Canadian Consumer Insolvencies Just Saw A 2009-Like Growth Surge

Canada has some of the most highly indebted households in the world, and they may be approaching their breaking point. Office of the Superintendent of Bankruptcy (OSB) data shows December was one of the busiest in years for consumer insolvencies. The year ended with the most filings since 2009, growing at a pace similar to the Global Financial Crisis. 

Why Are Consumer Insolvencies Important?

Consumer insolvencies are a filing made when a person is seeking formal debt relief. It’s composed of both consumer proposals and bankruptcies. The former is a negotiation for debt repayment while protecting assets, while the latter is debt repayment while giving up assets. Both are strong signs of consumer weakness and both are lagging indicators (like GDP), but this one tells us about consumer financial distress. Afterall, licensed insolvency trustees (LITs) are attempting to prevent critical financial failure after the debt becomes difficult to manage.   

Despite “lagging,” this is a really important data point for housing and mortgages. A rising trend means consumers are increasingly struggling to handle their debt loads. Only a portion of those people seek formal debt relief, and mortgages are the last bill that households let go into arrears. Insolvencies don’t just give us hard data; they’re a window into consumer health. 

Canadian Consumer Insolvencies Hit A 5-Year High For December

Canadian consumer insolvencies continued to climb into the end of the year. The OSB received 9,300 insolvency filings in December, up 2.8% from last year. It marked a 5-year high for the month, topping off a year of record setting months  

Canadian Households Filed The Most Insolvencies Since 2009

Annual Canadian consumer insolvency filings.

Source: OSB; Better Dwelling.

In general, last year was an unusually big year for consumer insolvencies. The OSB received 137,300 consumer insolvency filings in 2024, an increase of 11.4% from a year before. It was the 2nd biggest year for filings, only behind the 2009 recession. Growth over the past two years has only been beaten by the surge seen during the Global Financial Crisis. 

Despite better-than-expected economic data revisions, there’s quite a few signs that disagree. Not only did Canada just see the 2nd largest year on record for consumer insolvencies, but it’s seeing growth comparable to the Global Financial Crisis. If this is how consumers are dealing with a “strong” economy, a downturn may be a lot worse than expected. This data is also a warning sign for those rapidly escalating mortgages in arrears.