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BC Bankruptcy Statistics – May, 2017

August 9, 2017

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Consumer insolvency filings in British Columbia for the month of May totaled 936 which represents a decrease of 7.1% when compared to May of last year.

With the decrease of filings in May it marks the 12th month in a row where British Columbia had year over year declines in consumer insolvencies. It appears that with British Columbia’s relatively low unemployment rate individuals may be able to resolve, or at least postpone, any formal insolvency filings. Ironically, this may be detrimental to the individual as postponing a formal insolvency filing denies that individual the fresh start they receive by dealing with their financial difficulties through a Licensed Insolvency Trustee.

Nationally, consumer insolvency filings decreased by 1.1% for the month of May when compared to a year ago. All provinces except Alberta, Saskatchewan, and Quebec are showing declines in insolvencies when comparing to May of last year. Although some oil dependent provinces such as Alberta are showing limited increases in new filings year over year, the absolute number of filings is still relatively high given their population.

Despite the steady decrease in insolvency filings over the previous 12 months, there appears to be several triggers which have the potential to negatively impact British Columbia’s economy which may impact insolvency filings as a result. Some of the triggers currently being talked about are:

  • The new Provincial government in British Columbia and the impact they may have on business.
  • The slowing real estate market for single family homes in Vancouver and the impact it may have both on the industry, as well as on individuals’ ability to access equity in their homes.
  • The potential new qualification requirements on mortgages requiring a stress test at 2% above existing rates and the impact it may have on the real estate market.
  • The low vacancy rates for rental accommodation in Vancouver and the impact that it is having on rental rates and affordability in Vancouver.
  • The impact that the interest rate increases will have on household finances and discretionary spending.
  • The impact of the recent rise of the Canadian dollar on the industries which were benefiting from a weak dollar including the film industry, tourism and exports in general.
  • The new capital controls being implemented in China which attempt to limit the amount of funds leaving China and the impact it may have on luxury spending and real estate in British Columbia.
  • The current elevated debt levels of British Columbians and how it may act as a headwind for the economy due to the lack of discretionary income left after debt service payments.
  • The upcoming renegotiations with the United States and Mexico of the NAFTA agreement.
  • The potential tax changes to incorporated professionals and the impact that may have on their discretionary spending and the economy in general.

Any one of these points has the potential to negatively impact British Columbia’s economy. Alternatively, they could all work together to cause a greater slow down. Regardless, it is tough to see how a lull in insolvency filings will last too long.

Source for Statistics: Office of the Superintendent of Bankruptcy, Insolvency Statistics

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