National Report on High Interest Loans

ACORN Canada undertook a study focusing on high interest loans, especially when taken online. For the purpose of the study, high interest loans were defined as loans such as payday loans, installment loans, title loans etc. that are taken from companies/institutions that are not regular banks or credit unions.

The study was conducted to examine the experience of lower-income consumers in the increasingly available online high-cost credit markets.

The study was divided into three phases - conducting a literature review and webscan which was undertaken by Prosper Canada; legislative scan to understand the regulatory framework; and a national survey to capture experiences of people who have taken high interest loans, especially online.



Creating Change: Momentum’s Contribution to High-Cost Credit Reform in Alberta

As part of Momentum’s systems change planning process that was grounded in both participant and community experience, the issue of payday loans and other forms of high-cost credit (e.g., pawn, installment, rent-to-own, title and car loans) emerged as a priority issue for Momentum to address the financial barriers for people living on low incomes to exit poverty and build sustainable livelihoods.
To evaluate its work for high-cost credit reform in Calgary and Alberta in the period of 2012 to 2019, an outcome harvest was conducted. This evaluation reflects the collective efforts of multiple partners, identifies outcomes achieved as well as Momentum’s contribution to these outcomes.



Money Mentors – Savings & Debt Resources

Collection of money management resources, including how create effective budgets, realistic spending plans, deal with your debts, save more money, build a stronger credit rating, and prepare for retirement.



State of Fair Banking in Canada 2020: Borrower and Lender Perspectives

The DUCA Impact Lab defines fair banking as any financial product or service that lives up to the following set of principles:

  • Pricing is clear, transparent, and well understood
  • Pricing is representative of the cost of funds, cost of administration and risk, rather than what the market will bear
  • It is clear to all parties how any personal data is being used by the lender
  • Personal data is only used for purposes agreed to by both the borrower and lender
  • The terms and conditions, including penalties and the rights of each party are clearly explained and well understood by both lender and borrower
  • Products are only recommended that will bring the borrower closer to their expressed goals
  • The borrower is clear on what the institution will do (and not do), with deposits to earn a return
  • The assessment of risk is objective, transparent and not prejudicial
  • Financial institution recommendations are not biased towards in-house product recommendations
  • Products empower consumers when they need access to financial services, not just when they do not

Their Fair Banking 2020 report presents data on the following areas:

  • Debt load and its impact on Canadians
  • Financial confidence
  • Divide between borrowers and lenders
  • How financial products are priced
  • Poor credit and ability to access to financial product and services
  • Demographic snapshot: People of colour and Indigenous Canadians

 



Attitudes Toward Debt and Debt Behavior

This paper introduces a novel survey measure of attitude toward debt. Survey results with panel data on Swedish household balance sheets from registry data are matched, showing that debt attitude measure helps explain individual variation in indebtedness as well as debt build-up and spending behavior in the period 2004–2007. As an explanatory variable, debt attitude compares well to a number of other determinants of debt, including education, risk-taking, and financial literacy. Evidence that suggests that debt attitude is passed down along family lines and has a cultural element is also presented.



Debt Relief Options in Canada – Long Term Outcome Comparison

This research report compares the long-term financial outcomes of Canadians, based on a study comparing consumers who used a debt management program (DMP), bankruptcy (BK), or a consumer proposal (CP) to obtain relief from debt.



Bien choisir son crédit : un guide pratique [A Practical Guide to Making Smart Credit Choices]

A guide comprised of 12 fact sheets for consumers to learn more about credit, grouped into the following topics: general information, warnings, credit products, and comparison tables. (Please note this is a French-language resource.)



Office of the Superintendent of Bankruptcy Canada: Statistics and Research

The Office of the Superintendent of Bankruptcy Canada releases statistics on insolvency (bankruptcies and proposals) numbers in Canada.

The latest statistics released on November 4, 2020 show that the number of insolvencies in Canada increased in the third quarter of 2020 by 7.9% compared to the second quarter.



