Should struggling retirees consider going bankrupt?
The number of Canadians filing for bankruptcy protection in retirement has soared in recent years, according to the Office of the Superintendent of Bankruptcy Canada.
The share of insolvent consumers among people aged 55 and older has more than quadrupled in the past decade, sneaking past 20 per cent.
Not only do seniors have limited ability to earn income, most are reluctant to discuss money troubles openly, leaving them stranded when debt burdens grow overwhelming.
But, for older people, bankruptcy is usually not a particularly good choice, says accountant Douglas Hoyes, a licensed trustee in bankruptcy.
Most retirees don’t need to file for bankruptcy since the main reason for considering it is to ward off creditors that threaten to garnishee wages or seize assets – something they generally don’t have.
Without employment income, there may not be much to work with – particularly as it’s very difficult for a creditor, other than Canada Revenue Agency, to garnishee a pension, Hoyes says.
His advice for retired people in financial difficulty is as follows ... first, consider talking to a non-profit credit counselor for impartial advice. Second, if you are still considering bankruptcy, search out a bankruptcy trustee.
Third, if you decide to try to avoid bankruptcy, consider opening a new bank account, with a new bank, so that your existing creditors cannot access your account. Have your pension and other income deposited to your new account, and pay your rent and other monthly bills (but not debt payments) from the new account.
Finally, when the creditors phone, simply tell them you are on a pension and can’t afford to pay, and hang up. Eventually they will stop calling. If that’s too stressful, you could change your phone number to a new, unlisted phone number so they can’t contact you, he suggests.
Has anybody you know gone this route? Would you do the same if circumstances demanded it?
By Gordon Powers, MSN Money
Posted by: Janice | Feb 8, 2022 3:44:27 PM
I'm not all surprised!! That just proves the federal government is screwing us in regards to CPP and OAS, particulary women. We NEVER make the same money as men so it's impossible to have the same CPP when we retire. As for OAS the government is dreaming that they're so benevolent in giving us such a paltry amount. Why is heat, gas, taxes not included in cost of living??? I don't see any MPP's having to declare bankruptcy - hell no, with their pensions!!!! We religiously added to a RRSP throughout our working years and are still having a hard time. We're using the same furniture we had 25 years ago, haven't taken a vacation in the same amount of years. I can't remember what the inside of movie theatre looks like. The harder we try the more the government thinks they can take from us. If push comes to shove I would definitely try the suggestions in your article - new bank account and hang up the phone from creditors. All Canadians should definitely start to march in the streets against the government. We're way too laid back; our thoughts are and have always been: "oh, there's nothing we can do, so why bother" and the government KNOWS THIS.
Posted by: Gary | Feb 8, 2022 3:52:22 PM
I cannot believe I am reading about retired individuals who still have mortgages and other high end debt like credit cards, and newer vehicles. My plan seems to be working out. I made sure my mortgage was paid off before 50. I limited the household to (1) credit card. I purchase not lease a vehicle and I try to make it last 5 - 7 years. I put away RRSP's and don't touch them. Although I have a good LOC with the bank I have refused to use it. I was able to send both of my daughters to post secondary education + residency fees for 2 and 3 years respectably. The annual combined income of my wife and I has fluctuated anywhere from $60K to $120K. The secret for us has been not trying to keep up with the Joneses and not trying to live beyond our comfort zone.
Posted by: SirRichard | Feb 8, 2022 3:57:10 PM
Mike O'Keefe got it completely right. There is no room for a white male to find employment in Canada anymore. The only way 'whitey' can make a go of it is to have his own business and save for retirement. All too often, men and women of all races and colour are legally being terminated at or around the magic 50 years of age. There is quite often no reason or explanation given; the end result is a crime. The company contribution portion of the company pension plan stays where it has been for all your years of service while the employee leaves with nothing. That is assuming the funds have been invested and not used to run the company.
In my particular instance, I have worked for six international companies (Canadian subsidiaries) that have been subject to takeovers. Without exception, employees older than 50 years of age are terminated and their company pensions go south. By that I mean the USA parents. I have no company pension after 42 years working in the electrical industry and I am not alone. The good news is very promising. The present government in Ottawa, along with the opposition parties, are in total agreement. The pension contributions are to be paid back to the employees and their survivors just as soon as suitable amending legislation is tabled and becomes law. All employers going back 59 years are going to be told to ante up these pensions. How long is this going to take? Who knows. I do know that my offspring will most likely be the beneficiary to this new legilation.
I suggest you contact your federal MP and ask for more details.
Posted by: gman1126 | Feb 8, 2022 4:02:16 PM
I remember speaking to an Canadian of Indian descent. He was born here.. He was a well off Business owner of an IT company. He told me a story about his dad who worked in a factory for a number of years. A firend of his Dads asked him if he was saving for retirement. His response was " "I invest in my childrens future. In turn, it is their respsonsibility to look after their parents as did I and my parents before me."
I have always know that if my parents were unable to have a comforatable retirement, that it would be my responsibity to provide them with comfort for the rest of their lives.
Where are the children of reitirees?
