Personal Finance Survey Finds 1 In 5 Canadians Expect Debt To ‘Disappear Or Be Forgiven’
November 20, 2020
When it comes to their debts, it appears many Canadians are taking a page from Leonard Cohen, and waiting for a miracle.
In a survey of 1,500 Canadians’ financial state ahead of the holidays, more than one in five (21 per cent) said they “expect their personal debts to disappear or be forgiven.”
Credit Canada, the credit counselling agency that commissioned the Angus Reid study, called that number “shocking.”
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Household debt experts say this isn’t normal; it’s a sign that, amid the stress and uncertainty of the pandemic, many people are simply giving up on any sort of strategy to fix their finances ― and are perhaps hoping instead for a government bailout.
The attitude makes sense given the ongoing pandemic, said Stacy Yanchuk Oleksy, director of education and community awareness at the Credit Counselling Society.
Typically, crises are time-limited, “whereas this is dragging out. People are feeling unhopeful. People have a lack of control,” she told HuffPost Canada by phone.
But “wishing and hoping is not a good financial strategy. We all like to stick our heads in the sand now and then. And that’s a good strategy, for a day,” she said.
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It is true that ignoring debts will make them go away over time, Oleksy noted ― but not before a lot of bad things happen first.
“There are a lot of consequences. There are collection calls and letters, possibly legal action, garnishing of wages if you’re employed.”
The consequences of defaulting on a debt will follow you around for six or seven years. In that time, it may be more difficult, if not impossible, to get a credit card or a car loan, and you may face higher mortgage rates than borrowers with good credit.
Those in financial trouble should “resist the urge to borrow for everyday expenses,” Oleksy said, as that is almost certainly going to get you into trouble. Try to actively save money, however much or little you can, as that develops good spending habits. And don’t be afraid to reach out for help, Oleksy said ― there are non-profit credit counselling agencies you can turn to.
Grant Bazian, president of licenced insolvency trustee group MNP Ltd., is fairly blunt about these poll results. He attributes the attitude to “naivete… There is not a lot of financial literacy out there. Part of it may be wishful thinking.”
The government was so proactive in helping out households and businesses when the pandemic came that there may be an expectation among some that “the government will come and save the day,” he told HuffPost Canada.
People giving up?
That’s not to say Canadians are in the throes of a delusional fit of optimism about their future. In fact, Credit Canada’s survey shows respondents seem to be pessimistic on a number of fronts.
Twenty-one per cent say they are uncertain about their income over the next six months. One in eight (12 per cent) said they don’t expect ever to fully recover from the pandemic, and ― perhaps most tellingly ― 9 per cent said they don’t expect to find work, and expect to remain on government income supports.
That level of pessimism is based on feelings, not an actual budget assessment, Oleksy said.
“It’s based on the current experience of feeling helpless and hopeless, and not in proper control,” she said.
Bazian calls it “Covid fatigue.” People are “tired of what’s going on, depressed, lonely, uncertain. People don’t thrive in uncertainty.”
He adds: “I would encourage people to revisit hope. This will come to an end. Put some mindfulness to what you’re doing. Life will return to normal, the history of the world shows that.”
The Angus Reid survey for Credit Canada was carried out online from Oct. 21-23, 2020, surveying 1,500 Canadians who are members of the Angus Reid Forum. Online polls typically don’t have a margin of error, but a conventional poll of this sample size would have a margin of error of +/-2.5 percentage points, 19 times out of 20.