What does the average bankrupt look like?

What does the average debtor look like? What is the difference between you and the average bankrupt… meet Joe Debtor.

For those of you who have not heard of Joe Debtor, this is ananalysis that is done every couple of years by one of my colleagues in Toronto  (Doug Hoyes of Hoyes Micholas). It is a statistical summary that provides a picture of the typical insolvent person and it is very interesting. This is a great way to help you determine how positive or negative your current financial picture is.

Who is the Average Joe Debtor
Who is The Average Joe Debtor

Some of their key findings were as follows:

The average age of someone filing for a bankruptcy or a consumer proposal was 43. Interestingly this is 2 years older than the last time they ran this study. This suggests there is greater risk for those approaching retirement (see The Aging Face of Personal Debt: Squeezed From All Sides). This makes logical sense as we see our baby boom generation age, and all can appreciate the pressure many will face as the move to having to live on a fixed income.

Another one of their findings is that 28% of those who had filed a bankruptcy or a consumer proposal listed marital breakdown as one of their major causes of financial problems.

Of those who filed for bankruptcy or a consumer proposal they found that 81% of them were working at the time of their filing. So you don’t need to be struggling with employment to have financial difficulties. This makes sense as we see the average Canadian’s debt to income ratio climb (the last figure was this rate sat at 165%, meaning that each individual in Canada, on average, owes $165 for every dollar they bring home.

The big finding, in my opinion, is that the average person who filed for bankruptcy or a consumer proposal in this study had a total unsecured debt of $61,096. Not only is this 2% higher than in previous years, but this is 3 times the national average.

There are a number of interesting trends that this study identifies, and trends that deserve a little more attention. But the most important thing to take from this report is that you are not alone. Financial troubles are not limited to the sick, the unemployed, or the homeless. We live in a society where the average insolvent person is no different than you or I.

If you would like to arrange a time to have your situation examined by a professional, you can call me at 780-435-5110, email me, or visit us online at gothandcompany.com.

2012 Annual Bankruptcy Statistics released

Annual Bankruptcy Statistics Statistics
2012 Annual Bankruptcy Statistics

The 2012 Annual Bankruptcy Statistics were just released by the Office of the Superintendent of Bankruptcy. What they show is that both personal bankruptcies and proposals declined almost 4% across Canada. This is the third year in a row that we have seen a decline. However, as Sharon Hoyes pointed out (see Personal Bankruptcies in Canada Decline in 2012), this is despite a consistent increase in the level of consumer debt across Canada over the same period of time.
Another interesting trend is that we continue to see more Canadians are looking for ways to avoid a bankruptcy and as a result we see that the decrease in total bankruptcies of 8.3% in 2012. Which is contrasted with an increase number of consumer proposals filed of 4.2% in the same period (to read a good article about this see Record Number of Consumer Proposals Filed in Canada in 2012). While this was an all time high number of proposals filed across the country of 46,903 in certain areas in Toronto there were actually more proposals filed than bankruptcies.
While we haven’t quite seen this trend of more proposals than bankruptcies here in Alberta, we do see a reduced number of bankruptcies and increased consumer proposals) as compared to 2011. Here in Edmonton we saw the number of consumer bankruptcies filed dropped by 24% and the number of consumer proposals increased by 4.3%. Across Alberta we see the difference is even greater as the total bankruptcies filed dropped 18.1% and the total number of proposals filed increased 14.3%.
For any of you who are not aware, a consumer proposal is one of the most common alternatives to bankruptcy, and one that clearly is becoming a more common option for those in financial distress. One of the major reasons for it’s increase in popularity is that it contains many of the benefits of a bankruptcy (i.e. court protection, the ability to stop a garnishee and court action, eliminate all interest etc.), avoids many of the disadvantages of a bankruptcy (i.e. monthly reporting, long term stigma of filing a bankruptcy, loss of assets etc.) and at the same time will allow you to pay a portion of your outstanding debt over time in a fashion that actually fits into your budget. It is an excellent alternative to the filing of bankruptcy and works very well for people who can’t afford to pay their debts in full but still have the ability to pay a portion of their debt.
Regardless of the statistics, the increasing amount of consumer debt, or the health of the economy. If you are struggling with debt you clearly are not alone and it is important that you know there are ways to deal with this debt. If you are not sure what way to turn I would recommend you talk to me or another Bankruptcy Trustee in your area. You will be provided a free consultation that is designed to help you to assess where your finances are at and what options you can qualify for. There is no cost or obligation for doing so and we are happy to help.