Judy Southon never imagined it would come to this. She and her husband Vic had good jobs, raised a son and were homeowners. But after a run of bad luck, the 67-year-old wound up deep in debt and had to declare bankruptcy.

"I was scared and shocked," says Southon, who lives in Toronto. Judy Southon with her husband, Vic. Southon, 67, fell deep into debt after Vic developed dementia and could no longer work. He died in 2011. (Judy Southon)

The golden years have become a tarnished chapter for some. Seniors are carrying more debt into retirement and, as a result, a growing number are going bankrupt.

According to the federal Office of the Superintendent of Bankruptcy, 10 per cent of those who declared bankruptcy in 2014 were aged 65 and older. That's a whopping 20.5 per cent increase from 2010.

Spend savings, pile on debt

One of the reasons is actually a plus — we're living longer. "For many of us, we're outliving our savings," explains Nora Spinks with the Vanier Institute of the Family, a non-profit research organization.

Another driving force is that more seniors are retiring in the red. According to Statistics Canada's most recent numbers, in 2012, 42.5 per cent of people aged 65 and over still had debt. That's a stunning increase of 55 per cent since 1999.

Bankruptcy trustee Doug Hoyes blames the lingering debt largely on our addiction to low interest loans.

"If you've got decent credit, you can go out and get a mortgage for 2.5 per cent. So why not be buying the bigger house?" he says. "Today we don't need to save because we all have a line of credit."

But paying down debt in your senior years can be challenging on a fixed income. Throw in an unplanned setback like a financially needy adult child or a family illness and the bills can become crushing.

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Southon's setback began when her husband's communications business failed in 2002. To keep paying the bills, they had to sell their condo. Then, the unthinkable: Vic was diagnosed with dementia and could no longer work.

"I became very frightened, quite frankly, because I realized he wasn't going to be generating any more income and everything was up to me," says Southon.

She had given up her teaching career to go into business with Vic. While caring for her ill husband, she still managed to hold down a job at a bank until she was laid off in 2008. Wayne Kilgallen, 64, owes $15,000 in credit card debt he racked up to buy necessities like food and clothing. (CBC )

"The stress of the financial burden plus the stress of caregiving was huge," she says.

Vic's dementia worsened to the point where she had to move him into a nursing home. That meant paying his housing costs plus her rent. "We had two homes to pay for plus at this point I wasn't making enough to make ends meet," says Southon, She was landing only short-term, low-paying jobs.

Vic died in 2011 but the bills kept mounting to the point where Southon couldn't keep up. "The 'b' word was floating around in my mind for about a year," she says before she bit the bullet and, at age 66, filed for personal bankruptcy.

The financial burden of ill health

A new research study examining older Canadians and finances found that unexpected major events such as big health expenses challenged many seniors' financial plans.

The Ontario Securities Commission report surveyed more than 1,500 Canadians over 50.

For those under 75, the most common event derailing financial plans was an unplanned early retirement, often due to ill health.

Wayne Kilgallen worked most of his life as a farmer in Saskatchewan. But he had to quit five years ago after suffering a severe heart attack. Now, at age 64, he lives on disability in Toronto, where he has family.

To cover costs for simple things like clothing and food for himself and his dog, he says he's had to resort to credit cards, racking up $15,000 in debt.

"Usually I run out of dog food and I worry more about my dog than I do myself," says Kilgallen, adding that he can't give up his pet because she's "family."

Kilgallen's debt payments now cost him about half his $872 monthly living allowance.

"I try to make it but it's hard," he says. "I got this debt, I got that debt, I can't really do anything."

A better plan

Spinks, with the Vanier Institute, says the best way to guard against falling into financial traps in later years is to develop a long-term plan.

"When it comes to senior debt, the more we understand about our own expenses and our own financial situation in adulthood, the better equipped we will be to be able to handle the future and less likely to fall into financial difficulty," she says.

Although she fell into difficulty, Southon says she now has her finances in order and has mapped out a promising path for the future.

She's working two part-time jobs and has just become a licensed spiritual practitioner. She hopes to set up a practice and use her life experiences to help others.

"I look back on it as a learning experience," says Southon. "It is a way of starting over again. Never will this happen again."