Four Actions That Can Hurt Credit Scores

During the Four Actions that Can Hurt Credit Scores webinar, you'll learn about:

  • Key events which can bring down credit scores
  • How collections are reported to credit bureaus and how long they affect scores
  • What can happen to credit scores when you apply for too much credit in a short amount of time

Their guest speaker is Julie Kuzmic, the Director of Consumer Advocacy at Equifax Canada, and a recognized authority on consumer credit. In her role leading consumer advocacy within the organization, Julie helps Canadians build credit confidence.



Consumer debt and household vulnerability among low and moderate- income households in Canada 

Household debt levels in Canada have been rising since the 1990s, which poses increasing risks for Canada’s economy and Canadians’ financial health. However, the debt ‘picture’ for an average low- or moderate-income household is likely to be quite different from higher income households, both in terms of amount of debt and type of debt they take on. 

Join Alex Bucik and Vivian Odufrom Prosper Canada in this one-hour webinar where theywe will present findings from recent Prosper Canada’s recent research on consumer debt in CanadaRoadblock to Recovery: Consumer debt of low- and moderate-income Canadians in the time of COVID-19. Alex and Vivian will explore what types of debt are more common in low- or moderate-income householdsand some of the drivers of this debt load.  

This webinar is intended to equip financial educators and frontline practitioners supporting low-income clients, with recent knowledge on the types of debt Canadians living on low income may be dealing with, and things to know about the pitfalls of different types of debt. 

Click 'Get it' below to access the video link, and scroll down to access handouts, slides, and video timestamps for this webinar.



Read the presentation slides for this webinar.

Handouts for this webinar:
Report: Roadblock to recovery: Consumer debt of low- and moderate-income Canadian households in the time of COVID-19 (Prosper Canada)
Survey results: Canadians with incomes under $40K bearing the financial brunt of COVID-19 (Leger and Prosper Canada)

Time-stamps for the video recording:
4:42 – Agenda and introductions
7:52 – Audience polls
10:55 – Researching consumer debt (Speaker: Alex Bucik)
18:55 – How much does debt cost? (Speaker: Alex Bucik)
23:17 – How do different kinds of debt work? (Speaker: Alex Bucik)
29:17 – What are people using their credit for? (Speaker: Vivian Odu)
40:49 – What help is available to Canadian borrowers? (Speaker: Alex Bucik)
45:22 – Q&A

Quarterly Consumer Credit Trends: Recent trends in debt settlement and credit counseling

This report used a longitudinal, nationally-representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting agencies. Trends in debt settlement and credit counseling during the Great Recession and in recent years are presented. This report shows that nearly one in thirteen consumers with a credit record had at least one account settled through a creditor or had account payments managed by a credit counseling agency from 2007 through 2019. Since 2016, the number of debt settlements has increased steadily, while credit counseling numbers are relatively unchanged.



Targeting credit builder loans: Insights from a credit builder loan evaluation

This report presents the results of a Consumer Financial Protection Bureau (CFPB) funded evaluation of a Credit Builder Loan (CBL) product. CBLs are designed for consumers looking to establish a credit score or improve an existing one, while at the same time giving them a chance to build their savings.

The study used random assignment to explore four research questions:

  • How does the CBL affect participants’ likelihood of having a credit score?
  • For participants who already had a credit score, how does the CBL affect their score?
  • How likely are CBL borrowers to make late payments on the CBL and other loans?
  • Does the CBL affect participants’ savings balances?



The Early Effects of the COVID-19 Pandemic on Credit Applications

This report documents the early effects of the COVID-19 pandemic on credit applications, which are among the very first credit market measures to change in credit report data in response to changes in economic activity. Using the Bureau’s Consumer Credit Panel, how applications for auto loans, mortgages, credit cards, and other loans changed week-by-week during the month of March, compared to the same time in previous years was studied.



