Low-income Winnipeggers have highest bankruptcy risk: Report

A new report from the University of Winnipeg has identified which neighbourhoods in the city have the greatest risk for bankruptcy.

It's called Living in the Red, and it maps income and debt levels across Winnipeg, charting areas with the highest and lowest incomes and the highest and lowest risk of bankruptcy.

You kind of imagine that these areas are lower income and therefore they can take on less debt overall, but that's a big risk to a neighbourhood- Adrian Werner, University of Winnipeg research associate

The report found low-income areas like the North End and West End have low consumer debt (debt that excludes mortgages) and high bankruptcy risk.

River Heights, Wolseley and parts of St. Boniface — areas with moderate consumer debt — fell somewhere in the middle, with a moderate bankruptcy risk.

Meanwhile, wealthier neighbourhoods like Tuxedo that have the highest consumer debt also had the lowest risk of bankruptcy.

Adrian Werner, a research associate at the U of W's Institute of Urban Studies, said some of their findings come as no surprise.

"It's somewhat to be expected: you kind of imagine that these areas are lower income and therefore they can take on less debt overall, but that's a big risk to a neighbourhood," said Werner. "People who can't spend money, don't spend money."

Werner said low-income neighbourhoods are the most vulnerable to unpredictable market forces.

"Say the interest rates climb. We suddenly see these entire neighbourhoods having a high risk of going bankrupt and that has an influence on the social fabric of a neighbourhood if houses are on the market, or maybe that means the corner store shuts down or the grocery store."

Unexpected findings

Researchers also discovered a few patterns they weren't necessarily expecting to find.

"I was not expecting areas like Waterfront Drive or some of the more established neighbourhoods to be so deeply in debt compared to annual income," said Werner.

In some of the city's newer, more expensive neighbourhoods, Werner said Winnipeggers are taking out more loans to maintain more lavish lifestyles.

"What you're seeing is that some areas could be over 100 per cent of annual income to pay off non-mortgage debt. That's not mortgage — that's just TV, car, credit card, stuff like that. If you're spending more than a year of your income just to pay off that debt? What does that mean for your stability as a household? I think that was really surprising."

The study captured "just a snapshot" of citywide income, debt and bankruptcy trends. 

Tracking those varying neighbourhood-level debt and bankruptcy patterns into the future could help shed light on a few unanswered questions that surfaced during the study, Werner said.

"We don't know where we came from and we don't know where we're going to."