The number of people running into serious financial trouble in Prince George is on the rise.
According to numbers gleaned by insolvency trustee Leah Drewcock from the Office of the Superintendent of Bankruptcy, 96 consumer insolvencies were registered by city residents during the first three months of the year, a 23-per-cent jump from the same period last year.
"Pretty significant," said Drewcock, who is based in this city and works for MNP.
She pinned the cause down to people getting lured by low interest rates into carrying debt for things like trucks, ATVs and snowmobiles, only to get caught in the resource downturn and finding themselves in over their heads.
Drewcock said those who worked in the oil and gas industry in northeast B.C. and Alberta were hit particularly hard.
"They're suddenly without what was a very high income," Drewcock said. "They first go through their emergency savings and then they may use credit to pay for household costs while they're looking for work or maybe they've got work and haven't found equivalent income."
What can a person do to avoid the debt trap? Drewcock said it usually comes down to spending less, making more or selling something. And if that doesn't work, "you may be forced to give something up."
To avoid that situation, "communicate with creditors," Drewcock advised.
"Let them know what's going on," she said. "Is there a way before you miss a payment to renegotiate your payment terms, your interest rate, the length of your loan, for example.
"That's one way to deal with your secured creditors and credit cards and then there's the matter of living within your financial means."
To that end, Drewcock suggested drawing up a budget, meeting it and revisiting it during times of significant life changes.
"Look at your income, your cost of living, your needs and your wants," Drewcock said. "Nobody likes to do this and it's probably the most important thing you can do."
Putting away the equivalent of three to six months of required expenses into a savings account to act as a cushion is also a good idea, she said.
Drewcock steps in when it looks like the person can't pay the debt and is unsuccessful in negotiating with creditors.
"Sometimes the individual is completely insolvent and bankruptcy is the right choice," she said. "But I'd say 50 per cent of insolvencies now are consumer proposals, which are a negotiated settlement with a pool of creditors so everybody's treated equally, everybody gets the same deal.
"More and more people are choosing that because they want to pay their creditors. They may not have the means to pay everything they owe but they at least want to pay what they can afford."
Drewcock said she started to detected an upswing about a year ago when the volume of calls to her office began to rise.
"I have been seeing a slow increase, month by month by month, and these last two have been two of my busiest and I don't see it slowing down anytime soon," she said.
According to Equifax, the average consumer debt in B.C. was $23,177 during the first quarter of this year, down a slight 3.1 per cent from the same period last year.