Majoring in Debt: Why Student Loan Debt is Growing the Racial Wealth Gap and How Philanthropy Can Help

More than 44 million people in America have taken on student debt to pursue a post-secondary education. These borrowers collectively owe around $1.6 trillion in student loan debt. Borrowers exist in every community, but some are particularly vulnerable to its impact.  Women hold two-thirds of all outstanding student debt and Black and Latinx borrowers disproportionately struggle with repayment.

This webinar discussed the disparate impact of student loan debt on black and Latinx students and the following topics:

  • the state of student debt across the country,
  • the disparate impact debt has on low-income borrowers and borrowers of color, and
  • tangible, targeted philanthropic solutions aimed at alleviating the balances of borrowers with $10,000 in outstanding loans or less



Roadblock to Recovery: Consumer debt of low- and moderate-income Canadians in the time of COVID-19

Almost half of low-income households and 62 per cent of moderate-income households carry debt, with households on low incomes spending 31 per cent of their income on debt repayments, according to a new report published by national charity, Prosper Canada.

This report analyzes the distribution, amount and composition of non-mortgage debt held by low- and moderate-income Canadian households and explores implications for federal and provincial/territorial policy makers as they develop and implement COVID-19 economic recovery plans and fulfill their respective regulatory roles.



State of Fair Banking in Canada

Everyone needs to bank and nearly everyone has a relationship with at least one financial institution. Financial Institutions need relationships with consumers too, in order to thrive as businesses. The role these relationships play in financial decision making for Canadians is an important consideration for anyone seeking to understand the financial health of Canadians and the impact of the banking sector in Canada. This report discusses the findings from a national sample of both banking consumers and lenders who were asked about their perspectives on fairness, access, credibility and transparency.



Video: Debt collection scams

Dealing with debt collection issues can be challenging—especially when you’re not sure if the person you’re being contacted by is a legitimate debt collector or someone trying to scam you. This video from the Consumer Financial Protection Bureau in the United States shares useful tips on spotting debt collection scams and protecting yourself from scammers.



Backgrounder: Preliminary findings from Canada’s Financial Well-Being Survey

This backgrounder reports preliminary findings from a survey of financial well-being among Canadian adults. 

Preliminary analysis of the survey data indicates that two behaviours are particularly important in supporting the financial well-being of Canadians. First, our analysis indicates that Canadians who practice active savings behaviour have higher levels of financial resilience as well as higher levels of overall financial well-being. In other words, regardless of the amount of money someone makes, regular efforts to save for unexpected expenses and other future priorities appears to be the key to feeling and being in control of personal finances.

Secondly, Canadians who often use credit to pay for daily expenses because they have run short of money have lower levels of financial well-being. While this behaviour is likely symptomatic of low levels of financial well-being, our analysis indicates that a person can substantially improve their financial resilience and financial well-being by implementing strategies to reduce the frequency of running out of money and of having to rely on credit to get by.



Trading Equity for Liquidity: Bank Data on the Relationship Between Liquidity and Mortgage Default

For many, homeownership is a vital part of the American dream. Buying a home represents one of the largest lifetime expenditures for most homeowners, and the mortgage has generally become the financing instrument of choice. For many families, their mortgage will be their greatest debt and their mortgage payment will be their largest recurring monthly expense.

In this report, we present a combination of new analysis and previous findings from the JPMorgan Chase Institute body of housing finance research to answer important questions about the role of liquidity, equity, income levels, and payment burden as determinants of mortgage default. Our analysis suggests that liquidity may have been a more important predictor of mortgage default than equity, income level, or payment burden.



Debt and mental health: A statistical update

Financial problems can be a significant source of distress, putting pressure on people's mental health, particularly if they are treated insensitively by creditors. Some people in financial difficulty cut back on essentials, such as heating and eating, or social activities that support their well being, to try and balance their budget. In many cases this has a negative impact on people's mental health. 

This policy note from  draws on nationally representative data to update key statistics on the relationship between debt and mental health problems, and sets out implications for policymakers, service providers and essential services firms.



