Already in 2022, nearly one in five Quebecers have had difficulty repaying their debts. A greater number risk finding themselves in this precarious position at a time when inflation and rising interest rates are weighing down household finances, according to a report from the National Institute of Scientific Research (INRS), published Tuesday .
With a survey of 4,800 respondents, the INRS wanted to know the proportion of Quebecers who experience financial insecurity in relation to their debts. Its researchers also wanted to know the profile of the people most affected by this precariousness and how they found themselves in this difficult position.
In total, 18% of households say they have difficulty repaying their debts. If you are in this situation, you are not alone, insists Maude Pugliese, researcher specializing in finance and inequalities at INRS, in an interview.
“People who have debt difficulties often feel very alone. They don’t dare talk about it. They think it’s their fault. […] For me, there was really an interest in showing that, ultimately, there are a lot of people who are affected by this. »
The responses of those who are struggling to pay their debts demonstrate that the issue is generally not a question of individual responsibilities, defends Mme Pugliese. The study reports that 70% of people who incurred debt due to an event, such as job loss, illness or having to care for a loved one, have difficulty repaying it. . This proportion is only 10% for those who used the credit to buy a house or a car.
These life stories demonstrate that lack of knowledge is not the only factor that leads households into a difficult financial situation. “People were ultimately unlikely to say that it was just a lack of knowledge that had led them to debt. »
The study also shows that the proportion of people who struggle to repay their debts is greater among young people, single parents, racialized people and newcomers.
In light of the answers given by respondents, it would be wrong to see insolvency as a problem of personal will, warns Mme Pugliese. Having difficulty repaying is a very stigmatizing label for those who wear it.
She gives the example of the credit score, “which is used much more widely than just to grant loans”, notably to obtain a job or housing. “It’s become almost a way of assessing people’s morality, how trustworthy or unreliable they can be. »
This feeling of exclusion is also experienced in interactions with financial institutions. “There are all kinds of things that can make people feel uncomfortable asking questions,” she says. You may also feel that you are not respected or that you do not feel that you fit in with the usual clientele of an institution. »
The researcher specifies that the survey communicates information on the respondents’ perceptions, but that it does not make it possible to determine whether or not the actions of the banks justify this impression.
A tax on love
Unusually, many parents found themselves in a difficult financial situation after moving in with a new spouse.
Mme Pugliese gives the example of a mother who received child benefit while single and loses that support after moving in with a new partner. “Very quickly, after a year, we will take into consideration the income of the new spouse, but it is quite possible that the spouse will not contribute to the expenses of the children who are not theirs. »
The worst to come?
The picture painted by the study could deteriorate further due to the increase in the cost of living and high interest rates. INRS made its first survey at the start of 2022, just before inflation spiraled out of control. Its researchers therefore decided to repeat a survey in 2023 with a smaller sample of 800 respondents.
On the surface, the report states that there were no “statistically significant” differences between 2022 and 2023. By adjusting the data to compare people with similar characteristics, “the risk of reporting repayment difficulties becomes much more higher in 2023 than in 2022, by 16.1 percentage points,” the report reads.
Many homeowners could find themselves in a bad position when it comes time to renew their mortgage term at a higher rate, warns Mme Pugliese. “The effects of the increase in the key rate will take some time to fully materialize. »