Half of Canadians on brink of insolvency: MNP
A recent survey that shows more than half of Canadians are within $200 of not being able to cover bills is “absolutely frightening,” says Larry Herscu, President and CEO of Settlement Lenders.
“It’s evident ongoing economic disruptions are taking their toll on the average Canadian’s bank account,” Herscu says. “We’re past the one-year mark of living with COVID-19 and entering a third wave, yet some pandemic-related benefits and programs — like the Canada Emergency Response Benefit — have ended.
“Sadly, this will have a disproportionate impact on those who were already struggling financially before the pandemic, including those with personal injury claims,” he says.
The number of Canadians on the brink of financial insolvency has reached a five-year high, CTV News reports, with 53 per cent $200 or less away from being unable to meet their monthly financial obligations each month, according to a recent survey.
The latest MNP Consumer Debt Index also shows that of that group, 30 per cent say they are already insolvent with no money left at the end of the month to cover their payments.
“We saw that pandemic-related financial relief measures provided some breathing room over the last year, but now we’re seeing a reversal,” Grant Bazian, president of MNP Ltd., said in a press release.
“The number of Canadians with virtually no wiggle room in their household budgets has reached a five-year high. The anxiety Canadians are feeling about making ends meet – or already being unable to do so – tells us we may eventually see an avalanche of households falling behind on payments or defaulting on loans, mortgages, car payments or credit cards.”
Herscu says that for motor vehicle accident victims who cannot work due to their injuries, treading water financially is nothing new.
“When you’re already living paycheque to paycheque, and your income is reduced or halted due to an accident, the impact that has on a person and their family is monumental,” he says. “Settling your claim is a drawn-out process, and if your insurance benefits are exhausted or denied, it’s devastating.
“The pandemic has made a bad situation worse,” Herscu adds.
MNP reports that a quarter of Canadians have taken on more debt due to the pandemic — twenty per cent of those have used their savings to pay for bills, and 14 per cent of those surveyed used their credit cards to pay for monthly obligations. Seven per cent used a line of credit to pay for their bills.
“Even though some Canadians are spending less and saving more as a result of pandemic measures, others are being pushed further into the red, taking on more debt to stay afloat after job, wage, or small business loss,” Bazian said in the release.
The Easy Legal Group of Companies is a Canadian litigation financing firm. Its lending solutions service the personal injury sector including plaintiffs with pending injury claims, their legal representatives and the service providers involved in their cases. The firm is registered to conduct business in Ontario, B.C., Alberta and the Atlantic provinces. Services are delivered through four brands: Easy Legal Finance Inc., Rhino Legal Finance, Seahold Legal Finance and Settlement Lenders.