The typical person who files for bankruptcy in Canada is a 41-year old male owing $59,800 to something that isn't a mortgage, a report from an Ontario-based insolvency trustee said Monday.

Kitchener-based Hoyes Michalos & Associates published a report that draws on an analysis of the 8,000 customers the firm assisted in 2009 and 2010.

While far from scientific, the report paints a composite of what the typical Canadian who undergoes bankruptcy proceedings looks like.

"While many of our debtors admit they may have mismanaged their money, the vast majority of people we meet with are not bad people, and we believe it is important to put a 'face' on the average insolvent person — we call him Joe Debtor," the report said.

Warning signs

  • Do you avoid opening the mail if it is a bill?
  • Do you only make minimum payments on your debts or have you missed a payment because of a short-term cash crisis?
  • Will you need to borrow money in the event of an emergency like a car repair?
  • Are you close to your credit card limits? Are you using one card to pay another?
  • Are you unable to qualify for further lending at low interest rates?

If you answered yes to any of these questions you may be at risk of becoming Joe Debtor, the report warns.

According to Hoyes, Joe Debtor is likely a married man or formerly married. About 45 per cent were married or living common law at the time of filing. He likely lives in a household with at least one other person, and he takes home $2,240 a month after taxes — slightly below the Canadian average of $2,419.

"The fact is the average insolvent person is working and earns approximately the same amount as the average Canadian," the report said.

In any given year, more than 100,000 Canadians begin bankruptcy proceedings or file some sort of proposal to creditors. In the past two years, some 58 per cent of the people who used Hoyes's services were men.

If Joe is similar to most Canadians in his income level, differences start to emerge on the expense side of the ledger. Joe Debtor owes a total of $59,800 in debt that isn't mortgage-related, including $24,390 on credit cards, $13,761 on bank loans and lines of credit and $5,412 in unpaid taxes.

The average Canadian over the age of 18 owes $16,399 outside of mortgage debt, official data shows.


A shopper uses her credit card to pay for a purchase. Canadians who go bankrupt owe an average of $24,390 on credit cards, a new report says. ((Fred Prouser/Reuters))

The average debtor carries four credit cards. Forty-nine per cent of filers had at least one retailer's credit card with an outstanding balance of $3,090 on it.

The average debt load of those who undergo bankruptcy has increased by 17 per cent since 2008, and a little more than one in four of these people own their own home.

The report found that 39 per cent of insolvent debtors stated that job loss or reduced incomes contributed to their financial problems, 14 per cent cited a relationship breakup as a primary cause, and 55 per cent admitted they were over-extended and mismanaged their finances.

Despite good health care in Canada, 12 per cent listed health reasons (injury, disability, medical conditions) as a cause of their insolvency.

"Most Canadians in financial difficulty are good, hard-working people, but due to divorce, job loss, health crisis and over-use of credit, are forced into bankruptcy," the report said. "They do not follow the typical stereotype of the average bankrupt; in fact, they look like the average Canadian."

The general myth is that filing for bankruptcy may cause more family stress and may even lead to divorce. But the Hoyes report found that the opposite is actually more likely to be true. "More than one-quarter (26 per cent) of our clients were separated or divorced at the time of their filing and 14 per cent of our clients cited marital or relationship breakdown as the cause of their financial difficulties," the report said.

The report noted that  39 per cent of the firm's clients indicated that job related issues contributed to their financial difficulties. That was up from 33 per cent in 2008.

Some 60 per cent of debtors were between the ages of 30 and 59, but the firm has had clients as young as 18 and as old as 89 over the past two years.

Despite the stereotype that bankrupt people are unemployed, Hoyes found that 80 per cent of filers were employed at the time of filing. Only 13 per cent were unemployed. For comparison purposes, Ontario's unemployment rate was roughly 9 per cent for much of the past two years.

Some four per cent of filers were retired and 3 per cent were on long-term disability.

"The current economic climate, combined with easy access to credit has increased the risk of insolvency for the average Canadian," the report concluded. "Based on our experience, many Canadians are only one or two paycheques away from serious financial problems."