The Hoyes Michalos Joe Debtor 2024 Study
A summary of findings
Our Hoyes Michalos annual Joe Debtor study of our filings for the past year was released last month. As always, it is filled with data and analysis on the state of Canadian insolvent households and insights into what is driving the consumer credit surge. The study can be found here .
Methodology: a full statistical study of all of our firm’s insolvency filings (personal bankruptcies and consumer proposals) for the previous year. Create a profile of typical debtors that we see, broken down several ways (mostly demographically).
(Doug Hoyes and Ted Michalos also did an excellent summary podcast of Joe Debtor recently, found on our Debt Free in 30 podcast here.)
It tells the story of inflation, the cost of living, shifts in the nature of employment, and demographics.
Key findings
Unsecured debt:
in general was up 12.2% to $61K – also the largest incr in the life of the study (since 2011)
Credit card debt:
up 25.9% $16,199 to $20,398) - the largest incr since the study began (by comparison, avg Cdn cc debt up only 7%)
This is also up 47% in just two years (taking into account that during COVID people paid down CC debt).
Self-employment:
We are also filing more self-employed people than ever; 11% of our clients are self-employed now, up from 9% only last yr.
Reasons? A few:
Outsourcing; more companies are employing people on contract vs on payroll; this reduces their costs (tax obligations/source deductions); people are forced to essentially work for themselves, but then they often fail to take into account income tax remissions
Self-employment due to desperation/no choice; many today who are self-employed do not choose to be necessarily but are driven to
All of this leads to increasing tax debt, which we are also seeing:
o “average tax debt increased by 3.9%, reaching $21,280.”
Demographics: MILLENIALS
This age group is the story here; by far the largest increase in credit card debt – up a staggering 35% over 2023
Millennials also make up half of all our insolvency filings now
Also for millennials:
-16.4% avg debt incr (now $60k)
33% have student loans v 23% all other groups (makes sense but still heavy)
1/3 have payday loans (!); their access to credit is restricted
91% have credit card debt; it’s basically a given now for this age group
41% have tax debt; much of that CERB-related but also self-employemtn as mentioned earlier; also the gig economy – multiple jobs often means not enough tax deducted overall
Summation/factors contributing to insolvency filings:
Inflation/cost of living
COVID – financial/econ hangover
Self-employment on the rise/outsourcing/gig econ
Housing
Millennials
A look ahead/what to expect for 2025:
Increasing unemployment; what will tariffs do?
Increasing credit card debt and delinquencies as people hit their maximums
Mortgage renewals; the most are expected in 2025 and 2026; can people afford it?
Precon condo market decimation (for owners but also RE investors)
Car loan delinquencies; it’s one of your biggest total monthly expenses…
Increasing collection activity across the board, including CRA – drives insolvencies