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There were 925 consumer insolvency filings in British Columbia (BC) during the month of October this year, compared to 773 in October of last year. This represents a 19.7% year-over-year increase in filings, with overall filings now up by 1.5% for the year in BC. This was the second consecutive month of growth in insolvency filings and it was the fourth highest number of monthly filings in the last two years.
Nationally, insolvency filings were up by 8.9% in October when compared to October of last year. Notably, all provinces had year-over-year increases in October except for Newfoundland. Whereas Prince Edward Island, New Brunswick, Saskatchewan, Alberta and BC registered double-digit year-over-year increases, while the remaining provinces registered increases in the mid-single digits.
The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) represents more than 980 members who work in the insolvency profession and it includes almost 90% of all Licensed Insolvency Trustees licensed under the Bankruptcy and Insolvency Act. CAIRP recently issued a press release predicting an increase in insolvencies in the next year. Some key points CAIRP raised in their prediction were:
In the previous two periods of interest rate hikes, insolvency filings began to increase two years after interest rates began to increase. When interest rates began to increase in 1996, insolvency filings followed by starting to increase in 1998. When interest rates began to increase in 2004, insolvency filing began to increase in 2006. In the current cycle, interest rate increases started in 2017, leading to the prediction that insolvencies will begin to increase in 2019.
There are several challenges facing individuals, including rising interest rates and high levels of household debt. Further complicating their situation will be the impact that rising interest rates have on consumer spending, Gross Domestic Product and business growth. These factors on their own may have limited impact as it relates to insolvencies, however combined they may create the perfect storm for individuals.
CAIRP recently surveyed its members to gather insight on future trends for insolvency filings. As CAIRP members meet with individuals on a daily basis to discuss their financial challenges, this audience provides helpful insight into the struggles people are facing. Of those surveyed, 97% stated they felt insolvency filings would either be flat or increase next year and over 70% believed filings would rise over the next five years.
It appears both the quantitative and the qualitative data is starting to align, and a new trend may be starting to form for insolvency filings. Although the outcome is yet to be determined, all the indicators are pointing to increases in insolvencies for 2019.
Try our debt calculator to assess your different options for paying down your debts. If you’re unable to see an end and are feeling hopeless when it comes to getting ahold of your finances, it may be an appropriate time to file a consumer proposal with a Licensed Insolvency Trustee.
Get in touch with one of our Licensed Insolvency Trustees today for your free, no-obligation consultation to learn how you can get on the path to becoming debt free.
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.