British Columbia

British Columbia experiences jump in consumer insolvencies

According to data from the Office of the Superintendent of Bankruptcy, the number of British Columbians who filed for insolvency this quarter of 2019 was up 11.1 per cent compared to earlier in the year.

Scott Hannah, CEO of the Credit Counselling Society, says people are treating home equity like an ATM

British Columbians carry high levels of non-mortgage debt, says Scott Hannah, CEO of the Credit Counselling Society. (Ryan Remiorz/The Canadian Press)

New data from the government of Canada shows British Columbians are still struggling with high levels of debt. 

According to data from the Office of the Superintendent of Bankruptcy, the number of British Columbians who filed for insolvency this quarter of 2019 was up 11.1 per cent compared to earlier in the year. It is up 5.2 per cent compared to the same quarter of last year.

Scott Hannah, CEO of the Credit Counselling Society, says that's not the only issue. 

B.C. has the second highest level of non-mortgage debt — credit cards, loans, lines of credit — at just over $33,000, he says. Among major cities, Vancouverites carry the highest non-mortgage debt load, at just under $40,000. 

"It could have a severe impact on our economy overall if we don't reel this in," Hannah told host Gloria Macarenko on CBC Radio's On the Coast

High cost of housing

Hannah says the main issue is that in B.C., whether you're renting or paying a mortgage, housing costs are higher, even though incomes are not. 

"So more of our income is going towards maintaining a home," he said. "In many cases consumers are utilizing debt in the forms of credit cards [or] lines of credit to offset deficiencies in their spending until they reach the point of no return."

Vancouver's high cost of living can lead to consumers taking on more debt to pay living expenses, says Scott Hannah of the Credit Counselling Society. (Rafferty Baker/CBC)

Hannah says one concerning practice is how some consumers with home equity lines of credit use it "for all intents and purposes like an ATM machine.

"The reality is ... they're spending more than what's coming in month by month until they near the limits of their credit lines and now they find themselves in the position of not being able to meet the minimum payment required on the credit line and having exhausted the limit itself," he said. 

Tough decisions 

Hannah says the key thing for people to do is to focus on living within their means and staying focused on long-term goals. 

He says people should understand what all their expenses are, how much income is coming in and look at opportunities to scale back and pay off consumer debt. 

This may mean tough decisions about cutting back on spending and lifestyle. 

"There's a whole lot of pressure to [keep up financially] and it's really about saying what's important to me as an individual, regardless of what others have or ... the perception of what others have," he said.

Listen to the segment here:

August 20, 2019 British Columbians are struggling with high levels of debt and a big jump in the number of insolvencies. Scott Hannah is the CEO of the Credit Counselling Society. 8:27

With files from On the Coast