Cost of Living, Credit Cards and COVID-19 – BC’s Latest Consumer Debt Study Highlights Consumer Debt Issues, Mental Health Impacts of Debt and More

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Credit card debt is cited five times more than other types of problematic debt; Using credit for essential living expenses is the top cause of debt reported by 18% of insolvent consumers, and more than 3 in 4 respondents say debt affects their mental health.

VANCOUVER, British Columbia, Jan. 17, 2022 (GLOBE NEWSWIRE) — Licensed Insolvency Trustees of British Columbia Sands & Associates today released the full findings of the British Columbia Consumer Debt Study of 2021. This unique annual study surveyed more than 1,700 consumers across the province who have declared personal bankruptcy or consolidated their debts with a consumer proposal and provides an opportunity to better understand some of the many aspects of the financial challenges faced British Columbians.

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According to Blair Mantin, President and Licensed Insolvency Trustee of Sands & Associates, “Consumers can often be lulled into thinking that their debt isn’t ‘too much’, not realizing how easily problematic debt spirals out of control. or how the challenges of everyday life can leave people facing unimaginable financial hardship and overwhelming stress.

In addition to highlighting the causes of problematic 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%) reported having between $25,000 and $49,999 in debt (excluding car loans/mortgages) at the time they entered into formal debt relief.
    • Nearly 30% of respondents who applied for statutory debt relief described their credit rating as ranging from “good” to “excellent” at the time of their debt restructuring.
  • 4 of the top 5 most reported causes of debt could be described as beyond an individual’s control:
    • 18% said their debt was caused by using credit for essential living income costs that they could not cover.
    • This is followed by the leading direct causes of debt attributed to illness, injury or health problems (10%), marriage or relationship breakdown (8%) and job-related problems (8% ).

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  • Less than a third (28%) of all respondents considered their debt problems to be due to excessive credit due to general poor financial management.

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

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

  • The use of “last resort” financing continues to grow, with high-cost financing such as payday loans or installment loans (9%) occupying the fourth place among the most reported types of debt for consumers.
    • Payday loans were the top type of debt for about 6% of consumers surveyed in the 2020 study and 5% in the 2019 study.

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Participants indicated that being in debt affected their well-being in several ways, including:

  • 77% said their mental health suffered, 53% said their physical health suffered.
  • Constant worry about debt was reported by more than 4 in 5 people and anxiety by more than 3 in 4 people.
  • About 1 in 6 respondents said the stress of debt caused them to have suicidal thoughts or thoughts.

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

  • More than two-thirds (68%) of respondents said overwhelming stress was the main indicator of their debt problem.
  • Nearly 60% said only making minimum payments was a key warning sign, and 50% said debt balances remained almost the same each month, despite payments.

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Only 5% of consumers said they immediately sought professional debt help, with the majority being stopped by reasons such as:

  • Wanting to manage their debts on their own (63%).
  • Being ashamed of not being able to manage the debts contracted (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 licensed insolvency trustee firm focused exclusively on debt management assistance for consumers and small businesses. companies. A multi-year Consumer Choice Award recipient, Sands & Associates aims to integrate consumer empowerment, personal financial literacy, and Canadian law, offering a supportive—and effective—comprehensive approach to debt relief solutions. .

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In Sands & Associates’ annual study of consumer debt in British Columbia, Sands & Associates President and Licensed Insolvency Trustee Blair Mantin notes, “Through these annual studies, we are able to get and to share invaluable information about the challenges faced by people in virtually every community. As a Licensed Insolvency Trustee serving the residents of British Columbia, I understand the difficult situations people go through, the heavy toll of their debt – and being able to share this knowledge helps others to show empathy, thereby increasing the awareness that is so necessary in order to intervene and help people get the resources and solutions they need to get their lives back and move forward without the overwhelming burden of a problem of indebtedness.

Blair Mantin, Licensed Insolvency Trustee
778-735-0498
[email protected]

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