Canadian insolvencies are making a very large, and mostly unexpected surge. Office of the Superintendent of Bankruptcy (OSB) filings show a sharp increase for September. Ontario, Alberta, and British Columbia, in particular – are seeing the largest increases. One positive note is more consumers may be seeking protection from creditors earlier.

Canadian Insolvencies

In Canada, there’s two types of insolvencies – consumer proposals and bankruptcies. A consumer proposal is a formal agreement a borrower makes with creditors. The borrower pays back a portion or all of the debt, at a reduced rate. Bankruptcy is a formal discharge of a portion or all of your debt. Both mean consumers are seeking relief from creditors, they’re just two different methods.

Generally speaking, consumer proposals are viewed not as seriously as bankruptcy. A consumer proposal is typically an earlier form of intervention, for smaller amounts. Bankruptcy is more immediate relief, and the only option for amounts greater than $250,000. It’s not as serious technically, but some lenders view them in a similar light. It’s best not to have either form of insolvency, but if you’ve got take one – try to get help earlier than later. That said, let’s look at the debt storm brewing.

Canadian Insolvencies Were Up Over 19% In September

Canadian insolvencies made a large and unexpected rise. There were 11,935 insolvencies filed in September, up 19.3% compared to the same month last year. Consumer proposals represent 7,222 of the filings, up 30.6% from last year. Bankruptcies represent the other 4,713 filings, up 5.3% from last year. It’s a very large increase, but most of the increase came from just a few regions.

Canadian Conumer Insolvencies – September

The number of consumer insolvency filings received in September.

Source: OSB, Better Dwelling.

Looking at the 12-month rolling trend, we see a similar trend brewing. There were 133,923 insolvencies over the past 12-months ending in September, up 8.5% compared to a year before. Consumer proposals represent 79,457 of the filings, up 17.0% from a year before. Bankruptcies represent the other 54,466 filings, down 1.8% from last year. Bankruptcies are down for now, but consumer proposals more than make up for the drop.

Ontario Insolvencies Rise Over 28%

Ontario insolvencies are growing much faster than the national numbers. Ontario had 3,870 insolvency filings in September, up a massive 28.5% from last year. Consumer proposals represent 2,614 of the filings, up 41.6% from last year. Bankruptcies represent the remaining 1,256 filings, down 1.6% from the year before. This is the fastest growth in the country.

Canadian Conumer Insolvencies Change – September

The percent change in the number of consumer insolvency filings received in September.

Source: OSB, Better Dwelling.

The longer trend is also getting worse for the province. There were 43,240 insolvencies in the 12-months ending in September, up 13.4% from a year before. Consumer proposals represent 28,688 of the filings, up 22.9% from a year before. Bankruptcies represent the other 14,552 filings, down 1.6% from a year before. Nearly a third of all insolvencies in Canada are in Ontario now.

British Columbia Insolvencies Rise Over 18%

British Columba, a province not known for a high level of insolvencies, is seeing a bump. There were 992 insolvencies filed in September, up 17.5% from a year before. Consumer proposals represent 647 of the filings, up 32% from a year before. Bankruptcies represent the other 345, down 0.6% from last year. This is the third fastest growth for a province, right after Alberta.

Canadian Conumer Insolvencies 12-Months

The number of consumer insolvency filings received in the 12-months ending in September.

Source: OSB, Better Dwelling.

British Columbia has been seeing insolvencies rise over the past few months. There were 10,934 insolvencies in the 12-months ending in September, up 9.5% from last year. Consumer proposals represent 6,890 of the filings, up 16.3% from last year. Bankruptcies represent the other 4,044, down 0.4% from last year. This is a little faster than the national pace of growth.

Canadian Conumer Insolvencies Change

The percent change in the number of consumer insolvency filings received in the 12-months ending in September.

Source: OSB, Better Dwelling.

Canadian insolvencies are rising very quickly. Bankruptcy filings have been on the decline over the past 12-months. However, consumer proposals are rising more than enough to make up the difference.

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