Rising cost of living pushing more Atlantic Canadians into debt cycle, experts say
CBC
When Patrick O’Connell picks up the phone these days to help Prince Edward Islanders in financial distress, he’s hearing a familiar concern: the rising cost of living, which is driving people deeper into debt.
O'Connell, a licensed insolvency trustee for P.E.I. with Allan Marshall & Associates, said many of the Islanders he speaks with are struggling to make ends meet as everyday expenses continue to climb.
He said last month was the busiest his firm has ever been on the Island, handling more insolvency files on P.E.I. than ever before.
"Pretty much over 90 per cent of the people now would be saying, ‘I just can't keep up with my groceries and with gas and on my current income, it's just everything seems to be going up, and my income hasn't gone up... at the same rate as my expenses,’” O'Connell told CBC News.
Recent data from Statistics Canada shows debt payments are eating up a bigger share of Canadians’ monthly income once again.
The ratio of Canadian household debt-to-income had been declining every quarter since 2023, but since the third quarter of 2024, that trend has reversed.
Household credit market debt as a proportion of household disposable income rose to 174.9 per cent in the second quarter of this year, up from 172.2 per cent in the third quarter of 2024.
In other words, Canadians owed $1.75 in credit market debt for every dollar of household disposable income in the second quarter.
Susan Eisner, CEO of Solve Your Debts — a non-profit debt management group serving Atlantic Canadians — said her organization is also seeing more clients struggling to manage day-to-day costs.
“Inflation may have slowed, but of course, affordability has not improved for many households,” Eisner said.
“People are just relying on credit, and their availability to credit, just to make ends meet. So it's not maybe frivolous spending or on the fun things anymore. It's on groceries and gas and phone bills and things like that, just trying to get through.”
O’Connell said his firm has noticed a growing number of people turning to payday loans to make ends meet.
He warned that many payday loan companies now operating online may not be properly licensed or even based in Canada.
“If the debtor can't pay it back, they're very aggressive with their collection activities,” he said.
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