The number of young people unable to repay their debts has reached a peak, as they now account for almost a third of bankruptcy filings in Quebec, according to data from our Bureau of Investigation.
“Young people tend to want to have everything, to own everything. But that’s not how it works. […] I know it now,” admits Stéphanie (fictional name), a 23-year-old young woman who went bankrupt in 2020 (testimony will be read tomorrow).
In Quebec, young people aged 18 to 34 accounted for 22.5% of bankruptcy filings in 2011. In 2022 the share had increased to 29.2%. A 15-year high, according to the Office of the Superintendent of Bankruptcy.
7500
Last year, almost 7,500 young people filed for bankruptcy.
Although we are still below pre-pandemic levels in absolute terms, the upward trend is notable and is likely to accelerate, according to several experts.
“It’s been very clear since returning from vacation [de 2022-2023]There is a significant increase. “Young people, the group between 20 and 35 years old, they are the ones who submit the files,” reveals trustee Mathieu Roy of the M. Roy et Associés office in an interview.
“People under 30 are the ones whose credit card balances rise the fastest,” adds Pierre Fortin of Jean Fortin et Associés.
Pierre Fortin, President of Jean Fortin & Associés. Photo Pierre-Paul Poulin, Le Journal de Montréal / QMI Agency
A $15,000 bankruptcy
Mathieu Roy indicates that the bankruptcies he is currently experiencing are not necessarily large amounts. In some cases, these are amounts as small as a few thousand dollars. “Typically it’s $15,000 to $18,000 in debt,” he says.
He mentions that many young people under 35 generally feel less bad about bankruptcy than their elders. However, the consequences should not be taken lightly, he warns.
“There is a wildcard in the system. But there are years-long impacts on the credit file,” he explains.
Bankruptcy among young people
Reasons that young people give as justification for their bankruptcy*
1.
Poor financial management
Number of bankruptcy filings by 18 to 34 year olds
$4722
Median credit card debt of bankrupts under 35 in 2022 in Quebec
In Canada, between the second quarter of 2022 and 2023, the bankruptcy rate increased by 17.4% among those under 25 and by 20% among those aged 26 to 35.
Sources: Office of the Superintendent of Bankruptcy and Equifax / * January to May 2023
Creditors show their fangs
Another factor to consider: the awakening of creditors. Trustee Sophie Desautels of Raymond Chabot Grant Thornton says she has seen a change in tone for some time among creditors involved in numerous cases, such as Revenu Québec and credit card companies.
“In our offices we are seeing a lot more seizures and seizure threats. [Pendant la pandémie]Creditors have granted payment deadlines. “It’s back to how it was before,” she explains.
And in her opinion, it is not only the poorest who are affected by the current situation of inflation and the rapid rise in interest rates. “We see young doctors who have been given incredible lines of credit going bankrupt. I wouldn’t say it’s common, but it does exist,” she says.
Why do young people go bankrupt?
Easy access to credit
There are more ways than ever to spend money without always being aware of it, emphasizes trustee Pierre Fortin of Jean Fortin et Associés, especially in a post-pandemic context where there are fewer restrictions. “Everything can be financed today: Amazon, travel, spas, pergolas, patio furniture,” he says.
The consumption system
“We have a system based on consumption. No government wants to restrict that. If the income is not enough, we resort to loans. The system doesn’t help. This means that the risk of getting into debt is significantly greater than in the past,” continued Pierre Fortin.
Lack of education
The lack of education and the difficulty of finding employment play a major role in current developments, even with full employment in Quebec, emphasizes Mathieu Roy. “The people who come to us have no special training. They don’t have the training needed to get paid work,” he said.
Virtual payments
Johanne Leblanc / Photo Jean-François Cloutier, JDM
According to Johanne Leblanc, budget consultant at Option Consommateur, the increasingly abstract side of payments, which are almost sometimes done with just one click, is playing tricks on young people.
“We’re pacing a bit and our phone is already connected to our bank account and credit card. There are far fewer periods of reflection required before one can receive a good or service,” she notes.
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