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Concerns over debt rise

Interest rates may be at one of the lowest points in history, but a new survey finds British Columbians are still very concerned about their consumer debt.

According to the MNP Consumer Debt Sentiment Survey, concerns surrounding debt and potential interest rate hikes are rising among British Columbians.

According to MNP, 47 per cent of respondents report they are within $200 a month of being unable to pay their bills and debt payments, which is up 7 points since February.

Thirty-four per cent are concerned a rise in interest rates could move them towards bankruptcy, which is up 14 points since February. 

One-in-four are concerned about their current level of debt, up 8 points since February, and 43 per cent regret the amount of debt they have taken on. That number represents a seven point increase since February 2016 and includes 20 per cent who say they already don’t make enough money to cover their bills and repayment obligations.

“Many have over extended themselves, jumping into the hot housing market, worrying prices would continue to rise if they didn’t. Others feel like they had a lot of equity built up in their homes so they can spend more and use credit to finance their lifestyles," said Darrin Surminsky, a Kelowna-based government-licensed insolvency trustee at MNP Debt. "Now the sudden cooling of the market and looking ahead to the possibility of interest rate hikes puts many in potentially disastrous financial situations.

“With so many already feeling unable to cover their bills and debts, there is tremendous vulnerability to any kind of economic shock – the loss of a job, an emergency, a divorce, even things like a reduction in overtime pay or bonuses – and especially an increase in interest rates.”

Despite this supposed anxiety around debt, over-spending remains a reality for most in B.C.

Thirty-four per cent of parents said they spent more than budgeted on back-to-school shopping for their kids, while twenty-six per cent agree they went over budget on recreation or vacations during the summer.

“We cannot continue adjusting to a lifestyle where debt is used for things like new technology and vacations. Bottom line, if you are living on credit, you should seek professional financial guidance right away. One of the biggest mistakes people make is waiting until the point of devastation before getting help,” said Surminsky.

Across the country the feeling of financial security is not much better. The proportion of Canadians who say they can’t pay their bills is up 5 points since early 2016 and 10 points since February 2015

Thirty-eight per cent of Canadians say they are concerned an increase in interest rates could move them towards bankruptcy, compared to only thirty-one per cent back in February 2016.



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