For the first time in four years, it’s the older demographic that is now dealing with insolvencies, according to a recent study. 

The study, conducted by licensed insolvency trustees Hoyes, Michalos & Associates Inc., the share of insolvencies among those aged 50 and older increased from 28.3 per cent in 2019 to 29.8 per cent in 2020. Following the onset of the pandemic, this share rose to 31.4 per cent. 

"Where younger debtors were filing insolvency at increasing rates before the pandemic, we saw a reversal of this trend and a shift towards older debtors post-pandemic,” said licensed insolvency trustee Doug Hoyes. “Income supports and deferral programs were not enough to deal with a lifetime of debt accumulation." 

Unemployment rate among insolvent debtors rises to 12 per cent 

The unemployment rate among insolvent debtors doubled to 12% in 2020. While job losses impacted all age groups, non-retired people aged 60 and older experienced the largest drop in debtor income, down 10.7%. 

"CERB softened the financial impact of COVID-19 job losses for younger debtors, but provided less cushion for older debtors whose income tends to be higher," said licensed insolvency trustee Ted Michalos. "Combine this with a significantly higher debt load among older debtors, and you still have a debt repayment problem." 

Debtors aged 50 and older owed an average of $65,929 in consumer credit, 12.6 per cent higher than the average insolvent debtor. Credit card debt accounted for 41 per cent of their overall debt load, compared to 34 per cent for the average insolvent debtor. 

"We need to rethink how much debt we continue to carry and for how long," said Michalos. "The impact of COVID-19 brought a level of job insecurity not felt by most Canadians for years. It should serve as a lesson that high levels of debt, at any age, can be catastrophic when combined with income loss."