There were 890 consumer insolvency filings in British Columbia (BC) during the month of March. This represents an 11.9% decrease when compared to March of last year and a 17.9% decrease when compared to March 2016. The average number of monthly consumer insolvency filings over the last two years was 863, making March of this year 3.1% above the average.
As a whole, British Columbians are currently facing several challenges which are likely going to have an impact on their financial situations. These challenges include:
Approximately 35% of Canada’s Gross Domestic Product (GDP) is dependent on trade and approximately 65% of Canada’s exports go to the United States (US). At this point, it is hard to imagine Canada’s trade relationship with the US could get any worse. In addition to the North American Free Trade Agreement (NAFTA) being at risk, the US has also imposed steel and aluminum tariffs and is threatening tariffs on motor vehicles. As a result, Canada is responding with retaliatory tariffs. Unfortunately, none of this bodes well for Canadian exports.
Despite a number of external pressures, the Bank of Canada (BOC) left interest rates unchanged at their last meeting on May 30. Reasons to raise rates include rising US rates, supporting the Canadian dollar and normalizing monetary policy. The BOC’s choice to keep rates the same was based largely on trade uncertainty, sluggish GDP growth and the high debt load Canadians are currently carrying. The BOC will meet again on July 11.
Summer driving season is here and gasoline prices remain high. High gas prices have an immediate negative impact on peoples’ finances. People pay more at the pump when they fill their tanks and businesses pay more to transport goods which ultimately leads to higher prices.
Real estate accounts for 18% of the BC economy, therefore any dissipation in the Vancouver market will have broad implications. In May, residential property sales were 19% below the 10-year average. A recent study by Macquarie Capital Markets forecasts a housing-led recession beginning in 2020, with unemployment rising by 370 bps to 790 bps. A spike in unemployment would have a significant impact on over-extended Canadians.
On the other hand, BC’s current job market is strong and people have jobs. The unemployment rate in BC is 4.8% and it is the lowest in country. When people have jobs and a steady income, they can continue to make payments to their creditors. However, if people want to compromise their debts with their creditors, a consumer proposal may be an excellent option. A proposal enables individuals to settle their debts for a fraction of what is owed.
Source: Office of the Superintendent of Bankruptcy, Insolvency Statistics
Licensed Insolvency Trustee
Greg Best enjoys working with clients to create solutions for their financial needs.
CPA, CA, CIRP
Licensed Insolvency Trustee
Chris Sinclair believes a practical approach is required to solve serious financial difficulties.
Cynthia’s goal is to ensure that every client feels respected and understood and to instill hope that they can get their life back by giving them the fresh start they deserve.