Canadians have been under financial pressure for years, but a new insolvency report shows how dire the situation is right now.

Despite declining interest rates and slower inflation, people are more hopeless about alleviating their money troubles anytime soon.

MNP Ltd. is Canada's largest insolvency firm. The latest Consumer Debt Index, published Monday, marked its second-lowest level since its inception in 2017.

It dropped to 79 points, a "staggering 10-point decline from last quarter," with Canadians' net personal debt rating plunging to an all-time low — a 12-point drop from the last quarter.

"The only other time Canadians' net personal debt rating reached close to this low point occurred in December 2022," the index's author, MNP Ltd. President Grant Bazian, noted.

Additional insights revealed that significantly more Canadians are on the edge of insolvency.

"Half (50 per cent) now indicate they are $200 or less away from insolvency, a significant eight-point increase since last quarter. A third say they are already insolvent (35 per cent), jumping nine points," the index noted, adding that women are likelier (55 per cent, +4 pts) to be $200 or less away from insolvency.

But the trend for men is also grim: "The increase in men who are $200 or less away from insolvency (44 per cent) was particularly striking this quarter, jumping 13 points."

Job loss and debt repayment worries

In the last quarter, 31 per cent of Canadians expected their debt situation to improve in a year. Now, that number has fallen to 27 per cent. In fact, with a steep 7 per cent jump, 19 per cent expect their situation to worsen.

Though Canada's unemployment rate has slightly decreased recently, job loss worries are at "an all-time high," with two in five (41 per cent, +9 pts) anxious about someone in their household possibly losing their job.

Slightly more than half of Canadians don't think they'll be able to cover their living and family expenses in the next 12 months without further sinking into debt.

Lower disposable income

Last quarter, Canadians averaged $937 in leftover monthly disposable income. That has fallen by $147, making managing unexpected expenses even more anxiety-inducing.

"This decline in month-end finances leaves households vulnerable to unexpected expenses or the impacts of economic changes," shared Bazian. "For those already living paycheque to paycheque, any financial disruption could quickly escalate into a crisis."

The expert believes Canadians will "find themselves grappling with the financial fallout of holiday spending."