Canadian households went from swimming in debt, to drowning in it last year. Office of the Superintendent of Bankruptcy Canada (OSB) data shows a substantial climb for insolvencies in December. Every province in the country showed large growth, with half printing double digits. The swelling insolvencies led the national number of filings, to the highest level since the Great Recession.
Canadians Filed The Most Insolvencies Since 2009
Last year was a huge year for insolvencies, with every single province seeing a rise. There were 10,427 insolvency filings in December, up 13% from the same month last year. During the 12-months ending in December, the country saw 140,858 filings, up 9.3% from a year before. This is the highest level of insolvency filings the country has seen since 2009.
Canadian Insolvencies Have Biggest Year Since Great Recession
The number of insolvency filings in the 12-months ending in December.
Source: OSB, Better Dwelling.
Ontario Takes The Top Spot For Insolvencies, Second For Growth
Ontario is the province with the most filings in the country. The province represented 3,409 of the filings in December, up 13.7% from the same month last year. In the 12-months ending, there were 45,754 filings, up 15.0% compared to the same period a year before. This was the second fastest growth in the country, just after Newfoundland.
Canadian Insolvencies – 12 Month
The number of insolvency filings in the 12-months ending in December, by province.
Source: OSB, Better Dwelling.
B.C. Sees Double Digit Growth For Insolvencies
B.C. made a large increase for both the monthly and annual numbers, but not as big as Ontario. The province saw 910 insolvency filings in December, up 15.8% from the same month last year. In the 12-months ending, there were 11,348 filings, up 10.4% compared to a year before. That means BC had the fifth largest increase in the country last year.
Insolvencies Are Rising In Every Canadian Province
The percent change in rolling 12-months of insolvency filings, ending in December.
Source: OSB, Better Dwelling.
Last year was a strangely large year for insolvency growth. Every single province is seeing growth, with half the provinces in the double digits. The country is now seeing the most insolvency filings since the Great Recession. Considering unemployment is near record lows, and a recession is believed to be far off, this is an unusual situation.
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That’s because the Great Recession was delayed by piling debt onto households. Now we’re seeing household failure, something truly spectacular. In a non-recessionary environment, this is developing nation stuff.
Good piece about the institutional exposure building in debt:
“High-Yield Was Oxy. Private Credit Is Fentanyl.”
https://www.institutionalinvestor.com/article/b1k369v2lg69qt/High-Yield-Was-Oxy-Private-Credit-Is-Fentanyl
With the low unemployment we will see higher immigration levels that may actually save the situation. (?)
The higher levels of immigration are actually what’s hiding the poor GDP performance. On a per capita basis, there’s almost no growth – so we are in a near recession like level of performance, it’s just obfuscated.
The abnormally high levels of immigration orchestrated by the government to avoid a headline recession are actually making the situation worse. You can’t blame people for seeking a better life in Canada and willing to go through hardships to settle here but what government is essentially doing by exploiting it is importing the third world living standards to squeeze Canadians for the benefit of the special interest groups.
Their strategy is twofold: a) at the top, do nothing about money laundering and foreign RE speculation b) at the bottom, suppress wages and living standards by importing as much cheap and agreeable labour force as possible. And working Canadians are squeezed in between. The insolvency numbers speak for themselves.
This is NOT an anti-immigration post, quite opposite. Canada has a better immigration track record and it should be preserved. If these attempts to paper over the real problems with unrestrained immigration continue, it’s going to snap and there will be a massive anti-immigration backlash. I don’t know how obtuse one has to be to not being able to see it.
i wonder sometimes if student visa immigration is just a way to keep the CAD from going too low compare to the us dollars. international student exchange their current for CAD therefore creating demand for Cad
increase immigration is signalling Canada desperation for outside money and avoid default
Lotta doom and gloom on this board.I guess some people want armageddon so they can purchase a home on the cheap,
Canada total dept to GDP is 90%(this includes all leves of government)while USA is 107% so why would Canada default on its debt? The yields on canadian govermenmt debt dont suggest an imminment default.
So, if Canada defaults on its debt(unlikely cos even if the worst circumstances) the central bank would just step and buy the debt or print money),scores of other countries would have also defaulted
Thats government debt to GDP, check out out household debt to GDP. We have more household debt than GDP. 4th highest in the world. Money printing can’t do much about that.
