Credit Cards Create Financial Abyss For "Joe Debtor"


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Look in the mirror. It is likely that you have more in common with the average bankrupt person than you may think.

UPDATE: Hoyes, Michalos updates our Joe Debtor study every two years. For the most recent results see here.

In a new study, Hoyes, Michalos & Associates Inc. reveals that the average bankrupt looks very much like the average Canadian. "We recently examined approximately 8,000 personal insolvencies filed in 2009 and 2010," said Douglas Hoyes, a trustee with Hoyes, Michalos & Associates Inc. "We discovered that a typical insolvent person, who we call "Joe Debtor (2011 study)", is a male, 41 years old. He has one dependent and has a monthly income of around $2,240, close to the Canadian average of just over $2,400. He is not that different than the average Canadian" concluded Hoyes.

"Where Joe Debtor differs from the average Canadian is in his level of debt," cautioned Ted Michalos, a trustee with Hoyes, Michalos & Associates Inc. "The average Canadian has consumer credit, excluding mortgages, of $16,399. Joe Debtor owes almost $60,000.”

The largest single category of debt for Joe Debtor is credit card debt. He owes almost $24,400, which is much larger than the average Canadian’s total unsecured debt. More than half of all insolvent debtors owe money on four or more credit cards, and 95% of all debtors owe money on at least one credit card.

"Carrying a balance on one or more credit cards is a recipe for financial disaster. Owing money on credit cards and other debts leads Joe Debtor to the financial abyss, because he's paying more than he earns each month to service his debt" concludes Hoyes.

Our study shows that 39% of insolvent debtors stated that job loss or reduced incomes contributed to their financial problems, 14% stated that a relationship break-up was a primary cause, and 55% admitted that they were over-extended and mismanaged their finances. Despite good health care in Canada, 12% 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. They do not follow the typical stereotype of the average bankrupt; in fact, they look like the average Canadian. The complete study can be found in our Joe Debtor report.

Joe Debtor
Personal Information
Average age41
Marital statusMarried
Average family size2 (including debtor)
Average monthly income$2,240 net of deductions
Average month income for all Canadians$2,419(1)
Total unsecured debt$59,814
Likelihood they own a home26% (1 in 4 debtors)
Average mortgage value$210,574
Detailed Information on the amount of average unsecured debt:
Bank loans$13,761
Credit cards$24,390
Finance company loans$4,997
Student loans$1,945

1. Statistics Canada: Personal Disposable Income per capita