In 2019, 375 Canadians per day sought financial protection or debt restructuring
Canadian consumer insolvencies jumped dramatically at the end of 2019 to the highest level in almost a decade.
There were over 35,000 insolvencies filed in the last quarter of the year, the most in any quarter since the record of 40,500 in the third quarter of 2009.
For the year, there were over 137,000 cases representing a 9.5 per cent increase or 12,000 more than in 2018. This figure however includes both bankruptcies and proposals, the latter being where a debtor agrees to pay back a portion of the debt.
Still bankrupticies increased 1.7 per cent
The highest rates for insolvencies were in Ontario at an increase of over 15 per cent from 2018, followed by Alberta at just under 15 per cent, and British Columbia at over 10 per cent.
Business insolvencies were up 2.8 per cent in 2019.
While personal insolvencies were up noticeably across Canada, there was also an increase in business insolvencies (submitted-via CBC)
What is concerning to analysts is that the insolvencies are occurring at a time of a relatively stable economy and low unemployment rate of 5.7 per cent. The last time insolvencies peaked a decade ago, the unemployment rate was 8.6 per cent.
A corporate insolvency expert noted that downturns in several sectors including resource industries and the information and cultural sectors.
Alberta-based David Lewis said that business may deal with financial pressures by cutting back on expenditures, capital investment and on staff which in turn has a knock-on effect which could increase consumer insolvencies.
Adding to the concern is the record level of household debt in Canada which stood at $2.3 billion by the end of December. There have long been fears that an increase in the low interest rates could push many of those currently struggling with debts, over the edge into insolvency.
Additional information-sources
- BNN-Bloomberg: C Fournier: Feb 10/20: Consumer insolvencies approach record in debt-weary Canada
- Globe and Mail: Lundy/Bradshaw: Feb 10/20: Consumer insolvencies on the rise, raising concerns about financial well-being of Canadian households
- Financial Post; C McClelland: Feb 10/20: 375 Canadians a day went insolvent last year, the most since the financial crisis
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