Consumer credit reporting firm Equifax Canada reported that Alberta still holds the highest consumer debt level among other provinces, while residents in Fort McMurray have been the largest borrowers compared to other major Canadian cities.
According to the first quarter figures released last week, Alberta's average consumer debt (excluding mortgages) peaked at $28,155, almost $6,000 higher than the national average. The average consumer debt in Fort McMurray was $37,755, while Calgary, came in second with an average of $29,283. Edmonton, meanwhile, ranked third on this ignominious list at $27,108.
"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. High debt levels become a problem when there's a lack of ability to service the debt," Edmonton-based insolvency trustee, Freida Richer, shared in an interview with CBC News.
She also pointed out that a lot of the debts in the province were acquired before the slowdown in the country’s economy four years ago.
"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 said.
Prior the recession, Albertans also carried the largest debts in Canada, but it was not a concern back then because people were paying on time. During the downturn, though, many consumers were unable to pay their debts on time, and had to file for bankruptcy or a consumer proposal.
Assessing the condition in Fort McMurray, Richer said that the locals’ debts were likely used to recover from the massive wildfire that occurred in 2016.
"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," she emphasized.
Household debts in Alberta are not expected to fall anytime soon, but there is an effort from the consumers to be debt-free.
"I think people are still luckily putting money towards their debt, but just not enough because of cash flow issues,” Richer explained.
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