Millennials dominate insolvencies as credit card, student loan, CERB tax debts add up | Canada News Media
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Millennials dominate insolvencies as credit card, student loan, CERB tax debts add up

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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.

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 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.”

This report by The Canadian Press was first published March 26, 2023.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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