Oh come on. I just covered this. Didn’t the LAMESTREAM (NAILED IT) media get the message?

Sigh.

Okay, fine. Let’s do this thing. Again.

Early this week yet another bankruptcy alarmist story started making the rounds. This one claimed that 46% of Canadians are $200 away from insolvency, versus 40% who felt that way in September.

Naturally, all the usual suspects latched onto this story and pimped it with all their might. It became a big enough story I saw it shared a good half a dozen times on my Twitter feed by concerned Canadians who think this might be it. The massive debt bubble we’ve been accumulating for years is about to burst. Or at least it would seem like it.

But, like always with these stories, there’s a much more nuanced picture once we dig a little further.

The skinny

Because I want to almost have a stroke, let’s compare headlines to reality.

46% of Canadians on the brink of insolvency as rates rise: Survey
46% of Canadians near insolvency: poll
Nearly half of Canadians just $200 away from insolvency: Study

(That last one is my favorite, as you’ll see)

Let’s start with the source of this information. Does it come from government statistics? Detailed analysis of thousands of personal balance sheets? Uh, no. It comes from a survey.

A new survey indicates almost half of Canadians have pushed their finances perilously close to the brink, underscoring the heavy toll that mounting debt loads are taking on households in this country.

Oh, they asked people. And who exactly did they ask?

Forty-six per cent of respondents to an Ipsos survey conducted on behalf [sic] MNP Ltd. said they’re within $200 of insolvency every month, compared with 40 per cent who faced such dire circumstances in the previous survey in September.

So somebody named MNP commissioned a survey, huh? I’m sure they are 100% unbiased.

JESUS FUCKING CHRIST.

Every day I wake up in the morning and tell myself I’m not going to cuss today. And then bullshit like this makes me SO FUCKING MAD mad and I just can’t help myself.

Did any of the people who published this story consider for one god damn second where the info was coming from? Or did they just take the word of a source with a massive conflict of interest? For all we know MNP found the most vulnerable people and asked them. I have zero reason to believe any of this is unbiased.

The whole thing smells worse than a Lithuanian bathroom. These bankruptcy trustees actually want people to go bankrupt. They want you specifically to experience the most horrifying and embarrassing thing that can possibly happen in your financial life. What a terrible thing to wish upon anybody.

The definition of insolvency

Let’s start with the other thing I abhor about this new survey.

What exactly does it mean to be within $200 of insolvency every month, anyway?

It doesn’t mean 46% of Canadians are on the verge of bankruptcy, like the survey suggests. What it does mean is approximately half of Canadians live paycheque to paycheque without much wiggle room. If their debt payments go up $200 a month then they’d find themselves in a difficult situation.

This is much different than the way this survey is worded, which suggests half of Canadians are absolutely screwed if their debt payments go up by $200 a month.

What happens to the average person who finds themselves in a tough spot? Do they throw up their hands and declare bankruptcy? Or do they find ways to cut back in order to meet their monthly obligations?

There are a million ways the typical Canadian can deal with temporary tough times. They can borrow against their house. They can cut back on meals out or coffee or whatever. They can sell crap on eBay. They can borrow from friends and family. They can work out temporary relief from a creditor. And so on.

To suggest the average Canadian is $200 away from bankruptcy is fucking irresponsible. It gives people no credit at all.

Let’s look at it another way. You run a company with $100,000 worth of assets and $20,000 worth of liabilities. You have a rough quarter and lose $2,500. Are you insolvent?

Uh, no. Of course you aren’t. Because your liabilities are not more than your assets. There’s plenty of equity there.

If the average Canadian was close to insolvency, then why do our collective net worth numbers look like this?:

This survey essentially says the average Canadian is $200 away from bankruptcy, yet the average Canadian actually has a net worth of $300,000. Those two facts do not jive. They make zero sense when put together back-to-back.

Look, I’m not going to deny there are a shitload of Canadians who are poor as balls and a shitload more that are living paycheque to paycheque. There are lots of people who spend their 20s and 30s at risk of disaster if they lose their job. But, for the most part, these people do not end up screwed. They are rational people who are working hard at paying back their debt.

Let’s wrap up this tire fire

First off, shame on the media for taking this and reporting it as fact without disclosing the bias so huge it’s visible from space.

I get what MNP is trying to do here. They’re trying to convince people on the brink to declare bankruptcy, giving them the chance to collect those sweet trustee fees in the process. These average about $2,000 per case, by the way.

Yeah, bankruptcy is big business. Who knew?

The point of this article isn’t to just debunk this terrible story that’s making the rounds. It’s also to encourage you readers to take a hard look at the source of your information.

Tell everyone, yo!