Personal bankruptcies fall…for now

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There’s a little more good news on the household debt front: Fewer Canadians are filing for personal bankruptcy.

The Office of the Superintendent of Bankruptcy has reported an 8.1% decline in the number of Canadians who filed either a personal bankruptcy or a consumer proposal in the twelve months ended October 31, 2011.

Over the past three months, personal bankruptcy filings decreased by 16.7%, 14.2%, and 15%, while consumer proposal filings have increased by 7.4%, 7.0%, and 7.4%.

“Consumer proposals allow the hard-pressed consumer the ability to negotiate settlements with their creditors, a win-win for everyone” says Ted Michalos, a bankruptcy trustee with Hoyes, Michalos & Associates Inc.

Michalos recommends all Canadians take immediate steps to reduce their debt levels, as this will improve their ability to cope with potential interest rates increases or worse, the risk of job loss.

The unemployment rate has increased in Canada every month since hitting a multi-year low of 7.1% in October. The rate now stands at 7.5%.

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Rising unemployment will put further pressure on Canadians’ finances, Michalos points out. The recent uptrend in unemployment could point to an increase in consumer insolvencies in 2012.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.