Credit Card Debt and COVID-19 Pandemic Pushing BC Bankruptcies and Proposals – Revealing New Debt Study Goes Beyond the Numbers

Credit card debt five times more problematic than other types of debt reported; COVID-19 pandemic called out as factor in over half of personal insolvency filings since March 2020

Vancouver, British Columbia, CANADA


VANCOUVER, British Columbia, Jan. 11, 2021 (GLOBE NEWSWIRE) --  Sands & Associates, BC’s largest firm of Licensed Insolvency Trustees serving individuals and small businesses, released the results of the 2020 BC Consumer Debt Study today. This unique annual study polled over 1,800 consumers around the province who declared Bankruptcy or consolidated debt using a Consumer Proposal.

In addition to examining causes of debt and the often-severe impacts for British Columbians facing debt problems, the 2020 BC Consumer Debt Study found that:

  • Over 55% of polled BC residents who eventually consolidated debt with a Consumer Proposal or filed bankruptcy for debt relief said credit card debt was the main type of debt they were carrying – far outpacing other types of debt such as lines of credit (11%) and tax debt (10%).
  • The COVID-19 pandemic was a contributing factor for over half (54%) of participants who filed insolvency since BC’s major lockdown in March 2020. 58% of these consumers noted the pandemic caused a loss of income, making pre-existing debt loads unmanageable.

Other notable findings from the 2020 BC Consumer Debt Study include:

  • Problem-debt may be impacting BC renters disproportionately, with fewer than 6% of respondents describing their housing situation as “homeowner”.
  • More than two-thirds (66%) of individuals were worried about being able to meet their basic costs of living prior to formally resolving their indebtedness.
  • Despite the serious impacts of struggling under unmanageable debt loads, 95% of participants did not seek professional debt help right away.

The full detailed study report and infographic of key findings can be viewed here.

PDFs are available here: http://ml.globenewswire.com/Resource/Download/165d78e8-278d-4b73-a667-51bc8ee9f440

http://ml.globenewswire.com/Resource/Download/3a00653f-9727-4034-94ac-0e60e407e402

Perhaps one of the most important aspects uncovered in the 2020 BC Consumer Debt Study points to alarming realities for indebted consumers. Some critical highlights include:

  • More than 3 in 4 respondents said their debt-stress resulted in anxiety or depression.
  • Roughly 1 in 6 people said the stress of debt resulted in them experiencing thoughts of suicide.
  • Over 3 in 5 participants claimed “overwhelming stress” was the indicator of how they knew their debts were a problem.
  • Over two-thirds of study participants said their self-esteem suffered because of being in debt, and 65% said their health suffered.
  • Nearly 70% of respondents indicated that their relationships with family and others were negatively impacted by being in debt.

According to Senior Vice-President of Sands & Associates and Licensed Insolvency Trustee Blair Mantin, “The COVID-19 pandemic hit some already-vulnerable consumers like a freight train. Though payment deferrals and income replacements like CERB blunted the initial impact, it was startling to learn that the pandemic was a factor in more than half of the insolvencies filed since March 2020. Sadly, it does not take much to push people into financial crisis where they can no longer service their debts, or into situations where they feel they must choose between paying their debt or meeting basic living costs. As deferrals come to an end and government income replacements are made more restrictive, we expect to see a surge of consumers who are barely hanging on at present take the necessary step of restructuring their debts in 2021.”

“Too often people focus on numbers and not enough on the problems that cause and come along with debt. We want consumers to know that they have support, where the qualified solutions are found, and above all that there is light at the end of the tunnel.”

Emphasizing emotional and psychological impacts of debt he notes:

“This study is in its eighth year, and we hear each year that people just didn’t know what their options were – or where or how to get help without fear of judgment or shame. Debt still carries a lot of shame and confusion for consumers. If a friend came to you and said they were wracked with anxiety and depression, struggling to pay off a credit card that they had used to make ends meet, or because their partner or child was sick, or they lost their job – would you react with judgment or criticism? No, of course not.

Normalizing conversation around debt and its impacts is key here. The accepted silence allows negative self-talk to overrun people, and then on top of that the confusion allows noise of unregulated debt industry to clutter access to legitimate legal debt solutions. We must keep trying to get the word out, we need to do a lot better for British Columbians.”

He urges consumers: “Don’t wait until you’re experiencing constant debt-stress and anxiety about your financial situation to seek advice. I would really encourage everyone to explore their legal debt options with a Licensed Insolvency Trustee – and above all know that you are not alone.”

Click here to read the full 2020 BC Consumer Debt Study report in PDF format.

PDFs are available here: http://ml.globenewswire.com/Resource/Download/165d78e8-278d-4b73-a667-51bc8ee9f440

http://ml.globenewswire.com/Resource/Download/3a00653f-9727-4034-94ac-0e60e407e402

Sands & Associates is BC’s largest firm of Licensed Insolvency Trustees focused exclusively on debt help services for individuals and small businesses. A multi-year Consumer Choice Award winner and industry leader, Sands & Associates takes a supportive and empathetic approach to debt help services, with an emphasis on boosting consumers’ knowledge and personal empowerment.

Sands & Associates’ annual BC Consumer Debt Studies aim to provide insights into the financial challenges faced by people across the province, and highlight the human elements of a debt problem, which are too often overshadowed by numbers and statistics. The annual studies continue to take aim at dismantling preconceived ideas of “who has a debt problem” and strive to destigmatize conversations about debt and financial literacy.

Blair Mantin, Licensed Insolvency Trustee
778-735-0498
bmantin@sands-trustee.com



Attachments

2020 Debt Study_Full Report 2020 Debt Study_Infographic