Debt management solutions

This is a one-hour webinar on debt management solutions in Canada for situations where someone's debt is significant enough that specialized solutions are needed. The speakers explain what steps are likely to be involved in the credit counselling process in setting up a debt management plan, or working with a licensed insolvency trustee to file a consumer proposal or bankruptcy.

The speakers in this webinar are:

Click 'Get it' below to access the video link, and scroll down to access handouts, slides, and video timestamps for this webinar.



Read the presentation slides for this webinar.

Access the handouts for this webinar:
How we help people – An overview (Webinar handout) – Credit Counselling Society
Our services (Webinar handout) – Credit Counselling Society
Debt solutions 101 (Webinar handout)  – msi Spergel Inc

Time-stamps for the video-recording:
4:13 – Agenda and introductions
7:00 – Audience polls
12:31 – Debt in Canada (Speaker: Glenna Harris)
15:20 – Credit Counselling Society on debt management plans (Speaker: Anne Arbour)
34:05 – Spergel Msi on Consumer Proposals and Bankruptcy plans (Speaker: Gillian Goldblatt)
56:00 – Q&A

Debt and assets among senior Canadian families

Using data from the Survey of Financial Security (SFS), this article looks at changes in debt, assets and net worth among senior Canadian families over the period from 1999 to 2016. It also examines changes in the debt-to income ratio and the debt to-asset ratio of senior families with debt.

This study finds that the proportion of senior families with debt increased from 27% to 42% between 1999 and 2016. 



Mortgage and Consumer Credit Trends Report

The Canada Mortgage and Housing Corporation (CMHC) publishes a quarterly report on Canadian trends relating to mortgage debt and consumer borrowing. Find out the level of Canadian household indebtedness, and emerging trends in outstanding debt balances in different urban areas and by age group. 



Consumer Insights on Managing Spending

The CFPB conducted research on consumer challenges in tracking spending and keeping to a budget. The research found that consumers aspire to manage their spending but for many reasons, many consumers spend more than intended and sometimes have\ difficulty in staying within their budgets. In addition, we found that although most people would like to use budgets and plans, they often don’t use them to guide spending decisions in the moment.

Budgeting and tracking spending are often considered to be overwhelming or too much of a hassle, and even those consumers who have a budget generally do not benchmark their spending to their budget frequently or regularly.



Does State-Mandated Financial Education Affect High-Cost Borrowing?

Using pooled data from the 2012 and 2015 waves of the National Financial Capability Study (NFCS), this research finds that young adults who were required to take personal finance courses in high school were significantly less likely to borrow payday loans than their peers who were not. These effects do not significantly differ by race/ethnicity or gender, suggesting that financial education may be useful regardless of demographics.



Dealing with debt: Worksheet 7 – Know your rights and options

When dealing with debt, there can be some difficult situations where you may need help. If you are dealing with creditors, or collection agencies, there are steps you can take to ensure you are communicating clearly. It is also important to know your rights and options.

This worksheet describes options for what to do if you need help with significant debt issues.

'Know your rights and options' is the seventh worksheet in the 'Dealing with debt' toolkit. Find the full resource here

 



Dealing with debt: Worksheet 6 – Your credit report and credit score

Knowing your credit history is an important part of managing your debt. It is important that you get your free credit report once a
year to check for any errors. The information on this page will help you:

  • Get free copies of your credit reports
  • Understand what’s included in your credit reports
  • Check your credit report for errors and signs of identity theft
  • Dispute any errors you find

'Your credit report and credit score' is the sixth worksheet in the 'Dealing with debt' toolkit. Find the full resource here



Dealing with debt: Worksheet 5 – Making a spending plan

This worksheet helps you set a spending plan for the month, one week at a time, based on the money you have coming in and going out that week.

