ST. JOHN'S, N.L. — Statistics released by the federal government paint a troubling picture of the financial health of people on the Avalon Peninsula.
The area was the third most affected economic region across Canada last year for growth in consumer insolvency filings, with an increase of 229 filings – up 16.5 per cent over 2017. Topping the list were Alberta cities Calgary and Edmonton.
The insolvency rate is also at an all-time high on the Avalon at 7.1 insolvencies per 1,000 residents age 18 or older. It’s the highest since tracking began over 30 years ago.
However, the executive director for Credit Counselling Services of Newfoundland and Labrador is not surprised. In fact, Al Antle said he wouldn’t be surprised if 2019 numbers surpass last year’s.
Antle has been providing credit and budget counselling in the province for 37 years. He said he’s seen a noticeable change in that time, but even more so over the past few years.
“Over a three- to five-year period, we watched the kind or the income source, or the whatever you want to call it, of the average client sitting across the desk change. We saw more and more people with higher income, (and) with a significantly higher debt load.”
Antle gave one recent example of a client who has over $1.5 million in real estate, but after losing two tenants, the person came to him for help.
He said while he used to see more lower-income individuals, he’s now seeing more and more people sitting across his desk who earn about $60,000 a year.
What accounts for this change?
“First of all, we believe it’s financial literacy,” he said.
“And secondly, we believe it’s mass advertising. The notion that anything you want, anything you can name, you can have. You can finance anything, you can lease anything. You can acquire whatever you’d like.
“Thirdly is the notion that the financial sector will police us. In other words, we can borrow until we can’t borrow anymore, and that’s probably true — but not the way we believe it. Generally speaking, we can all go out and borrow and we’ll continue to borrow until we stop paying. It’s that simple.
“But people believe that if the financial sector, or the financial institution you’re dealing with, feels you can’t afford the item or the credit that you’re requesting, they will decline you, but that’s only partially true, because they’re in the business of selling money.”
In a news release from insolvency practice MNP, licensed insolvency trustee Greg Gosse said one of the biggest problems people face is “a lack of rainy day funds.”
“So something like an increase in interest expenses or a car repair could easily throw their finances into a tailspin,” Gosse was quoted in the release.
Antle said to reverse these trends, financial literacy needs to begin with young children.
“This is a critical life skill, as critical as reading, writing and arithmetic.”
Cross-country comparisons
When comparing provinces, Newfoundland and Labrador ranked third in the growth of consumer insolvencies last year, after Alberta and Ontario.
The number of bankruptcies and consumer proposals filed in the province last year went up 13 per cent over 2017, to 2,802. Total assets declared at the time of filing was $350,248,246 and total liabilities declared were $422,595,066.
In St. John’s, the total number of consumer proposals filed last year increased 33.8 per cent, to 626 proposals. The number of bankruptcies, however, decreased by seven per cent, to 520. Altogether, assets declared at the time of filing were $178,883,798 and liabilities declared were $200,114,165.
Across Canada, a total of 128,846 insolvencies were filed with the Office of the Superintendent of Bankruptcy in 2018, a 2.4 per cent increase from the previous year.
Twitter: @juanitamercer_
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