Who files bankruptcy in Canada? Our 2015 Joe Debtor study reveals who is at risk and what you can do if you are struggling with debt.

1. Joe Debtor:
Marginalized by Debt
2015 Study of
Insolvent Debtors
www.hoyes.com

2. Table of Contents
Why We Conduct Our Study
How We Gather Information
Causes of Insolvency in Canada
Meet Joe Debtor
At-Risk Groups for Filing Insolvency
Insolvent Senior (60+) Debtor Profile
Insolvent Student Debtor Profile
Insolvent Lone Parent Debtor Profile
What it Means for Canadians
Bankruptcy is Not Your Only Option
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15
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3. • Our Joe Debtor report has
been published every two
years, for the past eight years.
• We hope to inform the public
about personal finance trends
and to identify individuals at-
risk for filing insolvency.
• The statistics collected in our
study help us to better
understand our clients so that
we can offer advice that will
benefit their unique situation.
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Why We Conduct Our Study

4. • As required by law, Hoyes Michalos gathers information about each
person that files with us, including:
– income, family size, gender, age, assets and debts.
• Our current study is a review of almost 6,000 personal insolvencies
between January, 2013 to December, 2014.
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How We Gather Information

5. Causes of Insolvency in Canada
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Throughout Canada, just over 118,000 individuals filed a consumer proposal or
personal bankruptcy in 2014.1
The top reasons for financial difficulties include:
Cause of Financial Difficulty2 Rate
Overextension of credit, financial mismanagement and
unexpected expenses
55%
Job related (unemployment, layoff, reduction in pay) 37%
Marital or relationship breakdown 19%
Illness, injury and health related problems 15%
1. Office of the Superintendent of Bankruptcy Canada, Insolvency Statistics in Canada
2. Tabulated from the reasons given by the debtors on the Statement of Affairs, when asked to give reasons for their financial difficulties. The numbers do not add to
100% since some debtors give more than one cause for their insolvency.

6. Meet Joe Debtor
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Contrary to popular belief, the average insolvent debtor is not unlike the
average Canadian. Joe Debtor is:
• 44 years old
• Male
• Employed
• Married with at least one child
Joe’s Debt Levels
Type of Debt Amount of Debt
Unsecured Debt $56,545
Mortgage Debt $197,137
Personal Loan Debt $19,266
Credit Card Debt $20,776
Tax Debt $9,114
Student Loan Debt $1,849

7. At-Risk Groups for Filing Insolvency
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We’ve identified three at-risk groups:
1. Seniors
2. Students
3. Lone Parents
For each of these at-risk groups, unique
factors push them further into debt.
We’ll take a look at each profile to
determine specific causes for their high
debt levels and offer solutions for
dealing with debt.

8. 8
Insolvent Senior (60+) Debtor Profile
• Seniors account for 10% of all files
included in our study.
• Average Unsecured Debt: $69,031
When Compared to Other At-Risk Groups:
 Highest Credit Card Debt at $33,355
 Highest Tax Debt: $12,571
 Highest Debt-to-Income Ratio: 260%
 Highest Payday Loan Debt: $3,693
 Carrying 3.7 payday loans on average

9. 9
Senior Debtors on a Fixed Income
• Living on a fixed income,
seniors are supporting larger
amounts of debt with decreased
cash flow.
• 30% of all insolvent debtors
surveyed were over the age of
50.
• Seniors’ desire to pay back
their debt is made harder when
coupled with an inherent desire
to financially help family
members.
• To combat increasing debt, a reduced income and external factors that affect their
cash flow, many seniors are taking on part-time work and high interest loans to
make ends meet.

10. 10
Senior Debtors Turning to Payday Loans
• With the highest unsecured
debt load of all identified at-
risk groups, averaging $68,677,
seniors are turning to high
interest loans in an attempt to
pay down their debt.
• We found that 1 in 10 seniors
(9%) carried at least one
payday loan, but the average
insolvent senior had 3.7
outstanding loans at the time
of insolvency.
• Average payday loan debt:
$3,693 (equal to 167% of their
income)

11. 11
Senior Debtor Solutions
1. Pre-retirees facing debt should review their options to eliminate that
debt before they retire and shift to a lower fixed income.
2. Avoid cashing out savings plans like RRSPs that will be taxed upon
withdrawal. If you’re struggling to pay off your debt and need
professional help, laws in Ontario ensure that you keep your
retirement savings. Learn more here.
3. Although you may want to help your children or grandchildren with
their financial difficulties, it’s important that you deal with your own
debts first so that you don’t solve one problem while making another
far worse.

