THE SITUATION OF BANKRUPTS

In 1997, the Office of Consumer Affairs of Industry Canada commissioned a survey of over 1,000 debtors who sought bankruptcy protection between mid-March and early May of that year. The survey responses were then combined with information contained in the Statement of Affairs, an official form summarizing the financial position of the debtors. The research project was intended to help understand the
causes of consumer insolvency in Canada.
For this article, I use the resulting survey data to compare the economic status of the bankrupts who have student loans among their debts to that of the overall sample. Two sub-groups of student loan borrowers can be defined in the survey:
(1) the group of 262 individuals who had student loans among the liabilities listed on their Statements of
Affairs; and
(2) the group of 183 individuals who either said that student loans “triggered” their bankruptcy, or who had student loan liabilities whose dollar value was more than 50 per cent of their total debt.

In the discussion that follows, these two groups are compared to the complete sample of potential bankrupts and, where possible, to the entire Canadian population. The picture that emerges is unequivocal. As a group, bankrupts who are also student loan borrowers are in worse economic shape than the larger group of bankrupts. They are more likely to have very low household incomes and more likely to have depended on government transfers. They are not, in general, young professionals; many have no post-secondary credentials at all

read Consequences of default

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