Credit Card Debt Driving Insolvencies – Even for Consumers with Full-Time Employment and Good Credit Scores
VANCOUVER, British Columbia, Feb. 10, 2020 (GLOBE NEWSWIRE) — Working full-time and hold a good credit score? That might not be enough to keep a debt problem from setting in. A new BC debt study shows over 70% of BC residents who filed for bankruptcy or made a Consumer Proposal were earning regular income, with nearly a third of consumers having a credit rating of “good” to “excellent” at the time they restructured their debts.
Sands & Associates, BC’s largest firm of Licensed Insolvency Trustees, focused exclusively on debt solutions for consumers and small businesses, released the results of their seventh annual BC Consumer Debt Study today. The 2019 BC Consumer Debt Study offers an in-depth look into consumers’ debt levels, the causes of debt for individuals, as well as additional insights into the often severe emotional and physical impacts of debt on consumers across the province.The complete detailed report of the study and an infographic summarizing the study’s results can be viewed here.
The 2019 BC Consumer Debt Study highlights several notable findings about debt levels and demographics of consumers in the province who filed personal bankruptcy or consolidated debts with a Consumer Proposal, including:Nearly 40% of individuals who filed a Consumer Proposal or personal bankruptcy were aged 55 or older, indicating that debt is an increasing concern for individuals approaching the end of their working life, or already in retirement.The largest proportion of participants indicated they were carrying between $25,000 and $49,999 worth of debt (excluding vehicle loans and/or mortgages) at the time they started their debt relief process with a Licensed Insolvency Trustee.Credit card debt was cited as being the main type of debt that 55.7% of respondents had, with lines of credit following at 12.6% and tax debt at 11.6%.
The top main causes of debt reported were an overextension of credit and financial mismanagement (28.1%); job related (15.0%); and illness, injury or health-related problems (14.2%).The vast majority of survey respondents indicated they were working either full-time (54.3%) or part-time (8.2%) when their debt problems arose. When considering self-employed individuals as well, more than 70% of those who filed for bankruptcy or made a Consumer Proposal were earning regular income.29.6% of participants indicated that their credit score could be described as ranging between “good” and “excellent” at the time they started their debt relief process.Just 4.4% of respondents described their housing situation as “homeowner” at the time they sought debt help. The majority of respondents indicated they were renting (79.4%) or sharing a rental unit with roommates (5.8%) at the time they sought debt solutions.The 2019 BC Consumer Debt Study additionally uncovered startling figures about the impacts that debts and debt-stress had on survey respondents, including:Nearly 90% of participants stated they experienced a constant or daily worry about their debts or general finances.Anxiety or depression was cited as a debt-stress impact by 77.1% of respondents.Overwhelming stress, only making minimum payments, and accumulating more debt were cited as the top indicators that debts were becoming a problem for participants.As many as 1 in 5 respondents said the stress of their debt resulted in them experiencing thoughts of suicide.
Vice-President of Sands & Associates, Licensed Insolvency Trustee Blair Mantin notes: “It’s truly concerning that so many people are feeling so debt-stressed that they’re having feelings of suicide. More needs to be done to get the word out that there is safe and reputable debt help available, and where to find it.”“70% of consumers said they delayed seeking professional assistance because they were trying to manage on their own, as well as delaying getting help because they were feeling ashamed or worried about being judged – on top of that there’s a huge proportion of people who say they didn’t know where to get help or that there was even a solution to their situation…it’s unacceptable and concerning to think we’re failing people so much when it comes to awareness and education.”
Mantin says he’s hoping the latest study will serve as a trigger for professionals within the financial and legal sectors to educate themselves on the solutions Licensed Insolvency Trustees offer, to better serve their clients – and to government bodies to step up measures to protect consumers, as well as to help them find the legislated options for debt relief.He also notes the concern that “A lot of people who haven’t yet reached a place of financial crisis probably fit these types of statistics. We can reasonably speculate more people will end up in these situations – and we can only hope that studies like this, as well as our other public efforts will help them recognize when they’re reaching a problematic point financially so they can get ahead of the problem and take steps to get help before they end up suffering so long.
Money problems can happen to anyone, regardless of factors within our control.”Click here to read the full report in PDF format.The only BC-specific annual study of its kind, the 2019 BC Consumer Debt Study undertaken by Sands & Associates polled over 1,300 respondents who filed Personal Bankruptcy or consolidated debts using a Consumer Proposal, representing approximately 12% of the total number of consumers who formally restructured their debts in BC last year.
Learn more about past BC Consumer Debt Studies here.
Licensed Insolvency Trustee Sands & Associates