'Making a spending plan' is the fifth worksheet in the 'Dealing with debt' toolkit. Find the full resource here



Dealing with debt: Worksheet 4 – Tracking fluctuating expenses

Unexpected expenses can make it harder to pay off debts. Knowing your spending needs can help prevent borrowing more money in the future. Use this worksheet to plan ahead for emergency or fluctuating expenses. If you can make a plan to pay for these this year, you’ll be less likely to borrow more money.

'Tracking fluctuating expenses' is the fourth worksheet in the 'Dealing with debt' toolkit. Find the full resource here



Dealing with Debt: Worksheet 3 – Making a debt action plan

Once you’re ready to start tackling your debt and have a clear sense of how much you owe, your next step is to make an action plan. Use this worksheet to think about your debt repayment goals, the steps you can take now, and the help you will need along the way.

'Making a debt action plan' is the third worksheet in the 'Dealing with debt' toolkit. Find the full resource here



Dealing with Debt: Worksheet 2 – What do I owe?

Knowing what you owe is the first step to paying it off. This worksheet will help you see the full picture of your debt. Although it may be difficult to face, it is an important first step. Then you can think about

'What do I owe?' is the second worksheet in the 'Dealing with debt' toolkit. Find the full resource here

Dealing with Debt: Worksheet 1 – Your Money Priorities

What would it feel like to have less debt in your life? What other goals or activities would be possible? 

This worksheet will help you think about your values and goals. Setting goals is the first step in making a debt repayment plan. Think about what is motivating you towards your goal.

'Your money priorities' is the first worksheet in the 'Dealing with debt' toolkit. Find the full resource here



Economic Well-being Across Generations of Young Canadians: Are Millenials Better or Worse Off?

This article in the Economic Insights series from Statistics Canada examines the economic well-being of millennials by comparing their household balance sheets to those of previous generations of young Canadians. Measured at the same point in their life course, millennials were relatively better off than young Gen-Xers in terms of net worth, but also had higher debt levels.

Higher values for principal residences and mortgage debt mainly explain these patterns. Financial outcomes varied considerably among millennial households. Home ownership, living in Toronto or Vancouver, and having a higher education were three factors associated with higher net worth.



Financial Expectations and Household Debt

This Economic Insights article quantifies the degree to which families who expect their financial situation to get better in the next two years have, all else equal, more debt than comparable families.

The study shows that even after a large set of socioeconomic characteristics is controlled for, families who expect their financial situation to improve in the near future have significantly more debt and generally higher debt-to-income ratios than other families.



Mortgage Calculator

This calculator from the Financial Consumer Agency of Canada determines your mortgage payment and provides you with a mortgage payment schedule.

Debt and assets among senior Canadian families, 1999 to 2016

These results are from the new study "Debt and assets among senior Canadian families." released in April 2018. The study examines changes in debt, assets and net worth among Canadian families whose major income earner was 65 years of age or older.

In recent years, household debt has increased. The level of debt and value of assets are especially important for the financial security of seniors. Because income typically declines during the retirement years, seniors often need accumulated assets to finance their consumption, especially if they do not benefit from a private pension plan. Debt can also be particularly problematic for seniors as repayment can be more difficult on a reduced income.



Dealing with debt


Many of us struggle to talk about money, especially when it comes to talking about debt. It is when debt becomes too much for us to manage, or when we do not have a plan to pay it off, that it can become stressful and even overwhelming. This is when it is time to have those tough conversations and make a plan to deal with debt.

This booklet provides a set of activities to help you manage your debt, identify your money priorities, calculate what you owe and strategize how you can pay it back. These worksheets can be completed on your own, in the sequence that works best for you. However, we recommend working with a trusted financial coach or credit counsellor if possible.

Printed copies of this booklet are available to order at $150 per box of 50 booklets.

Order "Dealing with debt" Booklets - English

 

We are grateful to the Government of Ontario for generously funding this resource, and to Credit Counselling Sudbury for their content consultation.

Latest update on May 14, 2020:
Worksheet resources in this toolkit are available as fillable PDFs. Please open with Adobe Acrobat Reader for full functionality.