Canadian Consumer Debtor Profile – 2019

The Office of the Superintendent of Bankruptcy (OSB) is part of the department of Innovation, Science and Economic Development Canada. Its role is to ensure that the rules and regulations set out by the Bankruptcy and Insolvency Act (BIA) are followed. To do this, the OSB completes regulatory, administrative, and supervisory tasks. Some of the most important tasks include licensing and overseeing Licensed Insolvency Trustees (LITs), those responsible for handling the estates of debtors, keeping records of estates, and providing statistics for the Canadian insolvency system.

As part of the government’s commitment to openness, accountability, and public engagement, the OSB has developed the Canadian Consumer Debtor Profile report, which contains consumer insolvency statistics.

In 2019, there were 137,178 consumer insolvency filings, of which 40% were bankruptcies and 60% were proposals. That year also had the highest insolvency rate since 2011, with 4.6 out of every thousand adult Canadians filling for insolvency.

Canadian Consumer Debtor Profile 2019 infographic

Debtor Characteristics

While 53% of debtors identified as Male and 47% identified as Female, these numbers were 49% and 51% respectively among the general population.^Footnote1 The marital status of debtors was divided into four categories: 38% Married/Common-law, 37% Single, 22% Divorced/Separated, and 3% Widowed. In contrast, the marital status for the general population was 59% Married/Common-law, 26% Single, 9% Divorced/Separated, and 6% Widowed.^Footnote2 The average debtor was 47 years old with a household size of 2.1 people. In 2019, 22% of debtors had previously filed for bankruptcy. Of these repeat debtors, 87% had filed for only one previous bankruptcy. Only 16% of debtors lived in rural areas while 84% lived in urban areas, which is roughly the same distribution as the general population.^Footnote3

Income and Expenses

In 2019, debtors’ median monthly household income was $2,717, while median household expenses were $2,780, leading to a monthly net deficit of $63. In comparison, as of 2017, the median monthly household income for the general population was $5,800.^Footnote4 The median monthly debtor expenses for common categories are as follows: Housing - $1,075, Living - $570, Transportation - $352, Insurance  $133, Personal - $120.

Assets and Liabilities

The median total assets for debtors in 2019 were $12,731 and the median total liabilities were $51,904, for a net difference of $39,173. In contrast, as of 2016, the median household assets for the general population were $440,200 and the median debts were $80,600, for a median net worth of $295,100.^Footnote5

Among debtors, 65% owned a vehicle with a median value of $8,346. Only 21% of debtors owned a home with a median value of $210,000 and a median mortgage value of $180,923. The most frequent liability category was credit card debt. Among debtors, 88% had credit card debt with a median debt of $13,827. Loans were another frequent liability and are divided into four categories: bank loans, finance company loans, student loans, and loans from individuals. Of these, bank loans were the most frequent, with 56% of debtors having bank loans with a median debt of $18,300. The second most frequent were finance company loans, with 37% of debtors and a median debt of $11,109. Third were student loans, with 13% of debtors and a median debt of $10,500. The least frequent were loans from individuals, with just 2% of debtors and a median debt of $9,746. Another frequently identified liability was taxes, with 37% of debtors owing taxes with a median debt of $5,598.

Reasons for Financial Difficulty

The top five debtoridentified reasons for financial difficulty in 2019 were: loss of income – 37%, medical reasons – 23%, relationship breakdown – 15%, business failure – 7%, and tax liabilities – 6%.

69% of debtors provided reasons for financial difficulty that can be categorized under the heading “Financial Mismanagement”. This category has been excluded due to its limited analytical value.

Age Brackets

The debtor population has notably different characteristics when stratified into age brackets. For this report, we divided the population into four age brackets:

Under 35

The debtor population under the age of 35 had the fewest liabilities, with a median value of $39,108 ($51,904 all ages). This population also  had the highest frequency of student loans, with 28% of debtors (13% all ages). Additionally, 60% of these debtors were single (37% all ages) and only 12% owned a home (21% all ages).

35 – 50

Debtors in the 35 – 50 age bracket accumulated the most liabilities, with a median value of $61,549 ($51,904 all ages). Additionally, this group had the highest median household income and expenses, with $3,135 ($2,717 all ages) and $3,200 ($2,780 all ages) respectively. This age bracket also had the highest percentage of married/common-law debtors, with 42% (38% all ages) and the largest average household size, with 2.5 (2.1 all ages).

50 – 65

Debtors in the 50 – 65 age bracket had the highest frequency of tax debt, with 41% (37% all ages), as well as the highest median tax debt, with $7,100 ($5,598 all ages). This group cited medical reasons 29% of the time as a reason for financial difficulty (23% all ages) and had the highest divorce/separation rate, with 28% (22% all ages).

