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Albertans continue to carry the most consumer debt in Canada

cbc.ca logo cbc.ca 2018-06-29 CBC/Radio-Canada
a close up of a sign: Fort McMurray residents are on average carrying more consumer debt than people in any other major Canadian city. © Sylvain Bascaron/CBC Fort McMurray residents are on average carrying more consumer debt than people in any other major Canadian city.

Albertans continue to carry more consumer debt than residents of other provinces, while people who live in Fort McMurray have borrowed more money than those in other major Canadian cities.

The first-quarter numbers released Thursday by Equifax Canada show Alberta's average consumer debt (excluding mortgages), at $28,155, roughly $6,000 more than the national average.

There's an even greater divide when you compare Fort McMurray to other cities.

The average consumer debt in Alberta's oilsands capital is $37,755. The next most indebted city is Calgary with an average of $29,283, Edmonton is third worst at $27,108.

According to Edmonton-based insolvency trustee, Freida Richer, much of that debt was incurred before the downturn in the economy started in 2014.

High debt loads for 5 years

"Over the past, I would say at least five years, Alberta has held that first place when it comes to the highest consumer debt levels, but that's not really the issue to me as an insolvency trustee," Richer said in an interview with CBC News on Thursday. "High debt levels become a problem when there's a lack of ability to service the debt."

That appears to be what's happening in Alberta.

"The problem is people, especially during the recessionary years, were unable all of a sudden to pay their debt commitments as they became due, and that's what pushed people towards either a bankruptcy filing or a consumer proposal filing," said Richer.

"I think that stems from pre-recession, of course, the consumer optimism, the easy access to consumer credit. You know when people are happy about the economy, they feel good about it, people are working, there is a tendency to spend or overspend."

Richer points out that Albertans were also carrying the most debt in the country prior to the downturn, but it wasn't as big of an issue then.

"There was probably less news about it because people were maintaining their debt commitments so delinquency rates were likely lower and that changes when the recession happens," she said.

Fort McMurray, which is still recovering from the massive wildfire in 2016, is a different matter.

"Fort McMurray, which is a city I grew up in, is a city that is still rebuilding, and as more time passes, more people will be migrating back to the region, I think it's already started and so people want to rebuild," said Richer. 

He added: "Maybe it's household renovations or maybe it's getting that vehicle to get to and from work. There's a growing appetite for credit to help fund those things that are most important to people to help rebuild their lives.."

Richer expects the trend to continue in Alberta.

"I think people are still luckily putting money towards their debt, but just not enough because of cashflow issues, she said. 

As is always the case, the situation in Alberta will likely improve if the price of oil rises.

  • Nearly half of Albertans say they're $200 away from not being able to pay bills
  • Albertans carry the most debt relative to their assets, Statistics Canada says
  • Albertans have highest debt load in Canada, Equifax says
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