Thomson report

The average Canadian who files for bankruptcy owes $59,800 not counting his mortgage and is a 41-year-old married man with four credit cards, according to a report by a Kitchener-based bankruptcy trustee.

The information, released by Hoyes Michalos & Associates says this amount owed by the average bankruptcy filer is about three-and-a-half times more than the debt level of the average Canadian.

The report is based on an analysis of 8,000 insolvency filings the firm dealt with in 2009 and 2010 and offers a profile of men, women, and seniors.

The report, called “Joe Debtor: The Face of Bankruptcy” found:

58 per cent of those who file for bankruptcy are male and they take home $2,240 a month after tax, slightly less than the national average.

60 per cent are between the ages of 30 and 59.

The average bankrupt has credit card debt of $24,400, owes $13,800 to banks, $5,400 in back taxes, and has other debts worth about $16,200, owed to finance companies, payday loans, for student loans, and to family and friends.

The number of over-55s in financial trouble is increasing and their debts are greater.

The report takes aim at the assumption that people who file for bankruptcy are unemployed: in fact, the average insolvent person is working and earns close to the Canadian average of $2,419 per month.

The report found that between 2008 and 2010 the average debt carried by those who file for bankruptcy increased 17 per cent. The largest increase was in credit card debt – which grew by about one-third.

There has also been an increase in the number of people over age 55 who are snowed under by debt. In the same two years the portion in that age group rose to 16 per cent from 12.5 per cent.

On average, debtors in the 55-plus group owed about $74,000 in unsecured debt, including credit card debt of $37,000. Half of these debtors are living on their own but one-third still has a dependant at home. Their average take home pay was $2,133, well below the Canadian average.

Only one-third of older bankruptcy filers had RRSP savings and the average total value was about $30,000.

Approaching retirement without a safety net savings, combined with higher debt levels, significantly increases the risks of bankruptcy.

The profile of the average student debtor is a single female, 35, owing about $50,000 of which about $14,400 are student loans. She is also more likely to be divorced or separated and a single parent.

The firm’s research also shows that more than half of bankrupts admitted that they were overextended and mismanaged their finances, but that mismanagement was typically caused or dramatically increased by separation or divorce, job loss or personal illness.

Some economists say the odds of a national crisis spawned by consumer debt are remote as the economy continues to recover and add jobs.

But the Bank of Canada has been sounding the alarm on household debt for months, warning that interest rates are now set to rise from record-low levels, and that may put some consumers at risk.