Insolvency trustee Doug Hoyes encounters a lot of Canadians with money troubles, but he’s become particularly sympathetic to the plight of young people who find themselves financially underwater.
For more than a decade, his Ontario-based firm Hoyes Michalos has been crunching bankruptcy and insolvency numbers for its annual “Joe Debtor” analysis, with its latest results released last month ahead of tax season.
He’s concluded that millennial Canadians have been dealt a generational losing hand as they face student loans layered with bad debts from credit cards, high-interest loans, and post-pandemic tax debt from collecting CERB.
“I think there’s a whole bunch of whammies that have hit millennials.” Hoyes said. “The CERB was the final straw that broke the camel’s back.”
The 2022 Joe Debtor study examined 2,700 personal insolvencies filed in Ontario. Hoyes Michalos says 49 per cent were filed by millennials aged 26 to 41, even though they make up 27 per cent of adult Canadians.
The study found that on a per-population basis, millennials were 1.4 times more likely to file for insolvency than people in generation X aged 42 to 56, and 1.7 times more likely than baby boomers aged 57 to 76.
Insolvent millennials were on average 33 years old and owed an average of $47,283 in unsecured debt.
After years of sitting at rock bottom levels, higher interest rates are forcing Canadians with debt to pay more and crimping budgets, especially millennials, who are becoming more prone to insolvency. (Sean Kilpatrick/The Canadian Press)
Hoyes said many people collected CERB and other pandemic-relief funds without fully appreciating the tax liabilities those programs generated, finding themselves insolvent and unable to pay down their credit cards, student loans, high-interest loans, and lastly their tax debts.
More than 100,000 Canadians of all ages filed for bankruptcy or insolvency in 2022.
But older generations, Hoyes said, have enjoyed many advantages.
Housing prices were more in step with wages. Tuition fees didn’t necessitate student loans, allowing graduates to enter the workforce and start saving and investing out of the gate, rather than having to service large debts for years after completing their education.
Hoyes said those circumstances represented a “safety valve” that young people now can’t rely on.
“Anything goes wrong like a pandemic, or you lose your job or you get sick or you get divorced and boom, there is no safety valve there,” he said.
Filing for bankruptcy, he said, is an option to eliminate debts, but most people end up filing consumer proposals with the help of insolvency trustees like him to pay them down over time in manageable portions.
“It becomes an affordable way to eliminate the debt, and that’s why we’re seeing more and more millennials resorting to consumer proposals,” he said. “They really have no other choice.”
Sandra Fry, a credit counsellor with the Credit Counselling Society in Winnipeg, works on a budget template. (Brett Purdy/CBC)
Sandra Fry, a Winnipeg-based credit counsellor with the non-profit Credit Counselling Society, said many young people who seek alternatives to insolvency and bankruptcy are dealing with the shock of rising interest rates.
“Unfortunately, a lot of people out there are living on the edge of their affordability,” Fry said.
Fry said the Credit Counselling Society sees all types of people struggling financially with rising costs that are “really squeezing Canadians in general from all sides.”
The society helps people struggling with debt, negotiating with creditors to eliminate interest on loans, but also refers people in some situations to bankruptcy and insolvency trustees.
Millennial clients she’s dealt with lately have often had variable interest rate mortgages, and rate hikes “caused huge strain on their budget because their payments just went up like crazy.”
Dave Locke, 31, lives with his wife in Coquitlam, B.C., east of Vancouver, and the couple sought Fry’s help when their mortgage payments jumped dramatically in the middle of a costly renovation.
Locke, who works for a real estate brokerage, got into the housing market at a young age having worked in the oil and gas industry after high school.
He ended up buying a home in Coquitlam with his wife Tara, who works in labour relations, and the Bank of Canada’s rate hikes eventually saw their monthly mortgage payments jump 40 per cent.
The couple had a construction loan with their bank to fund the renovations, and as interest rates climbed and the price of construction materials ballooned, Locke realized something had to give, even with their relatively high combined incomes.
Insolvency or bankruptcy weren’t options for the couple because they wanted to keep their assets, but the Credit Counselling Society was able to work out a deal with their bank to eliminate interest on the renovation loan.
“I’m still paying the full balance,” Locke said. “I’m just not paying any additional interest.”
Locke said the stress and stigma of debt is embarrassing, “but it’s just the way it goes.”
“You have to kind of swallow your pride,” he said.
Grant Bazian, a licensed insolvency trustee and president of MNP Ltd. in Vancouver, said he’s seen many clients “keeping up with the Joneses,” but living beyond their means and getting stuck in a cycle of high interest debt from payday loans and credit cards, layered on top of “ridiculous” housing costs.
Bazian said there’s likely no “one magic bullet” to alleviate the debt woes of young people, many of whom are coming to see him racked with anxiety and other mental health issues.
For accountant Hoyes back in Ontario, putting out the firm’s Joe Debtor study every year is a way of letting people know they’re not alone and to remind them of legal options to start anew financially.
Hoyes said it would be a mistake to automatically blame millennials for their money trouble because “you cannot be blaming an entire generation for how the deck is stacked against them.”
“You don’t have to keep working two jobs for the next 20 years,” he said. “There are legal ways to eliminate a chunk of your debt, and yeah, it hurts your credit temporarily and it’s not something you want to do, but sometimes surgery is the answer.”
(Reuters) – Shares of Lululemon Athletica Inc soared 15% in early trade on Friday, after the premium apparel retailer defied investor worries with a full-year outlook lift amid little pullback from consumers and a sharp rebound in China sales.
