Canadian Consumer Insolvencies Approach 2009 Record High

Canada’s highly indebted households are starting to crack under the pressure. Office of the Superintendent of Bankruptcy (OSB) data shows insolvencies climbed in March. Now at a 17-year high for the month, the volume was only second to the 2009 financial crisis.

What Are Consumer Insolvencies?

Consumer insolvencies are formal filings with the OSB, made with the help of a Licensed Insolvency Trustee (LIT). These are legally binding and include consumer proposals and bankruptcy filings. The option pursued depends on the amount of debt, assets at stake, and how far behind the borrower falls. 

Insolvencies are often thought to be a sign of economic pressure, but they’re a lagging indicator. The pressure builds up after months (or years)—often after juggling repayment strategies and missed payments. It’s a fragile state where unexpected bills or job loss turns into a tipping point. In other words, rising insolvencies don’t tell us about the pressures today. They validate the pressure that was being quietly experienced. 

Canadian Consumer Insolvencies Rise To Second-Highest On Record

Canadian consumer insolvencies, March.  

Source: OSB; Better Dwelling.

Canadian insolvencies rose to one of the highest levels on record. There were 13,406 insolvencies filed in March, 10.6% higher than the same month last year. It was the second-most filings for the month, just 1.64% below the 2009 record high. 

Canadian Consumer Credit Is Having A Rough Year

Canadian consumer insolvencies: Rolling 12-month sum, March. 

Source: OSB; Better Dwelling.

The surge isn’t just a base effect due to a concentration in the month. The OSB received 143,353 insolvency filings in the 12 months ending in March, 4.2% higher than last year. That makes it the second-highest 12-month period ending in March on record, 4.5% behind the 2009 record. Insolvencies have been consistently grinding higher over the past year.  

Whether insolvencies are “high” depends on the perspective. Many would argue that Canada’s population is larger than it was back then, making it a smaller relative share. But insolvencies don’t capture all debt stress. Many failures stay buried on lender books as missed payments, restructurings, or loans quietly extended. It’s not uncommon to roll all consumer debt into a mortgage takeout or HELOC.

Then there’s the fact that 2009 was the peak of the global financial crisis. Today, we’re approaching that level while the economy is supposedly fine. We also have the benefit of knowing 2009 was the peak in hindsight. Today’s data doesn’t tell us whether this is the top or just another step to the top.