Cost of Living, Credit Cards & COVID-19 – The latest consumer debt study in BC highlights consumer debt issues, debt impact on mental health and more

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

VANCOUVER, British Columbia, Jan. 17, 2022 (GLOBE NEWSWIRE) — Sands & Associates, BC’s licensed liquidators, today released the full results of the 2021 BC Consumer Debt Study. This unique annual study surveyed over 1,700 consumers across the province who had filed personal bankruptcy or legally consolidated debt with a consumer application and provides an opportunity to better understand some of the many aspects of the financial challenges faced by British Columbians .

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According to Blair Mantin, President and Licensed Bankruptcy Practitioner of Sands & Associates, “Consumers can often lull themselves into thinking their debt isn’t ‘too high,’ not realizing how easily problematic debt can get out of hand or how everyday challenges can make people face unimaginable financial difficulties and overwhelming stress.”

The BC Consumer Debt Study 2021 BC Consumer Debt Study not only highlighted the causes of problem debt and how it impacts individuals, but also identified notable trends in consumer debt habits:

  • The highest proportion of respondents (32%) reported having between $25,000 and $49,999 in debt (excluding vehicle/mortgage loans) when they began a formal debt cancellation process.
    • Nearly 30% of those who requested a legal debt relief rated their credit rating as “good” to “excellent” at the time of their debt restructuring.
  • 4 of the 5 most commonly reported root causes of debt could be described as being beyond a person’s control:
    • 18% said their debt was caused by using credit that could not cover essential living expenses.
    • Next came the direct top causes of debt, which were attributed to illness, injury, or health problems (10%), marital or relationship breakdown (8%), and work problems (8%).

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  • Less than a third (28%) of respondents overall saw their debt problems as being driven by over-borrowing due to general financial mismanagement.

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

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

  • The use of ‘last resort’ financing continues to grow, with high-priced financing such as payday or installment loans (9%) taking the fourth place among the most commonly reported types of consumer debt.
    • Payday loans were the primary type of debt for about 6% of consumers surveyed in the 2020 study and 5% for 2019.

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Participants reported that debt affected their well-being in a number of ways, including:

  • 77% said their mental health had suffered, 53% said their physical health had 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 debt was becoming a problem:

  • Over two-thirds (68%) of respondents said overwhelming stress was the main indicator of their debt problem.
  • Almost 60% said making minimum payments is an important warning sign, and 50% said debt levels remain almost the same despite making payments each month.

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

  • Want to manage debt themselves (63%).
  • Ashamed of not being able to deal with the debt they have incurred (51%), ashamed of asking for help (50%).

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

About Sands & Associates and BC Consumer Debt Studies

Founded in 1990, Sands & Associates has grown to become an industry leader. Today it is BC’s largest licensed bankruptcy trustee firm focused solely on providing debt management assistance to consumers and small businesses. As a multi-year Consumer Choice Award winner, Sands & Associates aims to integrate consumer empowerment, personal finance literacy and Canadian legislation to provide an overall supportive – and effective – approach to debt relief solutions.

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Blair Mantin, President and Licensed Bankruptcy Practitioner of Sands & Associates, commented on Sands & Associates’ annual BC Consumer Debt Study, “Through these annual studies, we are able to uncover and share invaluable insights into the challenges facing people in virtually every community are faced. As a licensed bankruptcy practitioner serving residents across BC, I am aware of the difficult situations people go through, the heavy toll of their debt stress – and being able to share that knowledge helps others empathize and raise awareness that is so important to step up and help people get the resources and solutions they need to get their lives back and move forward without the overwhelming burden of a debt problem.”

Blair Mantin, Certified Insolvency Practitioner
778-735-0498
[email protected]

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