Posted by: Doug Thomson | Feb 8, 2022 4:08:56 PM
I worked in the Canadian Forces for 29 years, some of those in less than comfortable or safe situations. I went through a 10 year period in which we never received a pay increase. My pension now is very small compared to what force's personnel will now receive. My wife will also only get 50% when I die, and she could not live in the present lower middle income situation we are now in. So we have gone back to work in network marketing and she as a result will have a residual income to supplement my income. It is easy and honest work which she can continue when I die.
However, due to medical illness, we had to declare bankruptcy. We lost our home due to government policies on disability and Military pensions. Walkiong away was never an option and certainly we did not have the money to go abroad. So bankruptcy was the only way to go. I could not walk away and not pay what I could to those I owed, even if it was not my fault. So while bankruptcy may not be suitable for all pensioners, it is the only way out for some.
As for those who think government employees should not get a pension, I worked as hard and likely harder than mny of you, away from family for long periods and in all sorts of conditions. I paid into the pension fund, and I deserve every cent I get in the pension. As for CPP and OAS, the Federal government reduces my pension by almost the whole the amount I get from CPP. So no free ride here.
Posted by: chrisvb | Feb 8, 2022 5:11:48 PM
what is currently doing in many retirees, is the galloping increases in taxes of all kinds. After being retired 10 years , the gradual reduction in "descretionary spending money" is reaching the critical point .i can relate with the people on this board that are desperately trying to cobble together survival plans in large part due to government spending that hits our pocket books . hydro taxes , property taxes,hst,water taxes (hidden as environmental "charges"), and it goes on !!!
government is taking care of themselves by indexing their own fat pensions , the hell with the "great un-washed masses".
Posted by: Hosni on the Run | Feb 8, 2022 5:52:34 PM
I went to my local city hall yesterday for information about a bylaw. I spent two hours riding up and down the elevator being shuffled around from department to department by misinformed bureaucrats. This was after having another bureaucrat hang up the telephone on me - inspiring me to personally visit city hall.
Keep in mind, these useless unionized lifers are paid well to waste my time without any accountability on their part to anyone. In that two hours they also built up their pensionable time.
If Iggy and Jack keep Steve in minority power beyond this spring, higher interest rates/mortgage failures/unpayable student loans/bankruptcies will kick in (like the U.S.A.) and, as a result, bring housing prices, banks, bureaucrats and current politicians down.
Here in Ontario, Dalton just announced a nice raise for the OPP - in an election year. And all Mike Harris's protege, Mr. Hudak, can offer is buck a beer election promises.
Posted by: robert | Feb 8, 2022 5:54:24 PM
just a few , words on the treatment of seniors, I am retired now 7 years , guess what the cibc screwed up and good old CRA (rev, canada just sent me a bill for money that i do not in hells creatation , do not owe.I,i called them and went through several government employee,s and they just dont give a damn , you are just a thorn in their revenues daily coffee breaks !!, when is the MP>S getting off of their money counting and begin to really service the taxpayers .. We canadian Seniors built this LAND and since the charter of blights and invisible freedoms .. are if you are born here you are screwed the world sees canada as a big free stupid chicken that needs plucking and we are really getting plucked SENIORS ARISE AND BEGIN TO KICK SOME BIG ASS AT LEAST IN JAIL YOU NGET AS GOOD FOOD AS THE HOSPITALS AND FREE MEDICINE AND DONT PAY CABLE ARE IN OUT OF THE COLD NOW YOU ARE SCREWING THE SYSTEM BOUT TIME !!!
Posted by: TED | Feb 8, 2022 5:58:47 PM
If you are considering banruptcy check the personal exemptions for your province before you declare.The egyptian solution sounds good to me!!!! We need NON of THE ABOVE on ballots in all elections.
Posted by: Dennis | Feb 8, 2022 6:24:21 PM
Perhaps the college and university students would get on board with a revolt. I see that in order to get an education many of them are forced to take student loans. Now they are in debt to the gov. before they even have a job. I know 1 student here in Vancouver who owes over $40,000.00 and she still has 2 years to complete! Look around at your town/city. How many kids do you see without enough to eat or warm clothes to wear! So if you look at the "BIG PICTURE" the oldster kiddies are not alone.
No matter the ruling party the people are victims.
