Credit Card Debt Among Insolvent Debtors Surges 26% in 2024, Signals Broader Economic Stress

KITCHENER, ON, Feb. 10, 2025 /CNW/ - The average insolvent debtor's credit card debt surged by 25.9% to $20,398 in 2024, marking the sharpest annual increase since the study began in 2011, according to research conducted by Licensed Insolvency Trustees Hoyes, Michalos & Associates Inc.

"The dramatic rise in credit card debt tells a troubling story about the financial health of Canadian households," says Doug Hoyes, Licensed Insolvency Trustee. "We're seeing consumers increasingly relying on credit cards not for discretionary purchases, but to cope with basic living expenses in the face of persistent inflation and higher interest rates."

The study found that credit cards now account for 34% of total unsecured debt among insolvent debtors, up from 30% in 2023. The increase affected all age groups, with millennials experiencing the steepest rise at 35.0%.

"What's particularly concerning is that these insolvency statistics are just the tip of the iceberg," says Ted Michalos, Licensed Insolvency Trustee. "For every person who files insolvency, many more Canadians carry unsustainable credit card balances, struggling silently with minimum payments that barely cover the interest charges."

The average insolvent debtor now owes $60,678 in total unsecured debt, an increase of 12.2% from 2023. Higher debt loads among insolvent debtors combined with rising consumer insolvencies reflect the broader rise in credit card and consumer credit among Canadian households.

"We're seeing a perfect storm of financial stress," adds Hoyes. "Higher interest rates have increased the cost of credit while inflation continues to erode purchasing power. Many households are forced to choose between making rent or mortgage payments and keeping up with credit card bills."

The study revealed that higher-income earners are increasingly affected, with 54% of all filers having a net monthly income over $3,000, up from 48% in 2023.

"These numbers signal a deterioration in household finances across income levels," notes Michalos. "When we see this magnitude of increase in credit card debt, combined with rising insolvency filings among higher-income earners, it's clear that financial stress is moving up the income ladder."

The study also revealed the impact of mounting debt stress among homeowners. "Homeowner equity has dropped dramatically, from 21% to just 10% in 2024, with one in seven insolvent homeowners now experiencing negative equity," says Hoyes. "With a wave of mortgage renewals approaching at higher interest rates, we're particularly concerned about homeowners relying on credit cards to maintain their mortgage payments."

The study findings come amid growing economic uncertainty for Canadian households. "The combination of persistent inflation, higher interest rates, and new trade pressures creates significant risks for the Canadian economy," says Hoyes. "These conditions suggest we're likely to see even more households struggling with unsustainable debt loads in the months ahead, particularly if economic growth stalls."

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

About Hoyes, Michalos & Associates, Inc. Hoyes, Michalos & Associates Inc., a Licensed Insolvency Trustee firm co-founded by Doug Hoyes and Ted Michalos in 1999, has established itself as the leading voice on personal debt issues in Ontario. Hoyes Michalos provides real debt management solutions to help Ontarians climb out of debt, including consumer proposals and personal bankruptcy, with offices throughout Ontario. Further information is available at www.hoyes.com

SOURCE Hoyes, Michalos & Associates Inc.

Contacts: Douglas Hoyes, CPA, Licensed Insolvency Trustee, [email protected]; Ted Michalos, CPA, Licensed Insolvency Trustee, [email protected], 1-866-747-0660