Debt Management Solutions for Boomers and

Seniors

www.hoyes.com

Table of ContentsSeniors Growing Debt Crisis

Helping Parents With Debt

Death & Debt

Protecting Your Home

Considering Bankruptcy

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Canadians are taking on higher than ever debt loads with seniors and baby boomers showing one of the highest rates of debt growth in recent years.

• 1 in 3 retirees hold some form of debt1

• 2 in 3 pre-retirement seniors carry debt1

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Seniors Growing Debt Crisis

1 Statistics Canada “Retiring With Debt”

Seniors are facing financial pressures from all sides. They may be:

• Facing reduced income due to low interest rates, early job losses and even late in life divorce

• Caring for both aging parents & children

• Trying to maintain a pre-retirement lifestyle for a longer period of time

• Incurring health related costs and reduction in income due to illness

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Seniors Growing Debt Crisis

Aging debtors are relying on credit to make ends meet.

It’s not just entering retirement with debt that is the problem and it’s not all mortgage debt

• 80% of retirees with debt owe some form of consumer credit

• 20% of retirees over the age of 75 carried debt

• 17% carry a debt load of $100,000 or more with a median debt-to-income ratio of 286%

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Seniors Growing Debt Crisis

The propensity to carry debt into retirement is leading to an insolvency crisis among seniors.

Based on our Joe Debtor study, the rate of insolvency filings among older debtors (those 50+) in Ontario was 23% in 2009. This has jumped to 30% in 2013.

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Seniors Growing Debt Crisis

The average debt among insolvent boomers and seniors was $79,000.

• Help parents set up on-line banking. Ensure passwords are secure & kept confidential.

• Ask about any new contracts or agencies hired recently.

• If possible, monitor credit card activity for unusual or increased purchases. Credit card debts are an increasing problem for seniors.

• Ask if all mortgage and tax payments are up to date to avoid the risk of losing their home.

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Helping Parents with Debt

Older Canadians are embarrassed about debt problems. Encourage them to talk to a professional early to protect all their options.

Debts are not inherited in the case of the death of a spouse, dependent or parent.

Unless you have signed for the debt, known as a ‘joint debt’, you cannot be held liable for payment.

It is not possible to will debts to any party.

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Death & Debt

In the event of death, creditors will look to the ‘estate’ of the deceased. If no money is available, and the debt is not joint, then the creditors cannot pursue collection.

Half of all insolvent debtors over the age of 60 are living alone, 12% due to the death of a spouse.

While debts are not inherited upon the death of a family member, the surviving partner finds themselves trying to maintain joint debts and living costs on a single income.

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Death & Debt – Cont’d

Joint debts and living costs can become a financial burden upon the death of a spouse.

Older debtors may be faced with the contradiction of more debt than they can repay on their income while hoping to protect any assets they have built over time.

Consider these options to deal with debts:

1) Refinancing.

2) Consider a reverse mortgage.

3) File a consumer proposal.

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Protecting Your Home

Refinancing with a second mortgage is a good option if:

• You owe high interest credit card debt;

• You can afford the monthly payments;

• You expect to be able to repay your debts in full.

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Protecting Your Home – Cont’d

A reverse mortgage may be a good idea if:

• Your using the money to pay down higher interest debt;

• You have significant equity in your home but a low fixed income.

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Protecting Your Home – Cont’d

Avoid using a reverse mortgage to fund interest costs or if you still have significant unsecured debts.

A consumer proposal may be a good option if:

• You owe more than you own but have some equity in your house

• You want to keep living in your current home

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Protecting Your Home – Cont’d

A consumer proposal allows you to make a deal to settle your debts but keep your home or other assets.More information about consumer proposals can be found in our guide to Consumer Proposals

Personal bankruptcy provides protection from creditor action.

Pension income is not wages, and as such cannot generally be garnisheed by creditors.

Filing bankruptcy will stop calls from creditors.

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Considering Bankruptcy

Most seniors do not need to file bankruptcy unless they have non-exempt assets or income in the form of wages.

More information about personal bankruptcy can be found in our guide to Personal Bankruptcy

RRSP’s and RIF’s are exempt from seizure in a bankruptcy, except for contributions within the last year.

Other investments and any equity in your home are however realizable assets.

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Considering Bankruptcy – Cont’d

If you have significant non-exempt assets, consider filing a consumer proposal instead of bankruptcy.

Not sure which relief option is right for you?

Schedule Your FREE Debt Consultation

Or give us a call at 1-866-747-0660

We can help.