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Overindebtedness: Focus on the Financial Health of Quebec Households

October 10, 2023

Update : October 10, 2023

INRS unveils a new report on the socio-cultural and economic dynamics of Quebec households.

Research conducted at the Institut national de la recherche scientifique (INRS) is shedding light on the factors that are leading to household debt in Quebec today. Conducted among more than 4,800 respondents, the results speak for themselves—young people, single parents, racialized people, and newcomers are the most vulnerable groups.

The study was led by INRS professor Maude Pugliese, who worked with ten co-investigators from different professional fields. Collaboration across fields of expertise allowed for the issues to be examined from a multidisciplinary perspective.

“This collection of extremely recent data is a real gold mine for better understanding the principles of overindebtedness in Quebec today. This study sheds light on various debt mechanisms and could serve as a tool for understanding the issues involved,” explains Pugliese, a researcher who specializes in finances and inequalities at the INRS Urbanisation Culture Société Research Centre.  

Post-survey analyses revealed that 18% of Quebec’s adult population had difficulty repaying their debts in 2022.

With inflation and the rising cost of living, the research team found that this proportion continued to rise in the first half of 2023.

Uncertain financial environment: weaker purchasing power

The report Le surendettement parmi les ménages québécois (Overindebtedness in Quebec households) looks at the reasons for borrowing or turning to credit. While purchasing real estate, obtaining a car, or funding education immediately spring to mind, Professor Pugliese reminds us that there are other situations that lead to borrowing.

“For many respondents, we observed what we called compensatory debt: borrowing related to job loss, illness, support for a loved one or child, separation, or even a combination of such life events.”

Maude Pugliese, researcher who specializes in finances and inequalities at the INRS Urbanisation Culture Société Research Centre.

The verdict is that over 70% of people who take out a loan to compensate for job loss or illness have difficulty repaying their debts.

Furthermore, in the event of financial difficulties or projects that require a certain amount of money, vulnerable groups may turn to private, unofficial, or online lenders. These lenders often have terms that lack transparency, and they may charge up to 40% interest.

“Not everyone has access to conventional bank loans. By better understanding the motivations of people who need to borrow, we can also identify routes that lead to overindebtedness. What we’re seeing are certain vulnerabilities, tensions between the lack of consumer protection on the one hand, and underlying economic problems on the other,” explains the researcher.

Better support with practical solutions

Professor Pugliese and her team list several solutions in the report. These include the need for potential users to be more included financially. More specifically, financial institutions could put initiatives in place that make every individual feel legitimate and welcome in their spaces. This concept calls for more flexibility and a better understanding of the backgrounds of people that may approach traditional banking chains.

The report also notes that single-parent families and separated parents face particular difficulties. Food and housing costs are continuing to rise, putting a strain on household finances.

Furthermore, the dozen experts agreed that government assistance programs should be maintained and enhanced—employment insurance, family assistance programs, and disability benefits are all social safety nets that provide support to members of the population who need it.

In this context, improving the population’s financial literacy is becoming increasingly essential. At a time when a loan can be finalized in just a few clicks, for instance, understanding the consequences surrounding the concepts of credit and debt is even more important.

La professeure Maude Pugliese de l'INRS
Professor Maude Pugliese. Photo : Phil Bernard

About the report

The report Le surendettement parmi les ménages québécois, was published in September 2023 by Maude Pugliese (INRS), Hélène Belleau (INRS), María Eugenia Longo (INRS), Carolyn Côté-Lussier (INRS), Patrik Marier (Concordia University), Magalie Quintal-Marineau (INRS), Mathieu Lizotte (University of Ottawa), Sarita Israël (Centre for Research and Expertise in Social Gerontology), Sylvie Lévesque (Fédération des associations de familles monoparentales et recomposées du Québec), Simon David Yana (Ministère de l’Immigration, de la Francisation et de l’Intégration), and Camille Beaudoin (Autorité des marchés financiers).

Maude Pugliese has been a professor at INRS since 2018. Her research focuses on the links between family dynamics, personal finances, and socio-economic inequalities. She holds the Canada Research Chair in Family Financial Experiences and Wealth Inequality, and is the Director of the Partenariat de recherche familles en mouvance, the Observatoire des réalités familiales du Québec, and the Famili@ documentary database, which contains multidisciplinary scientific works on families and couples in Quebec.

This project was made possible thanks to the financial support of the following partners : ministère de l’Éducation, the ministère de l’Immigration, de la Francisation et de l’Intégration (MIFI), the ministère de la Santé et des Services sociaux (MSSS), the ministère du Travail, de l’Emploi et de la Solidarité sociale (MTESS), thee ministère des Affaires municipales et de l’Habitation (MAMH), le Secrétariat aux aînés (SA-MSSS) and the Fonds de recherche du Québec – Société et culture (FRQSC) as part of the FRQSC’s Action concertée de recherche sur la pauvreté et l’exclusion sociale phase 4.