Canadian Consumer Insolvencies Just Saw The 2nd Biggest Month Ever

Canadian households are struggling to carry some of the biggest debt loads in the world. Office of the Superintendent of Bankruptcy (OSB) data shows consumer insolvencies just had the second-biggest August on record. The move wasn’t exactly surprising and builds on a trend that’s seen consumer insolvency filings rise to a level not seen outside of recession. 

Canadian Consumer Insolvencies Had The 2nd Biggest August Ever

Canadian consumer insolvency filings for the month of August, by year.

Source: Office of the Superintendent of Bankruptcy (OSB); Better Dwelling.

Canadian consumer insolvency filings are climbing to dizzying heights. Consumers filed 11,388 insolvencies in August, an increase of 8.9% from last year. It was the second-biggest August on record, only beat by 2009’s Great Recession filings. The issue has become a trend in recent months.  

Canadian Consumer Insolvency Filings Surge Ahead of Recession

Canadian consumer insolvency filings over 12-months. 

Source: Office of the Superintendent of Bankruptcy (OSB); Better Dwelling.

Consumers are suddenly in a rush to seek formal debt relief. A whopping 134,466 consumer insolvencies were filed in the 12-month period ending in August. This represents a 16.0% increase when compared to the same month last year, and the biggest annualized volume since March 2020. Not a great month to match but also a commonly misunderstood comparison period. 

Most people recall that March 2020 was a bad month for the global economy. As the first month of a global pandemic, it wasn’t the best environment to be a highly indebted household. However, the above data is for the 12-month period ending in March 2020, and it highlights a very different issue. 

Households are under more pressure with higher rates, but they were also getting crushed back in 2019. Back then it was widely expected, and there was no shortage of global warnings about the country’s highly indebted borrowers. A stop-gap in 2020 delayed insolvencies, but didn’t necessarily fix them. The market is largely picking up where it left off, this time with more programs to carry even larger loads of debt for those who like a little risk. 

Canada’s surge of consumer insolvencies is concerning, but by itself it wouldn’t be that big of an issue. However, that changes when viewed in the greater context of the economy. Economic data showing performance only seen in the worst recessions ever, is starting to accumulate. If that’s the picture when things are normal, the one expected during an actual downturn is very ominous.

12 Comments

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  • [email protected] 4 months ago

    THINGS ARE ABOUT TO GET CRAZY
    WHEN THE PAYCHECKS STOP
    LOOK OUT BELOW
    THE HOUSE OF CARDS IS CRASHING

    • LFS 4 months ago

      They’ve been crazy for years, presume you mean crazy bad 🙂

  • Kyle 4 months ago

    And rising mortgage delinquencies? It’s getting interesting.

  • Timmy O’Toole 4 months ago

    My understanding a lot of this has to do with the rising audit counts. Not because people have unpaid taxes, but the gov is now focused on recovery stats and incentivizing settling for a higher amount.

    I don’t know if it’s a directive, but we’ve been seeing more CRA agents hitting households (& unincorporated small biz) with a bill that can’t be justified in anyway, then attempt to settle. If your household was struggling in 2020, it gets fully destabilized by the cost of audit (or those who skip audit and just pay the fake bill).

    • Michael Ko 4 months ago

      What you’re saying is the CRA took a page out of the scammers impersonating them, and just started using it?

    • Steve 4 months ago

      Simple answer? File a consumer proposal or go banko, CRA will be forced to settle for pennies on the dollar or nothing. Usually they insist on 100% within 12 months regardless of whether you can pay or not.

      There will be many more insolvencies to come as Canada’s economy continues to collapse. Trudeau and crew have deliberately made Canada an unaffordable place to live, so none of this should be coming as any surprise. The insolvencies and mortgage defaults will grow so huge that not even they will be able to bail the banks out or the credit card companies.

  • Heather 4 months ago

    Timothy, you could be right about the CRA. My stepson is self-employed, with an accountant doing his taxes. CRA doubled up on a potential payment, and now he’s into a few months of fighting to get it corrected. And further accounting expenses, I guess.
    Real ripe, considering 160 CRA employees, who while working and getting paid, helped themselves to the CERB benefits. I wonder how many were fired. Or were they promoted and are now trying to mess with us?

    • Former Tax Masochist 4 months ago

      The problem with fighting CRA is the accountants are afraid to contradict them because they fear all of their other client files will be opened up (whether that’s worth fearing or not).
      A lawyer will know the tricks that CRA is pulling and can protect you but too often, if you’re a smaller business going to a bigger law firm, they’ll see their job as billing you and not serving you in any way. They’ll charge you $50,000 and all they’ll give you for that is a 4 page letter to CRA that can be distilled down to “my client is an idiot, please don’t be mean to them….” Then they take you over to the bankruptcy trustee who buys them the best steak dinner or invites them to a box at Scotia Arena, and then they’ll often continue billing you for representation through the bankruptcy or consumer proposal.
      With a boutique tax firm you may get lucky or you may be far worse off.

  • Marko 4 months ago

    MSM refuses to report on this. CBC would never ever report anything that would be negative for Justy

  • Joshua Smith 4 months ago

    As long as Justin Trudeau is in Ottawa there is hope. He is EXTREMELY intelligent and will turn Canada around.
    Canada MUST remain strong and MUST increase temp foreign workers and international students.
    Canada must remain resolute and grow in population which will grow the economy. House prices are investments and must be protected by government policies.

  • Rich 4 months ago

    The CRA did they not just let go of hundreds of employees for scamming the system they they were running? How can we trust anything they do or should say have done is the CRA going back years yo see if all the work thos former scammer was legal? CRA will never tell us if there was wrong doing in the past.

  • peter 4 months ago

    Can you stop letting American Homebuy submitting self serving comments , the man is an idiot and doesn’t deserve the forum you are giving him , this is Canada , not the United Simpletons of America . Comments should be relevant to the articles you are publishing , and there are some great contributors , you are simply diluting the content by letting this continue.

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