The number of insolvent Canadians skyrocketed by 33 percent on a year-over-year basis in January 2023, according to a new report, which blames rising inflation and high interest rates for the jump.
Consumer insolvency filings in January increased 14.2 percent from the month before, said CAIRP, citing the latest statistics from the Office of the Superintendent of Bankruptcy.
“The impact of high inflation and numerous interest rate hikes are taking their toll on Canadians, particularly those who are deeply indebted and therefore more financially vulnerable,” according to CAIRP vice-chair André Bolduc and a licensed insolvency trustee.
“These individuals and families may turn to credit cards or lines of credit to bridge the gaps in their household budgets—to pay for groceries and essentials, for example. In the higher interest rate environment, it is harder to pay off these debts,” he said.
More Canadians are using consumer proposals, a legally binding process that allows them to pay creditors a percentage of outstanding debt, administered by a licensed insolvency trustee, said Bolduc.
The process offers legal protection from creditors and stops collection calls and wage garnishees.
In January, 78.7 percent of consumer insolvencies were filed as proposals, a 5.6 percent increase from 73.1 percent in January 2022.
Across the country, Ontario (3,063), Quebec (2,167) and Alberta (1,370) recorded the largest volumes of consumer insolvencies in January.
The provinces with the largest percentage increases in consumer insolvencies were Manitoba (66.9 percent), Nova Scotia (55. percent), and Alberta (41.7 percent), but all provinces experienced an increase, CAIRP indicated.
