The Bankruptcy Gap In Canada
Many people fall into the debt trap, and as statistics have shown, the number of people becoming insolvent in Canada has increased in recent times.
Of course, not everybody in debt eventually files for bankruptcy, as it is possible to remedy the situation.
But it is still important to have a closer look at the problem, as you might need to consider your own finances and your own potential for falling into a situation where insolvency is your only way out of debt.
Who Is At Risk?
It could be said that any one of us could be at risk of bankruptcy, although there is a gap between those who do become insolvent and those who eventually manage their debts in other ways.
Bankruptcy experts Hoyes, Michalos & Associates found that the average insolvent debtor owed $59,814 in unsecured debts, a figure that is nearly four times that of the average debtor in Canada.
This figure included credit card debt of $23,741, unsecured personal loans of $19,374 and other types of unsecured debt that equalled $17,981.
But who are the people with these high debts?
Is it all about financial mismanagement?
Well, not always, no.
Sadly, student debt is a massive problem in Canada, and it accounts for 1 in 6 insolvencies.
According to the linked article, 31% of student debt insolvencies are filed by people under the age of 29.
It’s a growing problem, as young people today are not finding those high-paying jobs that will give them a better chance of paying off their student loans.
According to Hoyes, the other group likely to file for insolvency are those in senior age groups.
Debtors aged 60 and older make up 12% of all insolvent debtors and it is a trend that continues to grow.
Why is this age bracket falling into insolvency?
It’s because of the accumulated credit card debt that has built up over the years.
According to the study at Hoyes, seniors have the highest credit card debt of all age groups, totalling $25,596.
It’s an alarming figure. More than one in ten seniors also have outstanding payday loans, and the use of payday loans by seniors to cover their living costs continues to rise.
So, herein lies the bankruptcy gap in Canada.
Those who are 29 and younger and 60 years plus are the most in danger of insolvency.
What Can You Do?
If you are struggling with debt, regardless of your age group, it is important that you find help as soon as possible.
It might be that you can consolidate your loans to make paying them back easier, and with the help of a credit counselling service, you might be able to get yourself back on track financially.
If you do decide insolvency is the right answer for you, you don’t necessarily need to file for bankruptcy.
Legislative changes to the Bankruptcy and Insolvency Act has meant that more people than ever before are now eligible to file for a consumer proposal instead.
This is an easier way of settling your debts, and you don’t have to risk losing your assets.
To learn more, talk to one of our trustees.
This can be your first step out of debt and on the road to financial freedom, so use the contact details on our website to arrange a free consultation.
The sooner you do, the sooner you will escape the debt trap you might currently be in.