Who’s At Risk Of Needing Debt Relief?

If you have more debt than you should, you’re not alone. Four in ten Canadians report they carry credit card debt and a quarter of Canadians have an outstanding balance on their line of credit. Who is at risk of having to seek professional debt relief solutions like credit counselling or bankruptcy to deal with their debt problems?

The truth is that debt problems affects Canadians from all walks of life – all ages, all income brackets, married or single, working, retired or unemployed. A recent study by Hoyes, Michalos & Associates, Joe Debtor: Who Is He? Who Is At Risk? revealed several ‘at risk’ groups. One might be you.

The Young Debtor

Insolvent debtors between the ages of 18 and 29 accounted for 12% of all insolvencies in the study. While working, a lack of steady employment and below average income means that the young insolvent debtor is using up most of his or her income to pay for living expenses. There is little left over to cover debt repayments. In the study, young debtors owed almost $33,000 in unsecured debts and had an unsecured debt-to-income ratio of 142%. One in three had a dependant to support and 12% were single parents.

The Family Debtor

The largest of the risk groups analyzed in the Joe Debtor study, insolvent debtors between the ages of 30 and 49 filed two-thirds of all insolvencies. Starting a family, buying a home and relying on credit to make ends meet, the family debtor soon finds his debts overwhelming. By his 40’s his unsecured debts reached over $67,000. The stress of all this debt can cause marital problems, possibly resulting in separation or divorce. Insolvent debtors are much more likely than the average Canadian to have their marriage end in divorce and the financial costs of divorce add to an already overwhelming debt burden.

Pre-Retirement Debtors

The most at risk group in the study, insolvent debtors aged 50-59 have the highest level of unsecured debts of all age groups at a staggaring $84,199. Unlike other risk groups, their debts are growing. Pre-retirement debtors with heavy debt loads are at risk of a drop in income due to illness, early retirement and job loss. 30% of pre-retirement debtors are supporting a dependant and almost one-third have not yet paid off their mortgage. Soon they find themselves unable to maintain debt payments on a reduce income.

Senior Debtors

While total insolvencies have declined in Canada, insolvency filings among seniors (60+) in the study increased. One in ten insolvent debtors were senior debtors. With debts that have accumulated over time, coupled with a reduction in income due to retirement or disability, seniors often turn to even more credit to make ends meet. Their overall credit card debt, at $37,161, was the highest  of all age groups. Senior debtors are trying to service larger debts on less income with many turning to bankruptcy or a consumer proposal as a solution.

No matter what your family situation or stage in life, worrying about debts has a devastating effect on both you and your family. Recognizing the need for help and talking to a reputable professional is the first step to dealing with overwhelming debt problems. Contact a debt expert today, and find out what your solutions can be.

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