Debt rock bottom: Four-in-10 Canadians don’t know where to turn for help

TORONTO (GLOBE NEWSWIRE) -- A new national survey by Credit Counselling Canada paints a picture of confusion about where consumers feel they can turn for help if they hit debt rock bottom. The study also addresses consumer sentiment on issues ranging from a lack of ethics, transparency and accessibility to trusted debt-help resources across the country.

The Got Debt? Poll, an Angus Reid survey of 1,510 Canadians, was conducted on behalf of Credit Counselling Canada, the foremost national association and accrediting body of non-profit credit counselling service agencies.

The study reveals that while Canadians can identify and agree on the warning signs of “debt rock bottom”, nearly four-in-10 (37%) would have no idea where to turn when facing it themselves.

Canadians define rock bottom debt

When asked to define at which point(s) a person has hit “debt rock bottom”, seven-in-10 respondents (71%) said it’s when they’re in a never-ending cycle of spending too much and incurring debt. Six-in-10 (62%) believe it’s when personal relationships are damaged, and half (52%) attribute it to constant secrecy and denial.

Other responses include when a person stops socializing and their world begins to shrink (37%) and when a person’s work conduct or performance becomes a major issue (35%).

“Being in debt can have a severely negative impact on people’s personal lives, relationships and professional performance, and it often feels like there’s no way to dig yourself out and stay out,” said Michelle Pommells, CEO of Credit Counselling Canada. “The pandemic has heightened this feeling of being trapped but the truth is, no one needs to struggle with debt alone. In fact, there is a non-profit network of free, unbiased debt counsellors across the country available to help.”

The warning signs of debt struggles

There is overwhelming agreement that before hitting “debt rock bottom”, a series of warning signs may present themselves as a caution of further trouble. Across the board, nine-in-10 Canadians agreed that the following situations signified a person’s struggles with debt:

• Always borrowing money to make it to the next paycheque (93%)
• Receiving constant calls from creditors (91%)
• Continually going over their credit limit (90%)
• Credit card regularly gets declined (90%)
• Only paying the minimum/interest but not paying down the principle (90%)
• Utilities cut off because they can’t pay their bills (89%)

Confusion reigns on where to turn first

The survey asked what people would do when facing “debt rock bottom” and strikingly, almost four-in-10 Canadians (37%) would have no idea where to turn. Meanwhile, one-in-four (23%) would bury their head in the sand and pretend the problem doesn’t exist, further perpetuating the debt cycle. On the positive side of the ledger, nearly two-thirds of respondents (63%) believe they have the necessary knowledge and resources to recover.

Other findings include:

• 79% would search for guidance from a trusted source such as a banker, family member or friend
• 72% would phone a financial or debt professional, such as a non-profit credit counsellor

Ethics, transparency and accessibility: The trust factor

It’s crucial Canadians feel confident they’re receiving trusted, professional debt advice – especially during challenging times such as the COVID-19 pandemic.
  
The greatest challenge Canadians face when seeking debt assistance is they feel there is a lack of focus on financial wellness and ongoing financial education (72%). A similar number (70%) list a lack of transparency around fees/conflict of interest and a lack of transparency around organization’s motives (69%).

Rounding out the list is a lack of accessibility to effective resources (63%), financial or debt advisors offering band-aid solutions that perpetuate the cycle (62%), and a lack of an ethical approach (59%).

“These findings highlight that there is major work to be done to increase awareness of consumer rights to safe, ethical and unbiased debt relief options,” said Pommells. “It’s essential that Canadians know where to start when in a financial crisis – and for them to understand that ignoring the problem isn’t the answer.”   

Free financial health check up

Helping Canadians achieve financial preparedness amid the uncertainty caused by COVID-19, Credit Counselling Canada has launched a Free Financial Health Check Up for anyone in Canada that’s got debt. The Check Up connects consumers with a certified and accredited non-profit credit counsellor and helps people understand all of their options to achieving financial wellness.

The full results of the Got Debt? Poll are available through the contacts below.

About Credit Counselling Canada

Credit Counselling Canada is the national association of non-profit credit counselling agencies that work provincially, regionally and locally throughout Canada. The association’s agencies exist to help individuals and families sort out their personal finances on a non-profit basis and have helped more than 12 million Canadians deal with debt in the past decade. As vocal advocates for consumer financial literacy, Credit Counselling Canada ensures clients receive highly-qualified support at little or no cost. Visit www.creditcounsellingcanada.ca for more information and follow us on Twitter and Facebook.

About the Got Debt?Poll

From August 25 to August 27, 2020 an online survey was conducted among a representative sample of 1,510 Canadians who are members of the Angus Reid Forum. For comparison purposes only, the sample plan would carry a margin of error of +/- 2.5 percentage points, 19 times out of 20. Discrepancies in or between totals are due to rounding.