This is concerning.
For the first time since 2010, the number of people going broke in the Thompson Okanagan is on the rise.
New figures from the Office of the Superintendent of Bankruptcy puts the consumer insolvency rate at 3.4 per thousand residents aged 18-plus in 2018.
Every other year since 2010, that number had been in decline.
Now, 3.4 per 1,000 may not translate into a big number, but it is an indication that regular people are struggling with debt.
“(That) makes them incredibly vulnerable to any kind of unexpected expense,” said Dean Prentice, a licensed insolvency trustee with MNP Ltd.
“A lot of people who are severely indebted can’t make meaningful reductions to their principal debt and may take on even more especially if they encounter unexpected expenses. In these circumstances, debt relief options are the only way for them to regain financial stability.”
Consumer proposals and bankruptcies put a freeze on creditors and allows an individual to get out of debt by paying only a portion of what is owed.
Proposals generally allow a consumer to pay an amount negotiated with creditors.
A bankruptcy may require an individual to sell assets or make payments set by legislation.
While paying a reduced amount may provide financial relief, consumer proposals and bankruptcy severely impacts an individual’s credit rating and it will be difficult for them for years to borrow money, get credit and build a new credit rating.
A recent survey my MNP shows 44% of people don’t have enough money to pay their debts as they become due and 33% have more in debt than they are worth.
As a result, 21% can’t cope with unexpected car repairs and 29% wouldn’t be able to cover expenses if unable to work for three months.