Fraser Valley/Vancouver – Licensed Insolvency Trustees are urging spending restraint among Lower Mainland and Fraser Valley residents, as soaring home prices continue to put residents deeper into debt. The Social Planning and Research Council of British Columbia recently conducted the largest-ever study of debt levels among Vancouverites, and found that households in the Lower Mainland are accumulating more and more debt year over year.
In Chilliwack, statistics from the Office of the Superintendent of Bankruptcy Canada show the number of consumer insolvencies increased 80% between January-April 2015 and January-April 2016.
“Low interest rates are making people feel comfortable, so they aren’t as concerned with limiting their spending. Many are buying homes or leasing cars and other items due to attractive low interest rates, but the reality is, they cannot afford them,” explains Judy Scott, a government licenced Trustee at MNP Debt.
The hot housing market in Vancouver is making Chilliwack and other municipalities east of Abbotsford more attractive to those who may not be financially able to handle the higher cost of living in Metro Vancouver, especially if they want to own their home. However, Scott notes that those who have moved to the Fraser Valley are still subject to the borrowing and purchasing temptations that current economic factors are creating.
“Residents who have moved to the Fraser Valley during the Vancouver housing boom are still typically able to obtain credit, but it can often be very tough for them to manage repayment,” says Scott. “Because of low interest rates and high real estate values, many people are currently very comfortable refinancing their homes to pay off unsecured debt. It is, however, tempting for them to continue with their previous lifestyle which they really cannot afford. With people carrying these higher debt levels, once interest rates go up, we will see more foreclosures and more consumer insolvencies.”
For those who are struggling with their mortgage or consumer debt, Scott recommends seeking professional help right away.
“Government Licensed Trustees are one of the only debt professionals who can offer a full range of debt relief options and guarantee legal protection from creditors. There have been cases where residents have had to file for bankruptcy, as they were no longer able to keep up with the payments on their two mortgages. What many don’t realize, is that a portion of their home equity is protected when they file. It is always better to seek help early and see what the options are,” she says.