'The financial runway just isn't there': More Sask. residents seeking debt relief

There has been an uptick in the number of people seeking financial relief in Saskatchewan.

According to government statistics, insolvencies in the province are up over six per cent from last year.

In the 12 months prior to June 30, 2022, 703 bankruptcies were filed compared with 832 for all of 2021. By June 30, 2022 there were 2,176 consumer proposals compared with 1,870 in 2021.

While there have been fewer bankruptcies over last year (15.5 per cent) the number of consumer proposals has increased by 16.4 per cent.

A consumer proposal is a way to negotiate to pay debts without having to go into bankruptcy, according to VP of consumer insolvency for MNP Chelene Riendeau.

“The proposal does offer a very similar the same relief from debt as what a bankruptcy does, but it does provide a little more flexibility.”

She said those making a consumer proposal can protect their income, pay off their debts and avoid crippling interest payments.

“We have seen an increase in people reaching out to us, across Canada in every province that we serve, including Saskatchewan over the past year,” Isaiah Chan, VP of programs and services at the Credit Counselling Society said.

He said they don’t make internal numbers public but have seen the numbers go up.

“We've seen a pretty substantial increase year over year.”

“Food is more expensive. Housing is more expensive, driving a car is more expensive. And I think people are just having to make those tough decisions on their budget. They have had to possibly turn to credit to make ends meet when their income is not sufficient,” Riendeau said.

She said many people had also relied on debt to get through tough times in the pandemic, and now they were having to deal with those debts.

“Maybe we just have more informed individuals that know their options and know that they can reach out for help if needed.”

Kevin Meyler, Partner and Senior VP at Financial Advisory Services said it has been a long time coming.

“It's just people have a bit of money to, to weather the storm for a bit. But as continuing price increases, continuing inflation, the financial runway just isn't there,” Meyler said.

And it's not just individuals looking for a new financial plan. The number of businesses filing for bankruptcy dropped by 18.9 per cent while the number of proposals increased by 66.7 per cent.

Thirty businesses had declared bankruptcy by June 30, 2022 while in 2021 there were 37. However, In the 12 months leading up to June 2022 saw 15 proposals filed by Saskatchewan businesses, compared to 9 in total for 2021.

However, the federal government statistics change when looking at individual businesses. Statistics show a 58 per cent increase in insolvencies in this category.

A total of 26 bankruptcies have been filed between June 2021 and June 2022, compared with a total of 19 filed in 2021. In 2021, five proposals were made by individual businesses while in the 12 months leading up to June 2022, there were 12 proposals filed.

GETTING FINANCIAL ADVICE

Experts say there is help available for those who want to tackle their debt or financial challenges before they get out of hand.

Meyler suggested a personal stress test.

“You could look at your financials, you could say, you know why I'm struggling now? What if rates continue to increase? What would that do to my financial situation? And, frankly, reach out. There's no obligation or cost to an initial assessment. And I always encourage people to know what their options are.

“We hate to see people suffer, and then end up doing it in two or three months when things are unfortunately worse. And they had to live with the stress for additional periods.”

Chan suggested the earlier you can deal with the issues, the better.

He said those struggling should consider talking to a debt counsellor.

“Our job is to go over your situation, everyone's situation is unique, and we can provide them with some specific advice or situation.”

He also suggested people start examining their budgets.

“Really look at where your pain points are. What are the things that are costing you the most? What do you see coming at you in the near future?”