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Fears of bankruptcy, debt ease after COVID-19 shock, poll suggests

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    CALGARY — Canadian consumers are more upbeat about their personal debt than they have been for three years, despite the recession brought about by the COVID-19 pandemic, a poll has found.

    An online survey of more than 2,000 people for bankruptcy firm MNP Ltd. found its net personal debt rating hit 31 in May, the highest in three years. The personal debt rating measures the difference between the number of poll respondents who characterize their personal debt situation as "excellent" to those who characterize it as "terrible."

    According to MNP, a larger share of people are confident that they are well-positioned to deal with debt, with 61 per cent of respondents saying they expect to be able to afford their living expenses for a year without adding to their debt. MNP says it saw 51 per cent fewer consumers file for insolvency in May, compared to a year ago.

    "The fact that many Canadians are more optimistic or even hopeful about their personal debt situation is likely a result of the pandemic relief measures," Grant Bazian, president of MNP’s insolvency practice, said in a statement. "What’s more is that many found it easier to spend less over the last few months since they were required to stay home."

    The results also said that respondents had an average of $148 more left over at the end of the month after paying bills, compared to early March.

    Women, on average, had less money left over at the end of the month compared to men, the poll said. Residents of Alberta were more likely to report a large month-end surplus compared to Saskatchewan or Manitoba.

    "COVID-19 dramatically altered consumer spending since restaurants, theatres, malls and other bastions of discretionary spending were closed," said Bazian.

    "Even with marginal increases in groceries, utilities and online shopping, many households have reported significant savings which, in some cases, have made them feel more capable of keeping up with previously unsustainable debt payments."

    The poll indicated that while attitudes toward personal debt are at a three-year high, 44 per cent of respondents still regret the amount of debt they have, and just 33 per cent expect their debt situation will improve over the next year.

    "At best, we will likely see these numbers rapidly return to the baseline as federal subsidies and stimulus dollars dry up, creditors begin clawing back deferred payments and consumers return to pre-pandemic spending levels," said Bazian.

    According to the polling industry’s generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.

    This report by The Canadian Press was first published July 20, 2020.

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