Average credit card debt among insolvent debtors reached $20,398 last year, a 25.9% jump relative to the previous year. Those numbers come from an analysis of Ontario clients served by Hoyes, Michalos & Associates Inc., an insolvency trustee firm.
It is the biggest year-on-year increase recorded since the study launched in 2011. Credit card debt made up 34% of unsecured debt in 2024.
“The dramatic rise … tells a troubling story about the financial health of Canadian households,” said Doug Hoyes, a licensed insolvency trustee with the firm, in a media release. “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.”
Insolvent debtors in the study owe an average $60,678 in total unsecured debt. That’s up 12.2% from 2023.
Increasingly, insolvency has become a fact of life for middle-class Ontarians. More than half (54%) of the clients who filed in 2024 take home more than $3,000 in income each month, a six-point rise relative to 2023 and a 14-point increase over 2022.
“These numbers signal a deterioration in household finances across income levels,” said Ted Michalos, a licensed insolvency trustee with the firm. “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.”
Mortgage holders are feeling the pinch, not surprisingly given recent rate increases. Homeowner equity among clients who filed in 2024 spiralled, from 21% in 2023 to 10% in 2024, according to the release. “One in seven insolvent homeowners [are] now experiencing negative equity,” Hoyes said. “[W]e’re particularly concerned about homeowners relying on credit cards to maintain their mortgage payments.”
The year ahead doesn’t look better.
“[W]e expect consumer insolvencies in Canada to continue to rise by an estimated 20–30%,” reads the report. Hoyes Michalos is forecasting higher credit card debt as mortgage holders renew at higher rates and falling condo unit valuations hit pre-construction buyers.