Retirees’ Debt in Quebec

In Quebec, a worrying trend has been emerging for several years: more and more seniors are finding themselves on the verge of bankruptcy.
At Mallette, our licensed insolvency trustees support hundreds of older Quebecers every year, helping them regain financial stability while preserving their dignity.

A fast-growing phenomenon in Quebec

According to the Office of the Superintendent of Bankruptcy, people aged 65 and over account for almost 11% of insolvencies in Quebec.

In Quebec, this trend is accelerating, with the average debt of retirees reaching between $20,000 and $40,000, often in the form of credit cards and high-rate lines of credit.

Many seniors even continue to work after the age of 65 to make ends meet, but find themselves trapped by tax and pensions to repay.

The cost of living, an aggravating factor

The rising cost of housing, groceries, petrol and medicines is hitting those living on fixed incomes hard. For many, minimum payments are becoming impossible to maintain.

Result: credit becomes a temporary solution... until it becomes an unsustainable burden.

Why are more and more seniors getting into debt?

Insufficient retirement income

Even with the QPP and the Old Age Security pension, the majority of retired people experience a 25% to 40% drop in income when they retire. However, their day-to-day expenses will not decrease.

The consumer credit trap

To make up the shortfall, many use credit cards or personal loans. With rates often in excess of 20%, debt increases rapidly despite constant payments.

Unexpected tax liabilities

Some seniors return to work, but find their income taxed. They then have to repay part of the benefits received, creating an unexpected tax debt.

Pride as an obstacle

Many people delay consulting a trustee out of pride or shame.

Yet a simple meeting can often avoid bankruptcy and ease the financial pressure.

How can I avoid bankruptcy as a senior?

When debts pile up after retirement, there are a number of practical strategies that can help you regain control without having to declare bankruptcy. The aim is to lighten your payments, reduce interest and protect your retirement income.

1. Draw up a realistic budget

Start by drawing up a complete picture of your finances: income (QPP, pension, savings, etc.) and essential expenditure (housing, health, food).

Then classify your non-essential expenses to identify where to cut. Calculating a clear budget will allow you to free up money each month to reduce your debts more quickly.

2. Pay off the most expensive debts first

Make it a priority to pay off high-interest debts such as credit cards or personal lines of credit. These accounts can easily reach 20% to 25% interest, making it difficult to reduce the balance if you only pay the minimum.

3. Negotiate with your creditors

Contact your banks or credit card companies at the first sign of trouble. Explain your situation and ask :

• A lower interest rate;

• A period of deferred payments;

• A repayment plan tailored to your means.

Financial institutions often prefer to cooperate rather than resort to debt collection.

4. Avoid touching your RRSPs

While it may seem like a quick fix, withdrawing your RRSPs to pay down debt means high taxes and compromises your future financial security. These funds are intended for your retirement and are often protected against seizure.

5. Consolidate your debts

A consolidation loan can simplify your financial management by combining all your debts into a single monthly payment at a reduced rate. This solution can ease budgetary pressure and reduce interest costs, if you qualify.

6. Protect your income and essential assets

Your retirement income, RRSPs, RRIFs and government benefits are generally exempt from seizure. Even in the event of insolvency, you can keep your essential possessions, such as your car or furniture.

Our licensed insolvency trustees can explain your rights and help you protect what belongs to you.

7. Consult a professional

If your debts become too great, don't delay consulting a licensed insolvency trustee. This meeting is free, confidential and without obligation. You'll get a clear analysis of your options:

• Consumer Proposal: repay only part of your debts, interest-free, while keeping your assets.

• Consolidation : consolidate your debts to simplify your payments.

• Bankruptcy : last resort solution to start afresh.

Preventing debt at retirement

Plan your financial retirement early

To reduce the risk of getting into debt when you retire, you need to plan your finances several years in advance. This involves a realistic assessment of your future income, debts and real needs.

The aim is to adapt your lifestyle to your financial situation, while allowing for the unexpected.

Adapting your lifestyle to your financial reality

When you retire, there are certain habits you can change without affecting your quality of life. Reducing the size of your home, rethinking your transport costs or adjusting your leisure activities are simple gestures that can help you avoid taking out credit. Each adjustment helps to preserve your financial stability.

Consult before it's too late

Many older people are reluctant to talk about their debts, often out of pride or shame. But asking for help is the first step towards financial recovery. You are entitled to a peaceful retirement, without stress or calls from creditors.

At Mallette, our human teams take the time to listen to your situation with empathy and respect. Together, we'll find a concrete solution to alleviate your debts and give you back the peace of mind you deserve.

Make an appointment today for a free and confidential consultation.