Canadian consumers are known for their resilience, but that luck might be running out. Office of the Superintendent of Bankruptcy (OSB) filings show consumer insolvencies had one of the biggest June’s on record. A sudden surge of consumer insolvencies over the past year has the annual volume at the third-largest peak on record, and the first outside of recession. That brings up a lot of questions about where this number heads in the coming months as things cool.
Canadian Consumer Insolvencies Just Had The 4th Biggest June Ever
Canadian insolvency filings are climbing fast. The OSB received 11,096 consumer insolvency filings in June, an increase of 4.2% from last year. An unusually large volume of filings, making it the biggest June since 2016. It was the fourth-largest June on record, only behind 2009, 2010, and 2016.
Canadian Consumers Have An Unusually Big June
Canadian consumer insolvency filings with the OSB in the month of June.
Source: Office of the Superintendent of Bankruptcy (OSB); Better Dwelling.
The increase wasn’t sudden, but a gradually developing trend over the past few years. Consumers made 131,251 insolvency filings over the 12-month period ending in June. This represents a substantial 16.5% increase compared to the 12-months before. Just to put that number into context—this is an average of 359 consumers filing insolvency per day. Great time to be an insolvency trustee, not so much a consumer.
Canadian Consumer Insolvency Filings Surge Ahead of Recession
Annual Canadian consumer insolvencies.
Source: Office of the Superintendent of Bankruptcy (OSB); Better Dwelling.
Canadians haven’t sought this volume of annual debt relief since April 2020. That was supposed to be a very different time, making this all the more concerning. Aren’t households being told the economy is great, and soon to be the envy of our economic peers?
Back when this volume of insolvencies was last seen, the economy was in lockdown. This time around, the economy theoretically is doing so well that policymakers are bragging about Canada leading the G7 for growth. Lenders have also been told to work with mortgage borrowers to ensure they can handle their payments, leading to much longer amortizations than regulations typically allow. Even with state-mitigation factors, the 12-month trend is on track to hit the third-highest peak in well over 30 years
Something doesn’t quite make sense in this narrative. If this is a strong economy, the next recession won’t be pretty.
Clearly heading into absurdly high levels when 2020 kicked off. Can’t wait for them to make up another reason they’ll need to bail out lenders from bad loans.
Bingo. You can delay a problem, but that doesn’t mean it was fixed. All of these politicians aren’t trying to make things better, they’re trying to push the problem onto the next guy so they can continue their looting.
2015
All over again
Just buy more stocks
the most concerning part here is most people don’t know how to file for insolvency, they just crash and burn with their debt. If more people are filing, a multiple are just going to default.
Same problem with business insolvencies. They average person doesn’t want a credit hit, so they take their losses with them after the business shutters and pays it off over their lifetime.
People think the credit reporting system is going to improve renter credit, but they just needed recourse for when you don’t pay.
What happens when you do not pay $100,000 of credit card bills, Not much, a few demanding letters and generally your other credit cards from other banks mostly keep working. It of course gets black marks on your credit report but if you do not need credit overall there is little affect. Most people think all hell will break loose but most banks just write you off and do nothing.
100% right. Although the 9 month discharge is only for low income people it seems. Otherwise it is usually now 21 months. Getting a mortgage will be hard for about 7 yrs but walking away from a pile of debt you will never be able to pay off is a life changing event which gives you a fresh start. The way things are going nowadays, I see many, many more bankruptcies ahead in the coming years as consumer debt in Canada is piling up like never before because more and more people cannot afford even the basics in life and wages are suppressed because of all the migrants and immigrants flooding in. Even if the feds cut legal immigration numbers to 2014-15 levels – illegal migration will ramp up like never before – especially if Donald Trump becomes president. Millions will flee north to avoid the deportations – not south.
Don’t worry Marc Miller will solve this by bringing in a million more people into Canada this year for lowering wages ands artificial demand for Canadian housing.
Trudeau is EXTREMELY intelligent and will help Canadians through these times. The government must support the house prices and so everything is on the table including a new tax to raise money to help those with mortgages.
This is a joke right???? The only people benefitting from the free handouts are those not making, or paying, these taxes! Being in the middle I don’t qualify for the free money Trudeau is so eager to throw away. But I sure as hell lose a ton of money from my pay! How about Trudeau stops throwing away Canadians hard earned tax money??? Perhaps start using the millions of dollars in the newly acquired weed revenue to give tax payers a break??? Another tax??? Seriously??? Now that’s too funny!
Calm down Janet.. he was being sarcastic..
Criminal Human Trafficking is not Consuming.
The other issue is that Credit Counselling firms are not allowed to advertise on Google anymore which is one of the main reasons insolvencies have risen over the years as that is the first option a debtor should look into before filing a Consumer Proposal or Bankruptcy. The Google Debt Services Policy states “Google allows ads promoting debt services as long as the advertiser and provider of these services is a Licensed insolvency trustee registered with the Office of the Superintendent of Bankruptcy.” The OSB had a big hand in that so if anyone Googles for help, only Bankruptcy Trustee’s will come up in the sponsored ads and is a huge issue as debtors aren’t aware of other options. The Google Policy team has advised they will not change this after multiple attempts so it is quite said the OSB has taken over that market.
Bankruptcy trustees in general are your best best as they are properly licensed and are much more professional. They outline your choices very well and don’t always recommend bankruptcy but instead consumer proposals or outright settlements if possible. A Bankruptcy trustee has legislated authority and a lot of power as opposed to these other types of so called credit counsellors. Many of which are a bit shady to say the least.
All Credit Counselling companies are fully licensed and bonded with their province now as Debt Repayment Agencies. Thankfully all the unlicensed and debt settlement companies in the past have been shut down with the licensing rules. A Consumer Proposal and Bankrutpcy show in public records for life so not always a good option and some people can’t qualify for that option as well if you have a lot of equity in your home, having to sponsor someone and some insurance licenses you can’t have any insolvency on file so good to know there are other options.