Job insecurity, housing costs and mounting debts have a devastating effect on families – not only emotionally but financially.
In a recent study conducted by Hoyes, Michalos & Associates, one of Ontario’s largest personal bankruptcy and consumer proposal firms, six in ten insolvent debtors were families with an average household of three people. Tragically, 16% are also lone parents.
Even if your income is growing during your 30’s and 40’s, typically so are your debts. One in three insolvent debtors will have purchased a home and will see a dramatic increase in credit card use to cover home costs and family expenses. The average debtor between the ages of 30 and 49 has an unsecured debt burden (excluding mortgage debt) of almost $58,769. This includes a staggering $22,505 in credit card debt.
The average insolvent debtor is most likely to be married, however he has a higher than average chance of being divorced or separated at the time of his (or her) filing. While only 9% of Canadian adults were divorced or separated in 2012, 28% of insolvent debtors experienced a marital breakdown, three times the Canadian average. This is likely why 18% of all insolvent debtors in the study cited marital or relationship breakdown as a cause of their financial difficulties.
Financial problems and stress over money are one of the top causes of divorce. It is a myth however that bankruptcy causes divorce. The truth is that bankruptcy is all too often the financial outcome of divorce. Faced with overwhelming debt, couples begin to argue about money. When the stress leads to divorce or separation, the debt-divorce-debt cycle continues. Now separated, each ex-spouse finds themselves setting up their own household. They are now managing on one income rather than two and their costs have increased. Each partner now has their own rent, utilities and other expenses. Some may eat out more often than before. While adjusting to their new life, recently separated people often rely on credit card debt to pay the bills. Combine these added debts with the legal costs of a marital breakdown and debts grow even large. The end result all to often is the need to file bankruptcy or a consumer proposal to deal with resulting debts before they can move on.
Dealing with overwhelming debt causes both stress and anxiety for both you and your family. Talking to a professional is the best first step in taking charge of your financial situation so you can develop a plan to eliminate your debts and start over. Contact a professional Ontario bankruptcy trustee for a free, no obligation evaluation today and get some debt relief.