Canadian consumer insolvencies on the rise

More than 12,000 Canadians filed for insolvency in May, a 5% increase from April and an 8.6% jump from the same period last year, data from the Office of the Superintendent of Bankruptcy Canada show.

Of the 12,375 consumer insolvencies filed in May, bankruptcies accounted for 5,163 and 7,212 were proposals, which are offers to creditors to settle debts under new terms.

Bankruptcies increased 6.2% from April to May but declined by 1.9% from a year ago. The number of proposals jumped 17.5% year over year.

For the 12-month period ended May 31, there were 122,693 insolvencies, a 5.2% increase. Proposals were up 12.1% over that period, while bankruptcies declined by 2.9%.

Last month, Equifax Canada reported that the average Canadian had $23,496 in consumer debt ($71,300 when mortgages were included) in the first quarter of 2019, up 3.2% from a year ago. Loans are taking longer to pay down and credit card use is rising, the firm said.

Delinquency rates are still low but rose by 3.5% year over year in Q1 to 1.12%, Equifax said.

The Bank of Canada’s next rate decision is July 10. Economists don’t expect a rate increase, with a cut more likely in the near term.

Read the insolvency statistics here.

Staff

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