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According to the 2022 Hoyes Michalos Bankruptcy study, millennials in Canada made up half the insolvencies that year – with an average unsecured debt load of $47k. Are Canadian millennials the little generation that could, but really can’t? 

The number came as a stark surprise, considering millennials (those born from 1981 through 1996) only make up 27% of the total adult population.

The study further revealed millennials were the only age group to see an increase in unsecured loan debt. Unsecured debt includes credit cards, student loans, and personal loans

Similarly, of all the insolvents, only 2% were homeowners, so how do we explain the rise of insolvencies, especially among millennials?

Is The Average Millennial In Canada More In Debt Than Other Age Groups?

Millennials lead the population in terms of a high debt-to-income ratio. A debt-to-income ratio is simply the amount of debt compared to income.

Right now in Canada, the average household has a debt-to-income ratio of $1.83. Meaning that for every dollar earned, Canadians owe $1.83. 

1 in 3 millennials in Canada carries unsecured debt. The largest contributor is student loan debt at an average of $16,725. The other two top contributing factors to millennial debt were high-interest personal loans and payday loans.

Is Unsecured Debt Affecting Millennials’ Home Ownership Rate?

These financial obstacles can contribute to younger millennials, those aged 25 to 29, exclusion from the housing market. In fact, homeownership rates for millennials dropped from 44.1% to 36.5% in 2021. 

It is generally harder for millennials to set up the pillars needed to be financially stable and invest. The Hoyes Michalos Bankruptcy study stated that millennials are 1.7 times more likely than Baby Boomers and 1.4 times more likely than Generation X to file for insolvency. In Ontario, millennials made up 49% of all insolvencies filled in 2022. 

Unsecured debt is hurting millennials. Despite this, the average millennial still carries less debt than Gen-Xers – whose debt load is burdened primarily by the high cost of mortgages

Though millennials’ overall debt load is less than Gen-Xers, they do have the highest debt-to-income ratio and the highest rates of insolvencies among all generations. 

Millennial homeowners face rising mortgage rates. And millennial renters deal with a housing crisis. In both cases, the young generation is clearly struggling to repay their post-pandemic tax debt and high-cost loans. Leaving many to rely on credit cards, creating unmanageable consumer debt, to make ends meet. It seems no one can catch a break.

Student Loans In Canada And The Average Millennial Debt Load  

Of the debt millennials had, 30% was attributed to student loans and interest costs. Millennials are one of the most educated generations, but they also have to face the high cost of tuition. 

As of April 1st, 2023, the Canadian federal government eliminated all interest on federal student loans

For individuals who have graduated and are currently repaying their loan, interest on their account accrued before April 1st, 2023 will not be forgiven. Meaning you will be responsible for paying the interest on your account however, will not have any further interest added.  

Student Loan Debt Assistance In Canada

The federal government offers a variety of aid to those struggling to repay their student loans. Depending on your income, individuals may qualify to have their student loan repayments reduced through the Repayment Assistance Plan. Additional aid is also available to those with disabilities. Those with student loans in collection with the Canada Revenue Agency (CRA) may also be eligible for assistance. 

As of April 1st, 2023 – all interest on new student loans is eliminated. Make sure you check your account to ensure this has been applied to your account correctly. In any case, it is best to contact the National Student Loan Service Centre if you are struggling to keep up with your repayments or have further concerns. 

Individuals who have previously paid interest on their student loan account will not be refunded. Moving forward, the elimination of interest will save the average person around $400 a year, depending on the loan amount. Though the elimination of interest is helpful, the issue remains that tuition continues to come at a high price.

Average Tax Debt Amongst Millenials In Canada

Like most individuals during the pandemic, millennials sought help from the government by signing up for CERB. Now, tax debt is one of the top causes of debt for millennials. Almost half of the millennials in the Hoyes study reported having an average tax debt load of $12,137 in 2022. 

Given that inflation has increased the cost of living, having a high amount of tax debt can lead to loan defaults and other payment issues.

Tax Debt Assistance In Canada

The Canada Revenue Agency has a lot of power when it comes to collecting unpaid taxes. However, if you’re struggling to repay your taxes and have a low income, you may qualify for one or more programs to help settle your tax debt. 

The CRA allows those who are struggling with debt to repay their tax debt in affordable installments. They also offer relief from interest and added fees on late tax payments. 

You can also opt for a consumer proposal or bankruptcy. These options can help you enter into a repayment plan or absolve you of your tax debts, respectively. However, these programs do not eliminate all of your financial obligations, and you may lose certain assets in the process.

If you have any further questions or concerns, contact the Canada Revenue Agency.

Credit Cards And Millennial Debt In Canada 

Millennials were the only age group to see a rise in unsecured debt in 2022. Credit cards and personal loans were common forms of credit used by millennials. In fact, 87% of millennials reported using their credit cards daily. 

