The percentage of insolvent debtors who are between the ages of 18 an 29 is increasing.  Living paycheque to paycheque, heavily indebted millennials are increasingly turning to payday loans as they struggle to keep up with student loan repayment and living expenses on a low income. This is contributing to the rise in young millennials filing a bankruptcy or consumer proposal.

Young Millennials Caught in Debt Trap

In our current study, 14% of all insolvent debtors are between the ages of 18 and 29, which is up from 12% in our previous two studies.

Debtors 18-292015-20162013-2014
% of all debtors14%12%
Unsecured debt$29,079$32,229
Debtor income$2,028$1,996
Unsecured debt-to-income120%135%
% own home5%10%
% use payday loans38%30%
% with student debt31%29%


Young insolvent debtors have the lowest unsecured debt-to-income ratio of all age groups, at 120%; however, it is the type of debt that they have which sets them apart from other debtors. Living paycheque to paycheque, young insolvent debtors are much more likely to use payday loans than any other age group. Of those aged 18–29, 38% have at least one payday loan outstanding. Student debt is also a major problem for young millennials, with 31% carrying a student loan—a significant increase from 24% just four years earlier. For young millennial debtors with student debt, their outstanding student loans accounted for 35% of their total unsecured debt.

Young debtors are more likely to list financial mismanagement and income loss as a primary cause of their insolvency. This is consistent with the fact that they are turning to payday loans in record numbers to make ends meet. Unstable employment and underemployment contribute to the fact that they have the lowest income of all age groups even though 85% of insolvent debtors between the ages of 18 and 29 are employed.

What is also interesting is the fact that it is young non-homeowners who are declaring insolvency. Only 5% of debtors aged 18–29 are homeowners in our 2017 study. In fact, these are millennials who are barely generating any savings. Only 23% of young insolvent debtors have an RRSP, and their average RRSP is just $2,722. This is less than the savings revealed in our 2015 study, when 26% of young debtors had an average RRSP savings of $3,125.

Job insecurity and the lack of a financial safety net, including an emergency fund, increases the risk that a young millennial will end up becoming insolvent once they begin to add to their student debt with credit cards, payday loans or other unsecured debt.

So, at least for now, it is not homeownership that is driving insolvency rates for young debtors but rather, it’s the fact that their income does not support their student loan and other debt repayment that is driving them further into the payday-loan trap.

THE YOUNG DEBTOR (18-29)
Personal Information
Male52%
Female48%
Marital status
   Married/Common Law26%
   Divorced or Separated6%
   Widowed0%
   Single67%
Average family size1.7
Likelihood of having dependant32%
Average monthly income$2,028 net of deductions
Total unsecured debt$29,079
Unsecured debt-to-income ratio120%
Likelihood they own a home5%
Average mortgage value$153,618
Detailed Information on the amount of average unsecured debt:
Personal loans$11,354
Credit cards$7,177
Taxes$3,151
Student loans$3,708
Other$3,690