65+

Debtors in this age bracket had the highest median credit card debt, with $18,700 ($13,827 all ages). In addition, this group had the lowest median income, with $2,170 ($2,717 all ages) and the lowest median expenses, with $2,235 ($2,780 all ages).

Appendix

Methodology

The data in this report was obtained from statutory forms submitted to the Office of the Superintendent of Bankruptcy (OSB), which are stored in the OSB’s dynamic transactional database. Except for the first section on Total Consumer Insolvency Numbers, this report includes only primary estates filed in 2019 with 50% or more of their debts classified as consumer. Additionally, a valid Form 65, Monthly Income and Expense Statement of the Bankrupt/Debtor and the Family Unit and Information (or Amended Information) Concerning the Financial Situation of the Individual Bankrupt and Form 79, Statement of Affairs (Non-Business Bankruptcy/Proposal) on file was required.

Notes

1. Total Consumer Insolvency Numbers

Insolvency Definitions

1. Insolvency: The inability of a debtor to pay off debt as it becomes due.
2. Bankruptcy: Governed by the Bankruptcy and Insolvency Act, bankruptcy is a formal process whereby debtors who cannot meet their obligations sign over all of their assets—except those exempt by law—to a Licensed Insolvency Trustee (LIT). The LIT’s role includes selling off those assets to satisfy outstanding debts. Once debtors are formally declared bankrupt, lawsuits by creditors are stayed and garnishments against debtors’ salaries stop.
3. Proposal: A formal offer by a debtor under the Bankruptcy and Insolvency Act to creditors to settle debts under conditions other than the original terms.

 2. Debtor Characteristics

1. Cases of debtors with a previous bankruptcy are defined as insolvencies in which the debtor had previously filed for one or more bankruptcies.
2. Urban/Rural: Debtors are identified as urban or rural based on their postal code. Rural postal codes are identified by a zero in the second position of the forward sortation area (the first three digits of the postal code). New Brunswick does not have this standard rural postal code identification system and is excluded from the comparison.

3. Reasons for Financial Difficulty

The reasons for financial difficulties categories identified in this report are based on an analysis of the text responses provided by the debtor to the OSB on the Form 79, Statement of Affairs. Our analysis uses a combination of business rules and business intelligence tools to separate the information into 13 categories selected by the OSB. A debtor can cite more than one reason for insolvency; therefore, multiple reasons may be declared for each debtor. In 2019, 69% of debtors provided reasons for financial difficulty that can be categorized under the heading “Financial Mismanagement”. This category has been excluded due to its limited analytical value. It is, however, included in the appendix tables. Additionally, 3,905 debtors are excluded from this section because the reason they listed could not be categorized.

Categories

1. Loss of income: Reduction of revenue, from work or other sources, over a given period of time. Unemployment, job loss, seasonal work, recessionrelated income loss (stocks, etc.), difficulty finding work, pay cut, sporadic employment (including part-time work) and reduction in household income cause a loss of income. Loss of income may be one factor that causes insolvency.
2. Medical reasons: The treatment or prevention of an illness or injury, experienced by the debtor or a family member, that prevents the debtor from working to his/her full capacity. Medical reasons may be one factor that causes insolvency.
3. Relationship breakdown: The failure of a marriage, common-law relationship or the existence of marital problems. Relationship breakdown can cause an increase in expenses or a reduction of household income and may be one factor that causes insolvency.
4. Business failure: Lack of success of the debtor’s business ventures. The financial losses caused by a business failure may be one factor that causes insolvency.
5. Tax liabilities: Total amount owed to a taxing authority (municipal, provincial or federal government).The debtor’s inability to pay tax liabilities may be one factor that causes insolvency.

4. Assets and Liabilities

1. Assets: What a person owns that can be sold or used to pay a debt.
2. Liabilities: An amount owing by one person (a debtor) to another (a creditor), payable in money, goods or services.

 5. Income and Expenses

1. Family income refers to the net income of the debtor’s household. This includes singleperson households.
2. Family expenses are the expenses for the debtor’s entire household. This includes singleperson households.
3. Expense definitions
   1. Housing expenses: Rent/Mortgage/Hypothec, Property taxes, Condo fees, Heating/gas/oil, Telephone, Cable, Hydro, Water, Furniture, and Other
   2. Living expenses: Food/Grocery, Laundry/Dry cleaning, Grooming/Toiletries, Clothing, and Other
   3. Transportation expenses: Car lease or payments, Repair/Maintenance/Gas, Public transportation, and Other
   4. Insurance expenses: Vehicle, House, Furniture/Contents, Life insurance, and Other
   5. Personal expenses: Smoking, Alcohol, Dining/Lunches/Restaurants, Entertainment/Sports, Gifts/Charitable donations, Allowances, and Other
4. The payment category was omitted from the report because the main expenses in this category are not expenses that the debtor experiences outside of insolvency; they are payments to the LIT for expenses related to the insolvency process.