The rosy outlook comes in contrast to the general trend of U.S. retailers ranging from Macy’s to Dollar General warning of weak discretionary spending by American consumers.
At least 11 brokerages raised price targets on the company, with Piper Sandler hiking by the highest margin to $445, above the median of $424.
“We think (Lululemon) is one of the select brands continuing to drive outsized demand in this more challenging macro environment with innovation and newness,” said Abbie Zvejnieks, analyst at Piper Sandler.
Lululemon’s first-quarter results also beat estimates as the company saw traffic across both its stores and online go up about 30%.
“Lululemon’s stores continue to be a key catalyst for customer retention and acquisition,” analysts at TD Cowen wrote in a note.
The company also reported a 79% rise in sales in China, bolstered by the rollback of COVID restrictions. Lululemon’s exposure to China could be “a solid source of sales and margin upside for the rest of the year,” analysts at Barclays wrote in a note.
A loyal customer base has also given the company a leg up, helping it sell more of its popular products, such as the Align high-rise yoga pants which retails between $98 and $118, at full price, even amid an uncertain economy.
“Lululemon is just very popular right now and seems to be immune from the slowing trend,” David Swartz, an analyst at Morningstar Research said.
The company’s strong results also lifted shares of other athletic wear makers including Nike Inc and Athleta owner Gap Inc by 4% and 3%, respectively. Shares of European sportswear companies Adidas and Puma were also up.
(Reporting by Savyata Mishra and Aishwarya Venugopal in Bengaluru; Editing by Krishna Chandra Eluri)
Oil prices were trading up on Friday afternoon as shorters got a little nervous heading into the OPEC+ weekend, with new rumors circulating about the group’s discussions about another 1 million bpd in production cuts.
The OPEC+ group is scheduled for three separate meetings beginning this weekend and concluding on June 4. While the general sentiment has been that the group will keep the status quo as far as production targets are concerned. But Saudi Arabia’s Energy Minister has made boistrous threats against oil’s speculators in the runup to the meeting, saying that shorters will be “ouching”.
On Thursday, Reuters suggested that the OPEC+ group would be unlikely to deepen its production targets at the meeting this weekend. But late on Friday, Reuters suggested that OPEC+ was indeed discussing an additional output cut of around 1 million barrels “among possible options” for the meeting on June 4.
Crude oil prices were already trading up ahead of the meeting, but increased even more in the afternoon hours, bringing Brent crude to $76.32 at 4:20 p.m., a $2.06 per barrel increase on the day. WTI was trading at $71.90 per barrel at that time.
The OPEC meeting will begin at 1 pm Vienna time tomorrow, with OPEC+ meeting on Sunday.
The latest price hike could prompt OPEC+ to keep production targets the same. But Saudi Arabia appears to still be in control of OPEC+, and he could decide to make good on his threats to punish short sellers for their speculative trades that fly in the face of market fundamentals.
“I keep advising them (referencing oil speculators) that they will be ouching, they did ouch in April, I don’t have to show my cards. I am not a poker player…but I would just tell them watch out,” Saudi’s energy minister said late last month in the runup to the meeting.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
An airline consumer advocate says Air Canada should face tougher consequences for stranding passengers after two disruptions in a week.
Gábor Lukács, president of Air Passenger Rights, said Canadian airlines such as Air Canada currently don’t face enough consequences from the government each time they delay or cancel a flight.
“It feels like the airlines just have a free pass,” Lukasc told CTVNews.ca in an interview Friday.
Air Canada’s operations were jolted not once but twice in a span of seven days, impacting over 670 flights combined. On May 25, 241 Air Canada flights were delayed, and 19 were cancelled. This past Thursday, 362 flights were delayed and 48 cancelled, according to tracking service FlightAware.com.
Air Canada said the recently implemented system used to communicate with aircraft and monitor the performance of its operations was having technical problems.
In a statement to CTVNews.ca yesterday, the airline confirmed that both incidents occurred in the same system but were unrelated.
Currently, a traveller is entitled to between $125 and $1,000 in compensation for delays up to three hours or more, unless the disruption is a result of events beyond the airline’s control.
However, Lukács said he believes Air Canada is gatekeeping what really happened so they don’t have to pay passengers compensation.
“I’m confident that this is within the airline’s control,” Lukasc said.
The federal government has plans to strengthen the Air Passenger Protection Regulations. The proposed policy amendments would increase the maximum penalty for airline violations to $250,000, and hold airlines to regulatory costs of complaints.
Air Canada said no one was available for an interview on Friday.
By Friday afternoon, the Montreal-based airline told CTVNews.ca through an email statement the communicator system was stabilized and “it is functioning normally.”
However, “due to the effects of Thursday’s IT issues on our schedule, some flights may be delayed this morning as we reposition aircraft and crew,” Air Canada said.
There were 164 Air Canada flights, or 30 per cent of the airline’s scheduled load, had been delayed Friday as of 6:00 p.m. EDT, along with 36 cancellations, as seen on FlightAware.
Additionally, Air Canada Rouge had 62 flights delayed and 25 cancellations.
“That’s absurd, especially for a massive huge airline like Air Canada,” said Lukács.
A spokesperson for Transport Minister Omar Alghabra said the ministry has been in touch with Air Canada since the situation began, but did not confirm whether the airline could face any consequences, including fines.
“We expect all air carriers, including Air Canada, to uphold their obligations to keep passengers safe and protect their rights, and ensure all delays and cancellations are mitigated as soon as possible,” Alghabra’s office said in an email statement sent to CTVNews.ca on Friday.
