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• Alarming trend – Aging debtors taking on more debt

Personal debt is graying and that too fast – Find out why

Of late the debt situation in Canada has been undergoing changes and amongst all other aspects that dominate these changes, there’s the concern that personal debt is aging and quite disturbingly so. This has become a major concern for most people with the Hoyes Michalos study revealing the statistical analysis. The study conducted by Hoyes Michalos was essentially an analysis of every person who’s aiming towards debt reduction be it by filing bankruptcy or any other means of debt management. What remains of utmost concern is the fact that this 2013, in spite of the warnings issued by the Bank of Canada as well as other important financial advisers, 2 very disturbing trends were observed. One, the average debtor is getting older, and the second remains the fact that he’s carrying more debt.



The most alarming concern remains the fact that the typical “pre-retirement” debtor who’s aged between 50 and 59 happens to be carrying the highest amount of unsecured debts amongst all age groups. Statistical data reveals some disquieting figures like the astonishing rise of 14 percent in the total outstanding debt which presently stands at 84,199 dollars. In fact, this particular figure happens to be 38 percent higher than that of the average insolvent debtor.

Factoring in – Reasons behind this aging debtor trend

One can’t help but wonder why the pre-retirement debtors have such high levels of debt. Well, it’s not just like that; in fact, there are a number of reasons behind this –

1.       Lesser income: It’s true that majority debtors between 50 and 59 are working; however, their income actually happens to be lower as compared to the 40 to 49 age group. If you take a close look, then you’ll realize that the average pre-retirement debtor has a net income of 2,366 dollars on a monthly basis, whereas it stands at 2,500 dollars per month for the 40 to 49 year old debtor.

 

2.       High debt to income ratio: Now, obviously with income falling and debt increasing, it’s definitely getting all the more difficult to service one’s debts. It’s this drop income that has been contributed to the pre-retirement insolvent debtors who’ve got an unsecured debt to income ratio of 297 percent, which is again the highest amongst all age groups.

 

3.       Increasing health issues: It’s again quite obvious that the pre-retirement debtors are more than likely to face unexpected illness or even disability and they’re all the more likely to list health reasons as a cause for their insolvency.

 

4.       Child and parent support: Again, it’s rather common to see a 50 to 59 year old person supporting both children as well as parents. More than 30 percent pre-retirement debtors are still known to have a dependent back at home.

With all these reasons and the fact that the pre-retirement debtors are squeezed at their ends, they’re definitely not getting much success at debt reduction; rather their debt level is on the rise. This is essentially why they’re not left with much of an option other than filing a consumer proposal or bankruptcy.

Author Bio: This article has been written by Samon Bagons. He’s associated with various reputed websites and his articles are widely read and sought after. He mostly writes on debt and the various happenings around it. He is associated with Oak View Law Group