Nearly 1.4 million Canadians

missed a credit payment

in the second quarter of this year. One of them may have been your kid. Now what?

Delinquencies are stabilizing, but not for consumers under 36, according to credit agency Equifax Inc. The average non-mortgage debt climbed two per cent to $14,304, and the non-mortgage balance delinquency rate for more than 90 days was up 19.7 per cent from a year ago for these

gen-Zers

and “late”

millennials

.

Before we mock their profligate ways, Statistics Canada said the

unemployment rate

among returning students aged 15 to 24 was 20.1 per cent in May, a 3.2 percentage point jump from a year ago. It’s tough to find a job and pay down your expenses when your shelter and food costs have been rising for years.

Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, said some people are doing better at lowering their borrowing, but others not doing as well and struggling wth rising debt.

“We start to look at some of the younger consumers and they are increasing their credit card spending, while some of the older consumers are cutting back,” she said, adding some of the increase may be a necessity. “It is the only way they have to pay for certain things. It is difficult to adapt. And if you don’t have a job, what do you do?”

Brian Doyle, president of Ottawa-based Doyle Salewski Inc., a licensed insolvency trustee, said he is regularly seeing clients with maxed-out credit cards.

“They are in with the payday loan people and dealing with these high-interest rate lenders. Lower-income people are desperate for any money,” he said. “We can take care of the debt. But the budgets still don’t work.”

A consumer proposal is an option, but it is usually structured under a five-year repayment plan with your creditors. Even after repayment, it is part of your credit history for three more years, and some life plans could be impacted by the increased difficulty of borrowing.

Bankruptcy

is even harsher.

It’s no surprise that parents will help a child, but adult children also help elderly parents. One solution, common in some cultures, is having multigenerational households.

“I have a relative moving back in with her parents and she makes $70,000 a year, but her rent was going up and she couldn’t afford it,” Doyle said, adding this woman was carrying $24,000 in student debt and a car loan.

Statistics Canada earlier this month said 2.4 million people in Canada lived in a multigenerational household, which amounts to about 6.5 per cent of all Canadians living in a private household. Of those households, 52.7 per cent were what the agency called racialized and 40.5 per cent were born outside Canada.

Doug Porter, chief economist at the Bank of Montreal, said the data is from 2021, but rising shelter costs and food prices will only encourage the trend.

“The only way to explain how the country has handled the burst in population is just more doubling up or living at home,” he said.

Doyle said the price for that is fewer people forming their own households in the crucial 25-to-34-year-old group, pointing to a recent study that only 17 per cent of Americans were doing that today. Say goodbye to the idea of nurturing your grandchildren because by the time your kids get around to creating their own families, you will be in a nursing home.

Caryl Newbery-Mitchell, a licensed insolvency trustee at MNP Ltd., said every client has a different case, but she sees many parents in

retirement

or pre-retirement supporting their children.

“The consequences are that those are crucial years and you are supposed to pump money into your retirement,” she said about housing expenses dropping as an empty-nester. “When you hit retirement, you may no longer have the savings you need to retire. It’s a challenging conversation and hard for most parents to say. ‘I won’t do it and I will leave them to figure it out.’”

It’s also easy to start looking at your house as an asset, a reality driving the rise in

reverse mortgages

.

Vince Gaetano, a principal broker and owner of Owl Mortgage, said rates on reverse mortgages have come down, making them more palatable. Usually only available to people 55 and over, a reverse mortgage allows you to draw equity out of your home without making payments.

“We are seeing a huge uptick because cash flow is so tight,” he said, adding that some seniors are getting reverse mortgages for just their own expenses. “It’s really just the last bastion an elderly person can qualify for because there is no equity lending — without meeting a stress test — unless you go into private space, which is costly. But I also see it with parents trying to help their kids for shelter purposes.”

Ted Rechtshaffen, chief executive of TriDelta Private Wealth, said helping out children is one of the most challenging conversations he has with clients.

“Tough love can be a really valuable thing,” he said, referring to the general idea of not bailing out a child.

He is not wrong about that. Wiping out your child’s credit debt only to see it ramp back up doesn’t make much sense.

But Rechtshaffen concedes that another benefit of helping your child out is making use of your money while you are still alive, which means helping them out financially, maybe even to buy a house.

“The financial question is: Can you afford it? And to me, that is any planning. You plug in a number and assume it’s gone,” he said.

Jeopardizing your own financial future to help out your child doesn’t make sense, but there are compromises out there, and that increasingly might be everybody living together longer.

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You might have to make room for your grandchild, though.

• Email: gmarr@postmedia.com