Calls for debt counselling rising with inflation rates in the Maritimes

A sense of unease may be the only thing higher than inflation and interest rates these days.

“I’m seeing a lot of panic with the interest rates increasing,” says license insolvency trustee Amanda Sherwood.

Following Canada’s inflation rate rising to 3.3 per cent Tuesday, Sherwood, who works for Allan and Marshall Associates, says she has seen an uptick in people not only looking for help on their existing debt, but those looking to get ahead.

“Now I’m getting phone calls from people worrying about down the road,” says Sherwood. “So they aren’t necessarily in trouble yet, but they see it coming.”

“I’m having a lot more conversations with people who normally wouldn’t reach out because the debt levels are somewhat manageable,” Sherwood continues. “But with the interest rates, those minimum payments aren’t working anymore.”

Inflation has forced many to take out loans to help get through these tough times, including Blaire Brophy, who took out a loan to help her move to Saint John, N.B., from Toronto during the pandemic.

“The interest on it is insane and I’m still paying that off,” Brophy says. “And then trying to make ends meets on top of paying this debt, and I have a student loan in digital video production, so it’s a lot.”

Other New Brunswick residents are looking to learn how to take better care of their finances.

“I am taking a course here next month because you have to budget,” says Donna Thompson. “You have to budget and save, you have to come together and help each other.”

Local businesses are also seeing the impact of inflation firsthand.

“Things are already super tight as it is with inflation and food costs going up,” says Corey Dugas, who owns Slocum & Ferris inside the Saint John City Market. “So every little bit that goes up on your lines of credit, or your credit card, it all hurts.”

“We’ve seen people who used to go out for dinner three to four nights a week and they are only coming out once a week now,” says Billy’s Seafood general manager Kara Grant. “Or we had people we used to see weekly, and now we only see them monthly and it’s because they just can’t afford it anymore.”

Having to watch their wallets more than ever, people are being forced to make tough decisions.

“I wanted to buy a house this year and that’s not going to happen,” Brophy says. “I am going to have to keep renting just because I’m trying to find work on a regular basis to fill in the gap, but everything seems to be more expensive, so those gaps I was filling before require extra hours now.”

“I have never gone to Walmart for my groceries,” Grant says. “And I’m going to Walmart for my groceries now.”

Sherwood says the extra costs have led to an increase in those filing for consumer proposals and declarations of bankruptcies.

“We are seeing both types of insolvencies that kind of frees that collection process,” says Sherwood. “And hit the reset button when you can’t pay it back because they money is not there.”

Sherwood urges anyone struggling with the rising costs to reach out for help.

She says many higher level banks aren’t offering the same types of loans they once did with inflation, leading consumers to go with other loan options. But she warns people to ensure they know what they are getting into.

“It’s extremely important to just sit down with them and fully understand what you’re signing,” Sherwood says. “Ask more questions, not just simply what my payment is, but what am I actually paying you back for borrowing this… because people are paying a lot closer to double what they are borrowing from these high interest level lenders because they are easier to access.”

Sherwood says people should try and cut down on any unneeded costs, as a curb in spending will lead to rates leveling out. 

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