Dear Alvi, Sadly your socialistic MMT mentality will and is destroying all western countries. Reckless Govt fiscal and monetary policies will lead to extreme inflation. When that happens interest rates will be forced higher (regardless of govt efforts) and that will destroy real estate values. Canada has 93% debt to GDP. US has 106%. That only makes Canada the best looking horse at the glue factory.
God have mercy on our souls and the future generations that will inherit this s#it show .
Canadian immigration and the universities use foreigners as a way to get artificial demand for Canadian dollars, slumlord housing and overpriced rentals. When the newcomers spend their last dime, or the international students graduate, they are left with nothing. It’s a scam.
We need legal immigration because the population is aging
Are immigrants coming without elderly dependents? Otherwise that doesn’t solve the problem mathematically. Always funny to see that repeated, despite zero evidence that helps offset liabilities.
Immigration fills holes culturally and socially, but let’s not pretend it actually solves the dependency issue.
Higher levels of immigration don’t necessarily solve the issue people think it does. Last time, as incomes stagnated and the cost of living jumped, professionals migrated to the US in “brain drain.” Canada just replaced them with lower earning immigrants (since an immigrant typically makes 30% less than locally raised people).
Our 2019 study helps explain why this is happening for those interested https://www.hoyes.com/press/joe-debtor/
Thanks for sharing. Always look forward to your reports.
These are trends in number of insolvencies. How about the dollar amount? Population has been increasing, too, so insolvencies per million adults, for example, might be a better measure?
OSB hasn’t released that information yet – they won’t do so until their full year-end report comes out. What our study found was that the average income of an insolvent debtor rose significantly. More prosperous people are filing, so we expect we will see a rise in the rate per 1,000 in 2019.
Aren’t wealthier people generally the ones that use insolvencies, since it’s hard for poor people to obtain sufficient credit to actually need to file for bankruptcy?
Excellent question. It’s neither poor nor wealthy. The average insolvent’s household income is 50% of the average Ontarian an d80% are employed. You are correct in that you need enough income to get credit, but the credit they are using is to keep up with rising living costs. Once credit capacity is maxed, and interest consumes most of their pay, they become insolvent. What we are seeing is that those who could keep afloat two years ago (slightly higher income earners) no longer can – hence the rise in insolvencies.
hummmm yes when you actually think about this.makes a lot of sence
A per capita chart would be nice. Clearly Ontario is doing better per capita than Quebec but it’s hard to visualize the other provinces.
On a per capita basis #of insolvencies per person for the largest provinces for 2019 were as follows:
1 Quebec .5%
2 Alberta .38% – no surprise there
3 Ontario – .31% – that’s a surprise almost tied with slumping Alberta.
4 BC – .22%
Don’t forget the number of quit claims and cures. Not included in Canadian stats anywhere, but included in the US – so that’s why their numbers are always higher.
The legal system in BC that involves a home being foreclosed on is quite antiquated and not really functioning.
Most of the Canadian Providences use a receiver to manage the property until the sale is completed. The receiver then sells the property and disperses the funds to the lender.
In BC the property is awarded to a court and after a sale date is set , which is not that transparent, a judge decides on the sale. Then after a period of one year, in which time the previous owner may , repurchase the property even after it has been sold to a new owner.
BC home foreclosures are just not an effective and just method of foreclosing.
Banks and lenders in BC would much rather have the owner sell the property, which would then arrive at a clean sale.
Hence we are seeing a lot of sales in Metro Vancouver..
Very well said in some of the comments. In good times double income, moderate cost of living and every thing was Hunky Dory. Once the cost of living went up and salaries remained more or less same , servicing of debt becomes difficult. Hence rise in insolvencies. BTW the stats for rise in employment is not always correct, even minimum wage part time jobs become a part of these numbers. No one talks of all the jobs lost in manufacturing & construction industry.
Strange how less than three and a half months ago, the MSM was telling us prior to the election that our economy was as good as it could be.
That wouldn’t have been to help the Liberals in their re-election after the MSM was gifted with $650,000,000.00 taxpayer dollars by Trudeau in the months leading up to the election?