As a collection agency operating in Edmonton, Calgary and the greater GTA we recognize that the vast majority of consumers we inevitably end up dealing with are good people, with good intentions that have now simply arrived at the tipping point of having to either try to continue to rob Peter to pay Paul or, in the alternative, to make some hard choices in monthly budgeting in order to honour their outstanding financial obligations.
According to a recent Ipsos poll conducted by MNP LTD., Canadians are increasingly worried about their ability to repay their debts. Since interest rates first rose in July, households across the country have noticed their budgets tightening as they struggle to keep up with expenses and manage other rising costs. Jumping eight percent since September, a full one-third (33%) of Canadians now say they are unable to cover their monthly bills and debt repayments. At the same time, almost half (48%) say they are $200 or less from not being able to meet their monthly financial obligations.
In light of the above and a little closer to home, it should come to no one’s surprise, that the recent numbers released for the Office of the Superintendent of Bankruptcy Canada reported Alberta bankruptcies increased 11.4% to 450 up from 404 the month prior. Compared to 12 months earlier personal bankruptcies in Alberta are up 2.3%. As is visible in the graph below, bankruptcies had been falling throughout 2017 until they picked up again in August and October. We suspect the Bank of Canada’s decision to increase key interest rates by 0.25% in July and again in September has been a contributing factor. With the additional hike earlier this month of an additional 0.25% we suspect bankruptcies to continue at elevated levels.
As with Newton’s third law: For every action, there is an equal and opposite reaction.