Government aid packages have prevented a surge in the number of Canadians seeking help from credit counsellors – so far.
But when that assistance winds down, the head of the national not-for-profit Credit Counselling Canada expects a “wave” of Canadians to look for assistance because of a general lack of savings, and high debt levels.
Michelle Pommells, the organization’s Chief Executive Officer said they have seen more concern and calls from their clients, but no large scale change in the number of Canadians seeking credit counselling. “With the government’s financial support, people are in a holding pattern, pretty much able to make their basic ends meet with a reduction in spending, working from home, and they have been able to see some benefits too, from reduced transportation costs,” Pommells said. “What we’re most concerned with is when the government accommodations run out, that’s when we believe we will see a wave of people reaching out.”
She said Canadians should quickly seek help if they miss two or more credit card payments, use credit to meet everyday needs, have a significant change in household income, are falling behind on household bills or are financially stressed to the point they are considering bankruptcy or other debt relief. Canadians have very high levels of debt, and very low levels of savings. Statistics Canada figures show household debt is approaching twice the level of household income, and lower income Canadians are not increasing their savings.
“The country is so highly leveraged around debt, those savings just aren’t there for people,” Pommells said. “It’s a national question. At the end of the day, the financial support is going to be a cost to the nation that we’ll have to look at following the crisis.”
She said this is a “wake up call” that points to a need to make non-profit credit counselling part of the government tool kit. “Every day, we see there’s a dearth of money management education. From a policy standpoint, we would like to see governments recognize that there are so many implications of a society that has a high debt load, even before a global health crisis like we’re experiencing now.”
More information about the accredited, non-profit credit counsellors available to help consumers prepare a plan to reduce debt is available at www.creditcounsellingcanada.ca.