CANADIAN SENIORS’ DEBT LOAD ALARMING
TD Bank recently conducted a study which had surprising results; older Canadians have increased their debt load by 15% (an average of $6000/person) from the previous year. Seniors living in Alberta, Ontario and Quebec had the highest rates of debt accumulation in 2012.
This would not be as alarming if most seniors were not already living on limited, or fixed, incomes of moderate levels. So what is causing these increased levels of debt?
Causes of the increased debt load can be partially attributed to the general increased cost of living, but with most of senior debt being credit based, what is the basis for this debt increase?
Karen Horvath, an Alberta Bankruptcy Trustee at Grant Thornton Alger Inc. notes that in the case of one spouse passing away, it becomes increasingly difficult to cover costs of presents, housing and groceries on now a single source of income.
More and more, bankruptcy trustees and credit counselors are seeing seniors in their offices seeking financial options to handle their debt load. A debt load which is more and more carried into retirement. The stress that these older Canadians are now facing on retirement is significant. Once on a fixed income, it is often impossible to continue with the payments required to service debt even by making minimum payments Seniors are often forced to postpone retirement and work into their 70’s and 80’s to keep their households running. Others are forced back to work after trying to retire but not being able to service their debt. Finally there are some seniors who are incurring even more debt after retirement t to service existing debt repayment commitments. Although there are options available, many seniors as well as other age groups are not aware of the options available to help them manage their debt.
“We have seen cases where the husband never worried about life insurance, so the surprise finding out there are not funds to cover funeral costs can be a lot to handle.” Says Karen Horvath, Trustee at Grant Thornton Alger Inc.
The stigma of seeking advice for debt problems is as a strong factor for many seniors. So what is the solution? Many people would never think that bankruptcy is a solution for seniors.[AB1] It is not the only option seniors have; there is also the option of filing a consumer proposal to the creditors requesting a reduction in the debt or simply a deferral of payments. As Karen says “a lot of times this can be just enough assistance that it helps seniors, and other individuals, get relief and a solution to their debt, to be able to move forward”.