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Older man thinking

Jacob Wackerhausen

Canadians who end up having to declare bankruptcy are increasingly older and deeper in debt, says a new study.

A review of about 7,000 personal insolvency filings from 2011 and 2012 indicates that the typical insolvent person is a 43-year-old male with more than $61,000 in unsecured debt, according to Hoyes, Michalos & Associates Inc., an Ontario consumer proposal and trustee in bankruptcy firm.

What is remarkable about the findings is that the highest debt levels occur in the 50-to-59 age group, where unsecured debt is more than $84,000.

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That's usually considered a stage in life where an individual should be reducing debt and preparing for retirement.

"The most at-risk group are 'pre-retirement debtors.' At a time in their lives when they should be rapidly paying down debt, their financial burden continues to grow," says Ted Michalos, a trustee with Hoyes, Michalos.

While the average 50-to-59-year-old debtor is working, he or she earns less than those in the 40– to 49-year-old age group, according to the study.

And one in three in the older age group still supports at least one dependent, and – if a home owner – still carries a significant mortgage, it says.

"They are squeezed from all sides as they are often supporting both older children and aging parents, making debt payments, and may also be dealing with medical expenses for themselves or family members," Douglas Hoyes said in a news release Monday.

The review found that the percentage of older Canadians -- 50 or older -- rose to 28 per cent of all insolvent debtors, up from 24 per cent in the 2009-2010 period.

The average of $84,199 in unsecured debt in the 50-to-59 age group represents a 14-per-cent increase over the previous two-year period reviewed, in 2009-2010.

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The review also indicates that while total insolvencies have declined in Canada in recent years, insolvency filings among senior debtors -- age 60 and over -- have gone up.

Senior debtors accounted for 10 per cent of all insolvency filings in the study, up from 8 per cent two years ago. The senior-debtor age group was the only one to show a net increase in total insolvencies, up four per cent, according to the report.

"Joe Debtor is using credit to make ends meet, increasing an already heavy debt load that he can't repay on his reduced income. He gets squeezed so much that the 'house of cards' collapses and he has no alternative but to file a consumer proposal or personal bankruptcy," said Mr. Michalos.

Canadian policy makers – notably Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney – have been warning that consumers must pull back on their record debt levels.

The Hoyes, Michalos report says consumers appear to be heeding the warnings: the average owing on credit cards fell to $23,741 in the period studied, down from $24,390 in a study done two years earlier.

The average number of credit cards in Joe Debtor's wallet also fell to an average of 3.9 from 4.2, says the new study.

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The authors say the economic recovery has been slow in Canada and in particular in Ontario.

Easy access to credit coupled with poor financial management and job loss or a reduced income remain the primary causes of insolvency for most debtors, they point out.

"We discovered an increase in the citation of marital and health related matters as a cause of insolvency," they say in the 27-page study.

"The pressures of slow economic growth, combined with heavy debt loads, is taking a toll on families and individuals."

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