Costs of Living, Credit Cards & COVID-19 – Latest BC Consumer Debt Study Highlights Consumer Debt Problems, Debt Impacts on Mental Health and More

Credit card debt cited five times more than other types of problem debt; using credit for essential costs of living the main cause of debt reported by 18% of insolvent consumers, and more than 3 in 4 respondents say being in debt affected their mental health.

VANCOUVER, British Columbia, Jan. 17, 2022 (GLOBE NEWSWIRE) -- BC Licensed Insolvency Trustees Sands & Associates today released complete findings from the 2021 BC Consumer Debt Study. This unique annual study polled over 1,700 consumers from across the province who declared personal bankruptcy or legally consolidated debt with a Consumer Proposal and provides an opportunity to better understand some of the many aspects of financial challenges faced by British Columbians.

According to Sands & Associates President and Licensed Insolvency Trustee Blair Mantin, “Consumers may often be lulled into thinking their debt isn’t 'too much', not realizing how easily problem debt gets out of control, or how common life challenges can leave people facing unimaginable financial difficulties and overwhelming stress.”

As well as highlighting the causes of problem debt and its impact on individuals, the 2021 BC Consumer Debt Study identified notable trends in consumer debt habits:

  • The highest proportion of respondents (32%) said they had $25,000-$49,999 of debt (excluding vehicle loans/mortgages) at the time they started a formal debt relief process.
    • Almost 30% of respondents who sought legal debt relief described their credit rating as ranging from ‘good’ to ‘excellent’ at the time of their debt restructuring.
  • 4 of the 5 most reported main causes of debt could be described as outside an individual’s control:
    • 18% said their debt was caused by using credit for essential costs of living income could not cover.
    • This was followed by direct main causes of debt attributed to: illness, injury or health-related problems (10%), marital or relationship breakdown (8%) and job related issues (8%).

  • Less than a third (28%) of overall respondents viewed their debt problems as being driven by overextended credit due to general financial mismanagement.

Click here to read the full 2021 BC Consumer Debt Study report in PDF format.

More than 56% of all consumers polled said credit card debt was the main type of debt they had when they began a formal debt solution, far surpassing other types of debt reported – tax debt (11%) and lines of credit (10%).

  • “Last resort” financing use continues to grow, with high-cost financing like payday or instalment loans (9%) taking fourth place in top-most reported type of debt for consumers.
    • Payday loans were the main debt type for roughly 6% of polled consumers in 2020’s study, and 5% for 2019’s.

Participants reported that being in debt affected their wellbeing in many ways, including:

  • 77% said their mental health suffered, 53% said their physical health suffered.
  • Constant worry about debt was reported by over 4 in 5 people and anxiety for more than 3 in 4.
  • Roughly 1 in 6 respondents said the stress of debt resulted in them experiencing thoughts or contemplation of suicide.

When asked how they knew their debts were becoming a problem:

  • Over two-thirds (68%) of respondents said overwhelming stress was the primary indicator of their debt problem.
  • Almost 60% said only making minimum payments was a key warning sign, and 50% said it was seeing debt balances remain almost the same every month, despite making payments.

Only 5% of consumers said they sought professional debt help right away, with majority being stopped by rationale such as:

  • Wanting to manage debt on their own (63%).
  • Feeling ashamed about not being able to handle debts incurred (51%), feeling embarrassed to ask for help (50%).

Click here to read the full 2021 BC Consumer Debt Study report in PDF format.

About Sands & Associates and BC Consumer Debt Studies

Founded in 1990, Sands & Associates has grown to become an industry leader, now BC’s largest firm of Licensed Insolvency Trustees focused exclusively on debt management aid for consumers and small businesses. A multi-year Consumer Choice Award winner, Sands & Associates aims to integrate consumer empowerment, personal financial literacy and Canadian legislation, providing an overall supportive – and effective – approach to debt help solutions.

On Sands & Associates annual BC Consumer Debt Study, Sands & Associates President and Licensed Insolvency Trustee Blair Mantin notes, “Through these annual studies we’re able to gain and share invaluable insights into the challenges being faced by people in virtually every community. As a Licensed Insolvency Trustee serving residents across BC I’m aware of the difficult situations people are working through, the heavy toll of their debt-stress – and being able to share in this knowledge helps others to empathize, increasing awareness that is so needed in order to step up and help people get the resources and solutions they need to regain their lives and move forward without the overwhelming burden of a debt problem.”

Blair Mantin, Licensed Insolvency Trustee