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More prosperous households are filing for insolvency, according to a study released on Monday by Hoyes, Michalos & Associates Inc., a licensed insolvency trustee based in Kitchener, Ont.

According to the study, insolvent debtors saw their average household income rise by 5.5% in 2019 to $3,152 a month after tax, but expenses grew by 6.4%. That left the average insolvent debtor with $264 a month to put toward debt repayment — down from $273 in 2018.

“More households have fewer funds available after paying for rising living costs to meet debt obligations,” Ted Michalos, co-founder of Hoyes, Michalos & Associates, said in a statement. “Combine this with high, pre-existing debt, and you have a debt repayment problem.”

The average consumer debt balances among insolvent debtors increased by 1.9% in 2019, from $57,840 to $58,923.

While credit card debt decreased two percentage points to 30% as the primary debt in consumer insolvencies, the study found a continuing rise in payday or fast-cash loans, high-cost financing loans, student debt and vehicle financing.

The number of insolvent debtors who carried at least one loan from a high-cost payday lender increased to 39% in 2019, up from 37% one year earlier.

Personal loans increased by 8.7%, driven by high-interest financing loans that carry an interest rate between 39% and 49%. More than one in 10 debtors (11.4%) had a shortfall on a vehicle loan, up 10.2% year over year. 

Young Canadians are struggling most, with those under the age of 40 accounting for 47.1% of all insolvencies, the study found. 

Read the full study here.