12. 12
Insolvent Student Debtor Profile
• Student debtors account for 13.4%
of those included in our study.
• 60% of that demographic are
female.
• Average Student Loan Debt: $13,818
Jane Student Vs. Joe Student
 Jane student owes $14,748
 19% more than Joe Student
 Jane and Joe Student earn a similar
salary.
 Joe Student is 91% employed compared
to 83% for Jane Student.

13. 13
Student Debtor More Likely to be Female
• 13% of all clients surveyed in the
study had student loan debt. Of
those clients, 6 in 10 (60 %) were
female.
• Women are more likely to be out
of work for factors such as
maternity leave, disability and
unemployment, making paying
of student loan debt even
harder.
• For the average female student
debtor, student loans were listed
as the primary financial problem
leading to their insolvency.

14. 14
Student Debtor Solutions
Be Pro-active:
• Avoid using credit cards as a source of cash flow. Piling debt
on top of student debt is not the answer.
• Take advantage of government repayment assistance
programs and negotiate new payment arrangements to help
manage your finances once out of school.
• Create a budget and a timeline for dealing with your
student loan debt.
Get Professional Help:
• If student debt is affecting your debt levels, seeking help
from a Trustee in Bankruptcy might be the right choice.
• The law states that once you have been out of school for
seven years or longer (The 7 Year Rule), student loan debt is
dischargeable in a bankruptcy and consumer proposal.

15. 15
Insolvent Lone Parent Debtor Profile
• Lone Parents account for 18% of all
files in our study.
• 75% are female.
• Average Unsecured Debt: $52,928
Lone Parent Debtors Vs. Joe Debtor
 Average family size: 2.7
 Joe Debtor’s family size: 2.2
 86% are employed, but household income
is 4% below Joe Debtor’s.
 Less overall debt ($52,928 vs. $56,545),
but struggle with student loans (19% vs.
13%), car loans (40% vs. 37%) and accounts
in collection.

16. 16
Lone Parent Debtors Struggling with the Cost of Living
• 1 in 5 debtors listed marital
issues as cause of debt
problems.
• 75% of lone parents are female
and more likely to be off work
for things like maternity leave or
family sick leave.
• Lone parents are more likely to
borrow to pay for ordinary costs
such as car loan debt, mortgage
debt and student loan debt.
“[Lone parents] are borrowing to live” – Doug Hoyes, Co-Founder
Hoyes, Michalos & Associates

17. 17
Lone Parent Debtor Solutions
• Assess your income and expenses each month. Use this
information to create a budget.
• Lone parents are more likely to carry debt on necessary expenses (like a
vehicle to get to work or a house). Review the cost of these items and
find out whether changes can be made; such as trading in for a
smaller/older car, downsizing your home or deciding to rent.
• Avoid using credit for every day expenses like groceries. It’s better to
budget for these expenses and pay with cash or debit so that you’re using
funds that you physically have in your account. The perception of free
money can be enticing, but it comes with high interest.
• Finally, if your debt has become unmanageable, it’s time to seek help
from a professional. They can review all of your options and come up with
a solution that will work for you and your family.

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What it Means for Canadians
• Canadians are not worried about high debt levels because interest
rates are low, making the cost to carry debt more affordable.
• For those not overextend and not reliant on high cost credit options,
low interest rates make debt manageable and explains the significant
reduction in the overall amount of insolvencies filed since 2009.
• However, for those groups that we have identified from our study as
at-risk for filing insolvency, they tend to be caught in a cycle of debt
from which it is difficult to escape.
• The most worrisome trend that our study revealed is the use of high
interest payday and quick cash loans by all of our at-risk groups. This
pattern suggests that debt has become a survival tool for many
Canadians feeling like they have no other option.

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Bankruptcy is Not Your Only Option
• For those who are in need of professional help, you have options.
• Not only did our study identify at-risk groups for filing insolvency, but it
also revealed that more Canadians are choosing to file consumer proposals
as an alternative to bankruptcy.
• In our study, proposals accounted
for 55% of insolvencies, while
bankruptcies made up 45%.

20. Worrying about money and debts has
a devastating effect on individuals
and families, alike.
Recognizing the need for help and
talking to a reputable professional,
such as a trustee in bankruptcy (like
Hoyes Michalos) for advice, is the
first step toward eliminating
overwhelming debt.
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The Solution to Problem Debt!

21. Read the full Joe Debtor report
You have options.
We can help.