The face of personal bankruptcy in Canada is getting older and older.
That's according to a report released on Monday by Hoyes, Michalos & Associates Inc, which found the highest debt levels occur in people aged 50 to 59 with unsecured debts exceeding $84,000. But it all starts somewhere: the average insolvent person appears to be so-called "Joe Debtor", a 43-year-old male with more than $61,000 in unsecured debt.
If left unchecked, the trend is troubling. Debt levels ebb and flow throughout the course of a person's life, from student loan debt to paying down a mortgage for a home to raising children.
But between 50 to 59 is usually the time when a person is trying to reduce debt and prepare for the golden years, says Douglas Hoyes, a trustee with the Ontario-based bankruptcy and consumer proposal services firm.
"We found, nope, in fact it's the opposite. It keeps building and building," says Hoyes, referring to debt loads.
That's because the average 50-to 59-year-old debtor is working, but they are likely earning less than people aged 40 to 49 years. Part of the problem is that the older group is at risk of losing jobs due to cost-cutting measures such as outsourcing. Because they are older it is difficult for them to find new jobs, says Hoyes. Another key factor is the cost of healthcare as people age.
As well, one in three likely still supports at least one dependent, and if they own a home they may still have a substantial mortgage. "They are squeezed from all ends," says Hoyes. "As a result, they're using credit to survive and it keeps going up and up."
For a better part of the past year, Canadian policymakers have been waving red flags about record consumer debt levels. According to Hoyes, the debt to income ratio for people aged 50 to 59 is a staggering 297 per cent.
Average 'Joe Debtor'
A review of 7,000 personal insolvency filings between 2011 and 2012, including information related to income, family size, age, gender, assets and debt, by the firm found that the average face of bankruptcy is Joe Debtor. The review found 57 per cent of insolvent debtors were male, while 43 per cent were female.
A common stereotype is that the average bankrupt person is unemployed, but the study shows that 81 per cent of insolvent debtors were employed at the time of filing. The average take-home pay for Joe Debtor was $2,366 per month on a net basis, while the average household income was $3,058.
The sluggish economic recovery has also played a role, forcing some people into early retirement while reducing the income of others.
"We discovered an increase in the number of debtors who listed marital and health related matters as a cause of insolvency," the report said.
"The economic recovery in Canada, and in particular in Ontario, has been very slow since the last recession. The pressures of slow economic growth, combined with heavy debt loads, is taking a toll on families and individuals."