The shock of rising interest rates isn’t just affecting the macro picture and grinding the US economy to a halt, but it is also having profound effects globally. In Canada, personal bankruptcies are on the rise as household debt lingers at, or above, all time highs and interest rates force the cost of servicing this debt even higher.

According to data from the Office of the Superintendent of Bankruptcy Canada, insolvencies climbed to 11,641 in October, a 9.2% rise compared to the year prior. Even more alarming, month over month this rise was up a staggering and somewhat inexplicable 16%, as if something "broke", pardon the pun, in October.

Bankruptcies increased 1.2% year-over-year and an astounding 13.5% on a month over month basis. Bankruptcy proposals increased 15.8% year-over-year and an even more dramatic 18.6% sequential increase.

These year-over-year numbers are alarming but the sequential rate at which these proposals and bankruptcies are rising make it clear that even the smallest uptick in interest rates is having an immediate and dire effect.

In Canada, annual increases were the highest in British Columbia and Prince Edward Island but there were also double digit gains in provinces like New Brunswick.

Rates in Canada are only still at 1.75% and the Bank of Canada said as recently as last Thursday that they are targeting a neutral rate "somewhere around 2.5% and 3.5%" - a tightening process which is certain to keep the insolvency and bankruptcy trend accelerating.

Chantal Gingras, chair of the Canadian Association of Insolvency and Restructuring Professionals recently stated: "High consumer debt levels and rising interest rates have been a growing concern over the last few years and we are now starting to see this reflected in the number of insolvent Canadians filing bankruptcies or proposals."

"Canada is in serious trouble", we wrote back in April 2018, when we pointed out that the country's over-reliance on its frothy, bubbly housing sector and the fact that the average Canadian household had failed to reduce its debt load would eventually come back to bite.

We look forward to the country continuing to prove us right.