Posted by: Blue in Ontario | Feb 8, 2022 6:42:34 PM
I know all too well the stories above as I after an 8 year fight with Workers' Comp after being hit by a drunk driver in my work place. Funny though my employer forgot to tell me he was the town drunk and I filed against my employer as I was theoredically at work. Well lost my home after 30 years of continuous employment. You see your mortgage insurance doesn't cover you unless it a critical (life threatening) situation. Wow all those years of paying into it. So moved with the relatives 5 years ago and continued the fight. Husband is now 65 so collecting CPP, OAS, a small private pension which still leaves him below the poverty line. So in comes GIS (who knew). We decided to file for bankruptcy and start making some changes to have a roof over our head for the future. Using our existing vehicle we bought a used travel trailer and said let's go yahoo we have a plan. Currently paying off the trailer and the tow vehicle we find out that if we travel to the US in the winters we will lose half of our GIS for all those years we choose to winter in the south. Huh where the heck in Canada can you live in a trailer for the winter. Chit freezes even in Victoria with our Canadian Winters. By the way we didn't have anything to surrender to the Bankruptcy Trustees so we are paying off their fees to the company and also our Tax rebates and GST cheques for the next two years. The fees are hefty but manageable. Oh yes forgot to mention that if you a senior and not 65 you have to hook up with the Trillium Drug plan for your medications but there of course is a quarterly deduction of several hundred dollars before it cuts in. Wow who figured after working so hard all our lives these snowballs being thrown at us would still keep coming. Oh ya thinking of moving the trailer into a enclosed quanset hut for the winter, anyone got any land to erect one of these things on. Dang this sucks. Oh ya forgot to mention that all of the latter has been happening while caring for a Disabled older brother and a 86 year old mother with early stage alzheimers. Can anyone give me a happy face.
Posted by: Hazel | Feb 8, 2022 7:00:19 PM
I get real upset too with the way our pension is run we gave pension to pensioners who didn't put into it yet there is all kinds of money for immagants and our native people. I am working full time and have 4 chronic illness's theres no help for me I work in chronic pain and disabiltes. I work for our prov gov't and I am treated with disrespect and tormented. I am hitting near 50 and have worked my ass off overtime for free and pay due to my respect and understanding of our customers. I looked after my nephew and neice after my sister past away with no help from anyone including dad or Govt. I have gone bankrupt because of it. I have lived on tomato soup all my life and living pay day to pay day and am finding it harder every year as bills go up. I s/h money according to what non Govt workers think but I would have no problem showing you my paycheck and my mortgauge and bills as a single women. I want and need to retire but am terrified that our pension is going to be worse than it is now. I have lived my life being a caregiver but am needing help now. I think the Gov't needs to really think about how they are running things and think about how they are putting people on suicide decisions.
Posted by: Carin Burnside | Feb 8, 2022 7:12:28 PM
We did save well for our retirement but the current non existent interest we receive has certainly reduced the sum we expected to have. Most of our friends in like circumstances are all hurting from the low interest but hope that it has some positive aspects for the younger generation - so far we just see a lot of them going into more and more unnecessary debt.
Posted by: r.w.w. | Feb 8, 2022 7:13:10 PM
i'm a 61 yr.old on a disability with social services, when i turned 60 i had to apply for early CPP or get kicked off assistance, buy doing this i only get a fraction of my CPP benifits and when i turn 65 they will not go up to what they should be. i'd like to be able to put money away but by the time i by food and the basic needs for a month i don't have much left. what really pises me off is that my father and others fought in WWII so that we good live in freedom and enjoy a good life, the only one doing that are polititians and fat-cat CEO"s ect.
Posted by: Shrewed Investor | Feb 8, 2022 7:31:17 PM
Dennis, I suspect you made a few mistake along the way. First, you likely didn't start saving soon enough. Allowing your money to make money over time is the way to end up with a comfortable sum of money for retirement (Even if you don't make $84K per year). How often do we hear that? Second, assuming that the "system" owed you, was a mistake. There are certain safety nets in place, but essentially you have to take care of yourself, which probably means (number three) that you should have saved more and spent less along the way. Fourth, you put all your retirment eggs into one basket; the locked-in RRSP. As in all things dealing with investing, you have to diversify that nest egg. You should have talked to that accountant before you retired, not afterwards. Lastly, it sounds as though you decided to retire before you had the means to do so and yet live in the style that you expected. But if you took some of that $1.7 million that was left over after taxes CPP and EI and purchased a house that is paid for, you did something right. Sell it, realize the capital gain, downsize, and stop blaming the politicians and civil servants (which I am neither) and Clifford Olson (ffs) for your poor financial planning.
Posted by: harry | Feb 8, 2022 8:13:39 PM
The person who says that she lives on $10,000 a year can pay dental bills ,school trips vet bills and i suppose eyeglass presciptions AND put savings in TFSA is either the biggest liar out there or living on fantasy island, or maybe a conservative politician bulls***ing us again........
Posted by: harry | Feb 8, 2022 8:19:54 PM
Believe me if you owe Canada Revenue they can, and will garnishe and take part of you CCPrbut they will leave you a few crumbs to eat .
Posted by: Blue in Ontario | Feb 8, 2022 8:21:56 PM
Oh damn forgot to add that after you file for bankruptcy you can't get anything without paying shark style interest rates for used vehicles, you can't qualify for anything much at all for a 5 years or more. But we're trying.
Posted by: harry | Feb 8, 2022 8:33:49 PM
A thought, for all you retirees and soon to be retired out there, without doubt We are the most discriminated against group of people in this country. I often tell my wife I should have got into politics years ago they are licensed to print money
Posted by: harry | Feb 8, 2022 8:38:36 PM
Do not opt for jail time if you owe Canada Revenue unlike real criminals when you have done your time you still have to pay taxes owed