KITCHEN, A, February 14, 2022 /CNW/ – The average insolvent debtor owed in 2021 $50,484 in unsecured debt, up 3.3% from 2020, the highest we’ve seen since 2016, according to a study conducted by licensed bankruptcy trustees Hoyes, Michalos & Associates Inc. The reason for the increase was higher outstanding tax obligations and student loan debt among the insolvent debtors.

“Tax debt has returned as the main debt driver of consumer bankruptcies,” he says Doug Hoyes, Certified Insolvency Practitioner. “This is despite a slowdown in the Canada Revenue Agency’s collections activity over the past two years.”

In 2021, 4 out of 10 bankrupt debtors owed taxes at the time of their filing. Tax debtors owed on average $19,776 in taxes and interest, from a low of $15,866 the year before. Taxes owed may include personal income tax, HST, withholding and property taxes.

“Much of the increase was due to tax liabilities created by CERB and CRB payments in 2020, where little to no withholding taxes were withheld,” he adds Ted Michalos, Certified Insolvency Practitioner. “From our perspective, this spike in tax bankruptcies is just the tip of the iceberg.”

Another worrying trend is a record percentage of defaulters struggling with student loan obligations. The average student loan debt among those applying for student loans was $17,005a staggering 11.5% increase, the highest level since our study began in 2011.

“The emergency student loan assistance in the form of deferrals and interest rate relief that was available during COVID-19 has not helped everyone and was likely a factor in higher outstanding student loan balances when filing for bankruptcy,” says Doug Hoyes. “The pandemic has worsened the long-term repayment terms for many millennials as they are more likely to be in precarious jobs impacted by the COVID-19 lockdowns.”

“Heavily indebted Canadians just can’t take a break,” he says Ted Michalos. “COVID-19 has resulted in a drop in income for our average customer, yet their housing and other living expenses continue to rise with no sign of inflation slowing anytime soon. Insolvent debtors only remains $200 a month after paying for bare necessities to pay off their debt. It’s not manageable.”

For more information, see Joe Debtor’s full study here: https://www.hoyes.com/press/joe-debtor/.

About Hoyes, Michalos & Associates, Inc.

Hoyes, Michalos & Associates Inc., a licensed receivership firm co-founded by Doug Hoyes and Ted Michalos in 1999 has established itself as the leading voice on personal debt issues ontario. Hoyes Micah ontario. Visit www.hoyes.com for more information

SOURCE Hoyes, Michalos & Associates Inc.

For more information: Douglas Hoyes, CPA, Licensed Insolvency Practitioner, [email protected]; Ted Michalos, CPA, Licensed Bankruptcy Practitioner, [email protected]1-866-747-0660