Aside from credit cards, personal loans and high-cost payday loans are becoming increasingly popular. The high cost of living in inflationary times adds pressure to use credit cards to cover everyday expenses and stay afloat. 

The study notes that a rise in personal and payday loans also poses further issues. Noting how Buy-now, pay-later (BNPL) services and lack of financial literacy are leading to risky borrowing habits. 

The Government’s Plan To Protect Canadian Borrowers

In the 2023-2024 proposed federal budget, the Canadian government suggested lowering the cap for the criminal interest rate from 47% to 35% APR. The proposed change is intended to protect consumers from predatory lenders. However, it also means that those needing quick cash to supplement expenses will now be left with fewer choices. This is because the proposed cap will inhibit millions of Canadians with poor credit from qualifying for personal loans.

Personal and payday loans can be good substitutions in certain financial emergencies, especially for those with low credit scores. However, borrowing irresponsibly can lead to further debt problems in the case of missed payments or late payments. 

Credit Card Debt Assistance In Canada

Credit Cards can be useful and essential to everyday life in Canada. However, credit card debt can negatively impact your credit scores, which can affect your ability to be approved for other forms of financing in the future. 

One way to reduce credit card debt is by limiting its usage and making consistent payments (preferably over the minimum amount). Services like credit counselling provide further support and direction in managing credit accounts and negotiating lump-sum settlements with credit companies. 

In worst-case scenarios, bankruptcy and consumer proposals are two options that can help you. Keep in mind that bankruptcy and insolvencies should be a last resort, and can impact your credit. 

Does Debt Forgiveness Exist In Canada?

In Canada, there are a few debt relief programs that can help reduce or absolve you of your debt, keep in mind there may still be certain conditions. Here are some of the debt relief programs available in Canada: 

Credit Counselling

Speaking to a credit counsellor is a great first step to finding financial freedom. They are debt professionals who can help assess your financial situation and provide you with the best debt relief option for you. 

Consumer Proposal

Consumer proposals do not provide total debt forgiveness. But, they are a great option for Canadians struggling to keep up with their monthly debt payments. A consumer proposal is legally binding and administered by a Licensed Insolvency Trustee. Your trustee will create a plan or proposal to offer your creditors. Typically, proposals include an offer to pay back a certain percentage of your total debt. They may also include a request to extend the amount of time you have to repay your debt. Lower interest rates or pausing the accumulation of interest are also comment requests. 


Bankruptcy should only be considered as an option of last resort. With this option, you’ll also work with a LIT. The goal is to be discharged from all your eligible debts. This is an important point, not all debt can be included in a bankruptcy. Furthermore, as the debtor, you will have specific responsibilities to meet and may need to make surplus income payments. If you’re thinking about bankruptcy as a debt relief option. It is important to speak with a Licensed Insolvency Trustee. 

Getting Your Financial House In Order

Debt can be difficult to face and manage. Canadian millennials hoping to invest in their future might struggle to do so because of the rising cost of living and borrowing. However, there are options and resources available to help manage debt and subsidize other portions of your life.

It is always good practice to get your financial house in order by taking a look at your debt, credit products, interest rates and payment terms. Make sure you also review any financial and social aid provided by your provincial and federal government. 

Part of overcoming debt is taking proactive steps. Being resourceful in finding the help and support you need makes a huge difference in your capability to repay and settle your debt.

Frequently Asked Questions

What kind of debt relief program is available in Canada?

There are a few debt relief programs available in Canada. Programs or processes include bankruptcy, consumer proposals through a Licensed Insolvency Trustee and debt consolidation programs through a credit counselling agency. If you’re looking for professional help in managing and reducing your debt, speak to a professional credit counsellor to find which option is best for you based on your debt load, income, and ability to repay. 

Can a consumer proposal erase all of my debt?

Consumer proposals will not erase all of your debt. A consumer proposal is an offer created by your LIT. The goal of the offer is to pay back your creditors a percentage of what you owe them, to extend your repayment term or both. 

What kind of debts cannot be forgiven?

While the federal and provincial governments offer different forms of support to those struggling to pay back their debt, not all debt is forgiven. In general, student loan debt and secured debt are the hardest to be forgiven. For example, student loan debt can only be absolved in bankruptcy after 7 years of being out of school or 5 years under the hardship provision. Similarly, secured debt is not included in bankruptcy and consumer proposals. 
Maidina Kadeer, BA avatar on Loans Canada
Maidina Kadeer, BA

Mai Kadeer is a graduate of Concordia University, with a BA in English Literature, with a minor in Law and Society. Mai was a student strategist on the Concordia University Senate (2016), through the Academic Planning and Priorities committee. She has a background in financial budgeting as a board member for non-profit organizations, such as the Quebec Public Interest Research Group and the Concordia Food Coalition. For the past five years, Maidina has worked as a content specialist. Mai is passionate about helping Canadian consumers with financial management and literacy so they can make informed decisions regarding their personal finance.

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