Canadian insolvencies are making a very large, and mostly unexpected surge. Office of the Superintendent of Bankruptcy (OSB) filings show a sharp increase for September. Ontario, Alberta, and British Columbia, in particular – are seeing the largest increases. One positive note is more consumers may be seeking protection from creditors earlier.
Canadian Insolvencies
In Canada, there’s two types of insolvencies – consumer proposals and bankruptcies. A consumer proposal is a formal agreement a borrower makes with creditors. The borrower pays back a portion or all of the debt, at a reduced rate. Bankruptcy is a formal discharge of a portion or all of your debt. Both mean consumers are seeking relief from creditors, they’re just two different methods.
Generally speaking, consumer proposals are viewed not as seriously as bankruptcy. A consumer proposal is typically an earlier form of intervention, for smaller amounts. Bankruptcy is more immediate relief, and the only option for amounts greater than $250,000. It’s not as serious technically, but some lenders view them in a similar light. It’s best not to have either form of insolvency, but if you’ve got take one – try to get help earlier than later. That said, let’s look at the debt storm brewing.
Canadian Insolvencies Were Up Over 19% In September
Canadian insolvencies made a large and unexpected rise. There were 11,935 insolvencies filed in September, up 19.3% compared to the same month last year. Consumer proposals represent 7,222 of the filings, up 30.6% from last year. Bankruptcies represent the other 4,713 filings, up 5.3% from last year. It’s a very large increase, but most of the increase came from just a few regions.
Canadian Conumer Insolvencies – September
The number of consumer insolvency filings received in September.
Source: OSB, Better Dwelling.
Looking at the 12-month rolling trend, we see a similar trend brewing. There were 133,923 insolvencies over the past 12-months ending in September, up 8.5% compared to a year before. Consumer proposals represent 79,457 of the filings, up 17.0% from a year before. Bankruptcies represent the other 54,466 filings, down 1.8% from last year. Bankruptcies are down for now, but consumer proposals more than make up for the drop.
Ontario Insolvencies Rise Over 28%
Ontario insolvencies are growing much faster than the national numbers. Ontario had 3,870 insolvency filings in September, up a massive 28.5% from last year. Consumer proposals represent 2,614 of the filings, up 41.6% from last year. Bankruptcies represent the remaining 1,256 filings, down 1.6% from the year before. This is the fastest growth in the country.
Canadian Conumer Insolvencies Change – September
The percent change in the number of consumer insolvency filings received in September.
Source: OSB, Better Dwelling.
The longer trend is also getting worse for the province. There were 43,240 insolvencies in the 12-months ending in September, up 13.4% from a year before. Consumer proposals represent 28,688 of the filings, up 22.9% from a year before. Bankruptcies represent the other 14,552 filings, down 1.6% from a year before. Nearly a third of all insolvencies in Canada are in Ontario now.
British Columbia Insolvencies Rise Over 18%
British Columba, a province not known for a high level of insolvencies, is seeing a bump. There were 992 insolvencies filed in September, up 17.5% from a year before. Consumer proposals represent 647 of the filings, up 32% from a year before. Bankruptcies represent the other 345, down 0.6% from last year. This is the third fastest growth for a province, right after Alberta.
Canadian Conumer Insolvencies 12-Months
The number of consumer insolvency filings received in the 12-months ending in September.
Source: OSB, Better Dwelling.
British Columbia has been seeing insolvencies rise over the past few months. There were 10,934 insolvencies in the 12-months ending in September, up 9.5% from last year. Consumer proposals represent 6,890 of the filings, up 16.3% from last year. Bankruptcies represent the other 4,044, down 0.4% from last year. This is a little faster than the national pace of growth.
Canadian Conumer Insolvencies Change
The percent change in the number of consumer insolvency filings received in the 12-months ending in September.
Source: OSB, Better Dwelling.
Canadian insolvencies are rising very quickly. Bankruptcy filings have been on the decline over the past 12-months. However, consumer proposals are rising more than enough to make up the difference.
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Finally some real growth to talk about. How does that saying go? Hindsight is 20/20? Apparently it’s talking about the year 2020. The days of the residential ATM are over and Toronto is becoming the UpsideDown.
You guys have a typo in H2 tag: “Canadian Conumer Insolvencies 12-Months”, should be “Consumer”
But realestate in Toronto isnt over valued so we’re good right???
Yes, the other day, it was marked as the affordable.
But realestate in Toronto isnt over valued so we’re good right???
When I hear people with low pay jobs buying houses as an investment property….. It reminds me of the old story of Warren Buffet.
It is said that once he was sitting at his shoe Shiner… .when the man tells him… “Mr. Buffet I will give you a good investment advice … buy into the tech sector… me and my family are investing on it and making a fortune”.
Mr. Buffet went to his office and told his traders to sell any tech stock they have…
When even the shoe shiner has invested in the stock market there is none else left…..
I guess in Canada we are getting close to it….
It’s not housing that’s driving up insolvencies, housing is affordable. Food is unaffordable.
Yes. Paying $1,750+ hydro for a one-bedroom apartment in Scarborough that is owned by the slum lords of Canada is affordable to the gentrifiers.
I predict there will be further increase after the Christmas season.
Normally it’s retail credit cards go delinquent first than auto loans then finally mortgages.
As more young skilled workers leave Canada due to unaffordable housing prices the tax base and economy will shrink. Unemployment and benefits cost will increase, this will lock the Canadian Economy in a downward spiral which will turn into lost decades.
The only way out is force transfer real estate speculator funds into Canadian wealth by taxing and foreign owning Canadian residential real estate annually at 5% estimated property value. This will force them to either sell or rent it out. We need to bring down housing price now.
Wishful thinking.
Scarborough has seen proposals to build dozens of 30-storey luxury towers in Golden Mile, Pharmacy Avenue, Mc Cowan RT station, Markham Road and Ellesmere, and there are plans to build a few 20+ storey condo towers along Birchmount, Warden and Kennedy starting from Eglinton and ending at Steeles.
There is a growing resentment against those who are planning to buy those condos though. Newcomers from the Caribbean tend to have their subsidized housing torn away to make way for condos and they don’t take that lightly.
The free market will never produce adequate rental supply without intense gov’t incentives. It’s folly to think otherwise.
They’re building these luxury towers because that’s where they can squeeze out an attractive return. Why provide rentals to overworked, poorly paid people in Toronto for a crappy return when I can build a few luxury towers for Dubai, China, Singapore, Russia, Persia’s wealthy and make a quick buck?