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BC Bankruptcy Statistics – October 2017

January 16, 2018

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Consumer insolvencies decreased by 2.9% in British Columbia during the month of October 2017 when compared to October 2016.

In total, there were 773 consumer insolvencies in British Columbia in October 2017. This figure is approximately 15% below the four-year average of 916 filings per month.

The decrease in filings for October means that only one of the previous seventeen months has shown an increase in insolvency filings. That being said, the 479 consumer proposals filed in October are in line with the four-year average of 475 consumer proposals filed per month in British Columbia.

With these numbers in mind, it certainly feels as if the Canadian economy is performing well. The most recent jobs report showed Canada adding 79,000 jobs in December, well above expectations. In addition, the unemployment rate in Vancouver has dropped to 4.1%, which is what most would consider full employment. Oil prices also exceeded $60 for the first time since 2015, helping the Prairie provinces recover from previous loss. We also saw the Canadian dollar trading above USD $0.80, higher than it traded for most of 2016 and 2017. Not to mention, Canada is expected to lead the G7 in gross domestic product growth according to the International Monetary Fund. Finally, consumer insolvencies are 2.5% below the previous national average over a twelve month period.

Naturally, there is always the other side to consider. With the current state of the economy, it will be difficult for the Bank of Canada to resist raising interest rates when it meets on January 17.  With Canadian household debt already at record levels and government deficits ballooning, even a quarter point rate increase will have consequences. In addition, new mortgage qualification rules recently took effect which will essentially reduce the purchasing power of those taking on an uninsured mortgage.  With finance, insurance and real estate taking up such a large portion of the Canadian economy, any downturn in the housing market will have far reaching consequences. Finally, a new provincial budget is expected in February which may have some consequences for the provincial economy.

Although it may seem counter intuitive, the best time to file a consumer proposal is when the economy is strong. A proposal enables an individual to settle their debts for a fraction of what is owed (try our  debt calculator to see what your payments could be). Generally, in order to make a viable proposal one would need to be employed and earning an income, which is more likely in a strong economy.  Alternatively, in a weak economy with fewer employment prospects, it may be more difficult to avoid bankruptcy by filing a proposal.

Source: Office of the Superintendent of Bankruptcy, Insolvency Statistics

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