Debtor Profiles: Who is at Risk And Why? | Hoyes Michalos

7/27/2019 Debtor Profiles: Who is at Risk And Why? | Hoyes Michalos

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Debtor Profiles

Who is at risk and why?

www.hoyes.com


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Table of ContentsThe Face of Bankruptcy

The Young Debtor

The Family Debtor

The Pre-Retirement Debtor

The Senior Debtor

The Student Debtor

The Self-Employed Debtor

The Female Debtor

3

8

11

14

22

2

5

25

18


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Bankruptcy affectsCanadians from all

walks of life all ages,all income brackets,married or single,

working, retired orunemployed.

3

The Face ofBankruptcy


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The Face ofBankruptcy

4

Our analysis reveals several atrisk groups:

Young Debtors

Family Debtors

Pre-Retirement Debtors

Senior Debtors

Student Debtors

Self-Employed Debtors

Female Debtor vs. Male Debtor

10%

18%

30% 30%

12%

0%

5%

10%

15%

20%

25%30%

35%

60+ 50-59 40-49 30-39 18-29

Bankruptcies By Age Group


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The Young Debtor

Vital Statistics

Young debtors are single and equallylikely to be female or male.

They are mostly working and only 10%are unemployed.

The average Young Debtor owes$32,686 in unsecured debt.

They have the lowest average debt,but also the lowest income.

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The Young Debtor

Why They are in Financial Trouble

Second only to Senior Debtors, Young Debtors were most likelyto mention poor financial management, followed by income

reduction as the cause of their bankruptcy.

With a below-average take-home pay, after paying theirexpenses, the Young Debtor does not have enough leftover torepay debts.

One in three Young Debtors has a dependent to support and12% are single parents.


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Young Debtors are most likely tofile bankruptcy over a consumer

proposal, because their incomelevel may not be sufficient tosupport a long term proposal tocreditors.

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The Young Debtor


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The Family Debtor

Vital Statistics

The Family Debtor is between the agesof 30 and 49.

In their 30s, 33% are single. By their40s, only 18% are single. More than halfhave a dependent.

At this stage, 1 in 3 will purchase ahome and see dramatic increases in

credit card use to cover home andliving expenses.


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By their 40s, the Family Debtors credit card

debts will have ballooned to $26,849 andunsecured debts will have reached over $67,000.

The added stress of repaying such a large debtputs strain on the Family Debtors marriage and

more than 1 in 3 will be divorced or separated

by their 40s.

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The Family Debtor


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Due to their income and assets(1/3 are homeowners) theFamily debtor is more likely tofile a consumer proposal todeal with debts than to file forbankruptcy.

Over 58% of Family Debtorsfiled a consumer proposal toeliminate debts.

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The Family Debtor


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Although the majority of debtorsin this age group are stillworking, their income falls below

that of debtors aged 40-49.

Pre-retirement Debtors are morelikely to list job or health reasons

as the primary cause of theirbankruptcy.

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The Pre-retirement Debtor


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Bankrupt debtors aged 50-59 have the largest unsecureddebt of all age groups, at an astounding $84,199!

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$-

$10,000

$20,000$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

18-29 30-39 40-49 50-59 60+

Average Unsecured Debt by Age Group

The most at risk group in our study!


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30% of Pre-retirement Debtors still have a dependentat home.

A dependent parent

An adult child retuning home or still in school

A younger child

A grandchild

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The increased financial cost of supporting dependents can lead tothe use of credit cards to meet daily needs.



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Senior Debtors account for10% of all insolvency filings,and owe approximately

$68,776 in unsecured debt.

This is the second highestamount of debt among all

age groups.

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The SeniorDebtor


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At approximately 5 credit cards per debtor, Senior Debtors often rely on creditcards to pay for daily living expenses.

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The SeniorDebtor

At an average of$37,161, Senior

Debtors credit carddebt is the highestamong all agegroups.


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The SeniorDebtor

50% of Senior

Debtors are tryingto maintain debtpayments on asingle income.

Senior Debtors

have a highlikelihood of citingillness, injury, andhealth relatedproblems as a

cause of theirfinancialdifficulties.

Only 56% of Senior

Debtors had RRSPsavings and theaverage totalRRSP value wasonly $19,464.


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The SeniorDebtor

Combine a high level ofdebt with a reduction inincome or unexpectedexpenses due to illness orretirement, and the needto file for bankruptcy

quickly becomes a reality.


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The Student Debtor

Vital Statistics

57% Female, 43% Male

Between 30 and 39

Single

High likelihood of being asingle parent

With an unsecured debtof $50,791, of which$13,252 is student loans


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The Student Debtor

The average studentleaves school with

an estimated$28,000 in debt andwill take 14 years topay it back.


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The Student Debtor

This is due to:

Lower interest rates

More older students thanyounger

Changes to the Bankruptcyand Insolvency act thatreduced the period of

automatic discharge from10 years to 7. $-$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

18-29 30-39 40-49

Debt Amount

Past debt amount

The average student loan has declined in recent years.


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The Student Debtor

Female 36 years of age Single With an average unsecured

debt of $50,791, of which

$13,252 is student loans.

Those declaring insolvency with student loandebt are more likely to be:


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On average, approximately99,000 new small

businesses are createdeach year, and just as manyexit the market (throughfailures or closures).


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Bankruptcies for Self-Employed Debtors rose from 9.6% to10.0% in the last year.

Debtors listing business failure as their reason for insolvencyincreased from 4.3% to 4.7%

Insolvent Self-Employed Debtors have an average unsecureddebt of $87,253 the largest of all risk groups.


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A significant part of this debtincludes tax debts for unpaidincome tax, HST and otherbusiness related taxes. 61%

had tax debts compared to only38% for the average debtor.

Often using credit to fundbusiness expenses, insolvent

Self-Employed Debtors had anaverage credit card debt of$31,917.


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The Female Debtor

The Female debtor is:

More likely to be divorced, single

or separated than her malecounterpart

More likely to list marital orrelationship breakup as a cause oftheir financial difficulties

More likely to be a single parent

Roughly 40% of insolvent debtors are female


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The Female Debtor

Female debtors are more likely to have highercredit card debt and student debt than male

debtors

They are less likely to own a home

Female debtors are more likely to file

bankruptcy than male debtors


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The Female Debtor

Female debtors(particularly singlemothers) have a

difficult time payingfor basic expensessuch as rent, foodand utilities, let

alone maintainingdebt payments.


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Worrying about money and debtshas a devastating effect onindividuals and families, alike.

Recognizing the need for helpand talking to a reputableprofessional, such as a trustee inbankruptcy, like Hoyes Michalos

for advice is the first step ineliminating overwhelming debtproblems.

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The Solution to problem debt!


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There is hope.You can be debt free.

Download our Joe Debtor eBook
http://hoyes.com/blog/wp-content/uploads/2013/05/Joe-Debtor-2013-Whos-At-Risk.pdfhttp://hoyes.com/blog/wp-content/uploads/2013/05/Joe-Debtor-2013-Whos-At-Risk.pdf

Debtor Profiles: Who is at Risk And Why? | Hoyes Michalos

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