Canada

Canada’s Debt Relief Pauses Insolvencies, But Still Biggest Year Since 2010

Canadians are still getting crushed by debts, but that isn’t a priority right now. Office of the Superintendent of Bankruptcy Canada (OSB) data shows a slower month in March. Despite the drop, this has more to do with the pandemic relief de-prioritizing the urgency of filings. Even with the drop, this is still the busiest 12-month period ending in March since 2010.

COVID-19 Relief

There’s a number of COVID-19 relief programs helping to delay insolvencies. A halt on evictions, emergency transfer payments, and easy credit allow healthy households and companies bridge into the future. It’s also been helping delay entities on the verge of becoming insolvent. Experts have been saying in the short-term, we should see a pause in the near-term. However, growth is expected to return as things begin to normalize, but expect some noise. Even with that noise, the climb towards recession levels has continued from last year.

Pandemic Slowed Filings, But Busiest Year Since 2010

Canadian insolvencies fell on a year over year basis, but it’s a busy year for credit relief. There were 11,198 insolvencies in March, down 9.1% from last year. Of those, consumer insolvencies represented 10,947 of the filings, down 8.5% from last year. Businesses represented another 251 filings, down 30.7% from last year. The pandemic lockdown led to a slower second half for filings.

Canadian Insolvencies Have Biggest Year Since Great Recession

The number of insolvency filings in the 12-months ending in March.

Source: OSB, Better Dwelling.

Insolvencies year to date (YTD) haven’t been this high for the month in a decade. There were 141,757 insolvencies YTD in March, up 8.4% from last year. Consumers represented 138,166 of those filings, up 8.7% from last year. Businesses represented another 3,591 of those listings, down 0.9% from last year. March YTD filings haven’t been this busy since 2010. As previously stated, the pandemic has lead to some deceleration of the trend.

Ontario Has The Most Insolvency Filings In Canada

Ontario is the province with the biggest number of filings these days, with the month a little busier than the rest of the country. There were 3,824 insolvency filings in March, down 2.6% from last year. Filings YTD reached 46,740 in March, up 14.9% compared to the same period last year. The monthly number didn’t fall as quickly as the average, and YTD growth is the highest in the country. Ontario also takes the new top spot for most filings in the past year.

Canadian Insolvencies – 12 Month

The number of insolvency filings in the 12-months ending in March, by province.

Source: OSB, Better Dwelling.

BC Insolvencies Slow, But Worse Than Average

BC’s slowdown was also a little smaller than the average for the country. The province saw 906 insolvencies in March, down 4.6% from last year. Filings YTD reached 11,389 in March, up 9.8% from the same period last year. This is the third fastest growing province  year to date, despite the slow month.

Insolvencies Are Rising In Every Canadian Province

The percent change in rolling 12-months of insolvency filings, ending in March.

Source: OSB, Better Dwelling.

Quebec Insolvency Filings Fall, See Slower YTD Growth

Quebec lost the top spot for the province with the most filings to Ontario. There were 3,407 filings in March, down 16.8% from last year. Filings YTD reached 44,681 in March, up just 2.2% from last year. The monthly decline is substantial, but is a little noisy considering the pandemic. YTD growth is lower than general growth across the country.

The year-over-year monthly numbers are dropping, but the overall growth trend persists. An insolvency filing isn’t necessarily the same as going broke. Households and businesses are still feeling the pressure. Many just haven’t been dealing with creditors as an immediate issue. When the economy becomes unfrozen, a mild spike should occur. This is typically followed with a cooling, before falling towards the long-term trend.

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7 Comments

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  • Marc 2 months ago

    I wonder if taxpayers realize they’re securing the loans of a lot of these companies that have no intention of paying back the debts they’re taking?

  • Mortgage Guy 2 months ago

    How are business insolvencies in Ontario lower than the number of business lease defaults? Are people really just not filing, and waiting for creditors to come at them?

    • Pete 2 months ago

      C’est la vie. A lot of people are treating this like the end of the world, and they don’t have to do anything ever again.

      • Trev 2 months ago

        Their are alot of people/business not paying anything. I would call it the big freeze.
        I suspect at some point the house of cards collapses, its all rolling up to the big guys, the baks!

  • Hgbvv 2 months ago

    What the government is doing to young people is criminal. They tax the young to prop up housing costs for the old and keep them alive with health care. Now this money printing and mortgage deferral to save speculators. Young people are too dumb to realize they are being screwed.

    • Oakville Rob 2 months ago

      Maybe the young people you know are dumb, but the young people I talk to have been clear – for, like, a decade – that Boomers stole their future. Many don’t even want children. It’s tragic, and Boomers may pay yet.

  • straw walker 2 months ago

    In BC the courts sell those houses that a financial institution has rendered insolvent v.s. a receiver in other Providences.
    The problem is the courts are closed, so banks are unable to move these properties forward. I would guess that banks are no longer foreclosing on houses in Vancouver until this is resolved.
    This might be a reason for slower house foreclosures.

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