Tag Archives: bankruptcy

BC, Canada, debt, economy, opinion, predictions, rates

The problem with low debt levels

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We’ve seen lots of warnings about dangerously high consumer debt levels in Canada for years now, but here’s something new: Millennials lack of debt may be a sign of trouble.

Insolvency filings by consumers have started to edge higher after a long decline that began after the last recession. As has already been widely noted, the share of insolvencies accounted for by seniors is growing faster than any age group. What has not had much attention is the fact that the young-adult share is falling. Could this be a rare bit of good news for a cohort of the population that has been struggling financially?

Falling insolvencies among young adults definitely sounds good, but every silver lining must have a cloud right?  What’s the chicken-little take on this situation?

Hoyes Michalos recently produced an analysis called Joe Debtor that looked at people who make insolvency filings. The firm says 86 per cent of debtors ages 18 to 29 are working, but their average income is the lowest of all groups at $1,996 on a net basis per month. The average unsecured debt for the group is $32,229, also lowest of all age groups.

Personal loans are the biggest debt component at $11,841 for young adults making insolvency filings, followed by credit cards at $9,858. Almost 30 per cent have student debt, with the average amount owed averaging $3,716.

Their problems in today’s economy may have kept millennials from worse debt problems, Mr. Hoyes suggests. “If you haven’t been able to get a decent job, then it’s a lot more difficult to get into a huge pile of debt.”

In today’s debt-hungry world a lack of bankruptcies is indicative of a low income, how’s that for a bummer?

Open Topic

FFFA! Debt, Zoocasa, Sellers, Economy, Rates

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123 Comments

It’s the end of another work week and that means it’s Friday Free-for-all time!

This is our regular end of the week news round up and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

–Realtor Hunger Index at 54%
–Savings rate hits 5 year low
–Zoocasa to stop publishing data
–First Sellers market in 4 years
–No more rate cuts?
–Highest gas prices in North America
–How do you make a return?
–Sell your toys, don’t buy a house
–Squamish bankruptcy for Rommel
–What to talk about instead of RE?
–Consumer debt hits $1.53 Trillion
–

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Open Topic

FFFA! Bubble, Oil, Toil

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183 Comments

You made it to the weekend!

And that means its time for another Friday Free-for-all! This is our regular end of the week news round up and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

–End of the boom?
–A look at bankruptcy and foreclosure
–Alberta anxious over dropping oil
–HAM or BCM?
–Prices wont go up or fall
–

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

BC, Budget, debt, economy

BC has the highest personal debt loads

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We’re number 1!

The province of British Columbia has the highest level of personal debt anywhere in Canada and it’s still growing.

With incomes low and house prices high, it’s not an entirely unexpected result.  But even if you remove house debt we have very high levels.  Not including mortgage debt, simple consumer debt averages $37,879 in BC.

And that of course has led to a rising number of bankruptcies. In the last four years bankruptcy rates across Canada have gone up 11%, here in BC the number is up 42%.

That Province article also talks about the ‘elation’ of declaring bankruptcy, but that usually only occurs after some one has used up all their other options and burnt up money they could have kept:

“People often come to see a trustee as a last resort, when credit is turned off and they can no longer borrow from one card to pay another,” Mantin says. “They come in and say ‘I regret that I didn’t know about these options sooner. All I’ve done over the last two years is tread water.'”

Frantic people make decisions that will compromise their future, Mantin says. One of the worst is cashing in RRSPs.

For one thing, only the last 12 months of RRSP contributions need be surrendered in a bankruptcy. And those who sacrifice an RRSP without learning to live within a budget are not facing the underlying issue, Mantin says.

“Unless they’re forced to make a behavioural change, I often find they’re in the same position a year or two later,” he says. “They’ve dealt with the short-term debt but haven’t solved the budget problem so they run their debts up again.”

Read the full article here.

advice, BC, debt, economy, opinion

Dipping into RSP to pay the mortgage.

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There was a discussion here the other day about someone dipping into their RSP to pay the mortgage on the investment property they couldn’t sell.

It brought up comment anecdotes about others dipping into their retirement funds to pay the mortgage.

DON’T DO IT!

RSPs are protected in bankruptcy, but if you withdraw from them to pay for a losing asset and end up going bankrupt you lose not just the home, but your retirement savings as well.

And you want to retire don’t you?

You should exhaust all other options before touching your RSPs and that includes the option of bankruptcy.  Losing your home isn’t nearly as bad as losing your home and all of your retirement savings.

Real estate is not always the direct path to riches, leverage is a beautiful thing on the way up, but it can really bite on the way down.   Just ask anyone in who bought in the hot bubble markets of the US in 2005.

Don’t make the mistake of throwing away your retirement savings, especially if you don’t have a lot of time to start over with your savings.