METRO IMAGE A bankruptcy trustee says Medicine Hat has seen a 20 per cent increase in bankruptcies compared to last year and that is the highest in the province.
gslade@medicinehatnews.com@MHNGillianSlade
Medicine Hat leads the province with the highest spike in number of bankruptcies.
A bankruptcy trustee says Medicine Hat has seen a 20 per cent increase in bankruptcies compared to last year and that is the highest in the province.
“Medicine Hat is certainly one of the hardest hit pockets of the province for sure,” said Randy Kobbert licensed insolvency trustee with Meyers Norris Penny. “I’ve never been busier here.”
In 2019, until the end of November, there’d been 337 bankruptcies and consumer proposals, which is a legal settlement (reduced amount) offered to creditors that is part of bankruptcy legislation, said Kobbert. In 2018 for the same months there were 281.
Mark Kalinowski, financial educator in Calgary with Credit Counselling Society, says the areas that are directly related to oil and gas have been hit hard.
Eight years ago Kalinowski was the only counsellor in the Calgary office but they’re currently hiring a sixth.
Counselling takes place in person but the telephone has been ringing from areas like Medicine Hat, he said.
The Consumer Debt Index, released in January by MNP, has dropped five points since September matching the lowest point ever recorded. Half the population of Canada say they are $200 or less away from being insolvent at the end of the month, 29 per cent are already insolvent and 49 per cent are not confident they will be able to cover their family living expenses without going further into debt this year.
The No. 1 reason people are in debt is due to a major change in employment, said Kalinowski.
“Going from making $100,000 a year to getting $2,000 a month in unemployment insurance is a definite shock to the system.”
A severance package and employment insurance payments help but if you have been a contractor, none of that applies, said Kalinowski. Contractors are essentially self-employed and typically do not qualify for EI.
“Life gets unmanageable very quickly,” said Kalinowski, noting mortgage payments and vehicle payments don’t change because you’ve lost your job. Credit is often perceived as a solution.
“In Alberta we see the highest credit card usage in the country,” said Kalinowski.
Credit Counselling Society’s average client owes about $30,000, but in Alberta that jumps to $35,000 on up to seven credit cards and lines of credit, he said.
Kalinowski thinks people are not asking for help soon enough. Credit Counselling Society and Money Mentors are free and confidential. If someone’s charging $3,000 for service and you don’t have any money, that’s not helping. He suggests asking your bank for help and they can make a referral.
The time to seek help is when there is a major life shift such as the loss of a job. You should have another set of eyes look at your budget to see where you can cut back, said Kalinowski.
Even if you have not lost a job but are using all your income every month it may be time to take action, he says. There are cost-of-living increases on a number of levels and generally incomes are not keeping up. You may not need a credit counsellor but you need to find ways to reduce your expenses.
My Money Coach.ca is one resource, there are webinars, and the Financial Consumer Agency of Canada (FCAC) provides safe tips on budgeting, said Kalinowski.
“Everyone can figure out a way to save a couple of bucks.”
There is some encouraging news. Kalinowski is seeing people going back to work even though it may be in an industry with a lower income.
“The truth is if we just go out there and put our best foot forward we’ll find money and when we find money we can find solutions,” said Kalinowski.
