Insolvencies in N.L. 'have gone from bad to worse': debt expert

The province's gloomy financial situation is being mirrored by many Newfoundlanders' and Labradorians'personal experiences.

Adebt expert says insolvencies in the provincehave spiked about 30 per cent in a one-year period, which endedthis past June.

"Certainly, things have gone from bad to worse," said Ian Penney, a chartered accountant with the licenced insolvency trusteefirm Janes Noseworthy.

• Newfoundlanders and Labradorians borrowing beyond their means

Penney said much of that trend has involved a "massive increase in consumer proposals," a process where people can skirt bankruptcy by cutting deals with their creditors.

Penney added the people using this method may not be who you think of when it comes to dealing with financial troubles they typically have higher incomes, stable jobs, and liquid assets on offer.

Fiscal update

8 years ago

Duration 3:43

The fiscal reality many individuals are facing right now, according to a St. John's insolvency trustee, has gone from bad to worse. Debbie Cooper spoke to Ian Penney of Janes and Noseworthy.

Another red flag for Penney is the number of seniorsin dire financial straits coming through his firm's doors.

"We're seeing people now in their 60s and 70s still carrying massive amounts of credit card debt, lines of credit. As the income declines, as you get to the end of your working life, there's nowhere to turn."

Chronic overspending

Personal finance problems are hardly limited to older Newfoundlanders and Labradorians.Penney said a lot of younger people have a distorted sense of how much they should pay forbig-ticket items.

"There's a lot of overspending.People's expectations are out of whack sometimes with what they can afford," he said.

"Younger people Ispeak to think a fouror 500,000-dollarmortgage is normal. Maybethat'sfine, but there's a big risk."

People's expectations are out of whack sometimes with what they can afford.- Ian Penney

While Penney typically putsmortgages into the "good debt" pile, here he finds it worrying.

"Just because you can afford a mortgage payment on a half-million dollar house doesn't mean you can afford the property taxes, the heat, the lights, the repairs, the insurance:all those things," he said.

He hopes a new website his firm has set up will help clear the financial clouds. Ittakes people through various life scenarios in the hopes of educatingpeople about warning signs, before bankruptcy strikes.

"Basically, we want to start a conversation about debt... I think it's important."