Insolvency trustee Doug Hoyes encounters a lot of Canadians with money troubles, but heB次元官网网址檚 become particularly sympathetic to the plight of young people who find themselves financially underwater.
For more than a decade, his Ontario-based firm Hoyes Michalos has been crunching bankruptcy and insolvency numbers for its annual B次元官网网址淛oe DebtorB次元官网网址� analysis, with its latest results released last month ahead of tax season.
HeB次元官网网址檚 concluded that millennial Canadians have been dealt a generational losing hand as they face student loans layered with bad debts from credit cards, high-interest loans, and post-pandemic tax debt from collecting CERB.
B次元官网网址淚 think thereB次元官网网址檚 a whole bunch of whammies that have hit millennials.B次元官网网址� Hoyes said. B次元官网网址淭he CERB was the final straw that broke the camelB次元官网网址檚 back.B次元官网网址�
The 2022 Joe Debtor study examined 2,700 personal insolvencies filed in Ontario. Hoyes Michalos says 49 per cent were filed by millennials aged 26 to 41, even though they make up 27 per cent of adult Canadians.
The study found that on a per-population basis, millennials were 1.4 times more likely to file for insolvency than people in generation X aged 42 to 56, and 1.7 times more likely than baby boomers aged 57 to 76.
Insolvent millennials were on average 33 years old and owed an average of $47,283 in unsecured debt.
Hoyes said many people collected CERB and other pandemic-relief funds without fully appreciating the tax liabilities those programs generated, finding themselves insolvent and unable to pay down their credit cards, student loans, high-interest loans, and lastly their tax debts.
More than 100,000 Canadians of all ages filed for bankruptcy or insolvency in 2022.
But older generations, Hoyes said, have enjoyed many advantages.
Housing prices were more in step with wages. Tuition fees didnB次元官网网址檛 necessitate student loans, allowing graduates to enter the workforce and start saving and investing out of the gate, rather than having to service large debts for years after completing their education.
Hoyes said those circumstances represented a B次元官网网址渟afety valveB次元官网网址� that young people now canB次元官网网址檛 rely on.
B次元官网网址淎nything goes wrong like a pandemic, or you lose your job or you get sick or you get divorced and boom, there is no safety valve there,B次元官网网址� he said.
Filing for bankruptcy, he said, is an option to eliminate debts, but most people end up filing consumer proposals with the help of insolvency trustees like him to pay them down over time in manageable portions.
B次元官网网址淚t becomes an affordable way to eliminate the debt, and thatB次元官网网址檚 why weB次元官网网址檙e seeing more and more millennials resorting to consumer proposals,B次元官网网址� he said. B次元官网网址淭hey really have no other choice.B次元官网网址�
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Sandra Fry, a Winnipeg-based credit counsellor with the non-profit Credit Counselling Society, said many young people who seek alternatives to insolvency and bankruptcy are dealing with the shock of rising interest rates.
B次元官网网址淯nfortunately, a lot of people out there are living on the edge of their affordability,B次元官网网址� Fry said.
Fry said the Credit Counselling Society sees all types of people struggling financially with rising costs that are B次元官网网址渞eally squeezing Canadians in general from all sides.B次元官网网址�
The society helps people struggling with debt, negotiating with creditors to eliminate interest on loans, but also refers people in some situations to bankruptcy and insolvency trustees.
Millennial clients sheB次元官网网址檚 dealt with lately have often had variable interest rate mortgages, and rate hikes B次元官网网址渃aused huge strain on their budget because their payments just went up like crazy.B次元官网网址�
Dave Locke, 31, lives with his wife in Coquitlam, B.C., east of Vancouver, and the couple sought FryB次元官网网址檚 help when their mortgage payments jumped dramatically in the middle of a costly renovation.
Locke, who works for a real estate brokerage, got into the housing market at a young age having worked in the oil and gas industry after high school.
He ended up buying a home in Coquitlam with his wife Tara, who works in labour relations, and the Bank of CanadaB次元官网网址檚 rate hikes eventually saw their monthly mortgage payments jump 40 per cent.
The couple had a construction loan with their bank to fund the renovations, and as interest rates climbed and the price of construction materials ballooned, Locke realized something had to give, even with their relatively high combined incomes.
Insolvency or bankruptcy werenB次元官网网址檛 options for the couple because they wanted to keep their assets, but the Credit Counselling Society was able to work out a deal with their bank to eliminate interest on the renovation loan.
B次元官网网址淚B次元官网网址檓 still paying the full balance,B次元官网网址� Locke said. B次元官网网址淚B次元官网网址檓 just not paying any additional interest.B次元官网网址�
Locke said the stress and stigma of debt is embarrassing, B次元官网网址渂ut itB次元官网网址檚 just the way it goes.B次元官网网址�
B次元官网网址淵ou have to kind of swallow your pride,B次元官网网址� he said.
Grant Bazian, a licensed insolvency trustee and president of MNP Ltd. in Vancouver, said heB次元官网网址檚 seen many clients B次元官网网址渒eeping up with the Joneses,B次元官网网址� but living beyond their means and getting stuck in a cycle of high interest debt from payday loans and credit cards, layered on top of B次元官网网址渞idiculousB次元官网网址� housing costs.
Bazian said thereB次元官网网址檚 likely no B次元官网网址渙ne magic bulletB次元官网网址� to alleviate the debt woes of young people, many of whom are coming to see him racked with anxiety and other mental health issues.
For accountant Hoyes back in Ontario, putting out the firmB次元官网网址檚 Joe Debtor study every year is a way of letting people know theyB次元官网网址檙e not alone and to remind them of legal options to start anew financially.
Hoyes said it would be a mistake to automatically blame millennials for their money trouble because B次元官网网址測ou cannot be blaming an entire generation for how the deck is stacked against them.B次元官网网址�
B次元官网网址淵ou donB次元官网网址檛 have to keep working two jobs for the next 20 years,B次元官网网址� he said. B次元官网网址淭here are legal ways to eliminate a chunk of your debt, and yeah, it hurts your credit temporarily and itB次元官网网址檚 not something you want to do, but sometimes surgery is the answer.B次元官网网址�
Darryl Greer, The Canadian Press
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