Today, the Office of the Superintendent of Bankruptcy released their annual bankruptcy statistics. Here’s the big picture: while consumer insolvencies (that means personal bankruptcies and consumer proposals) declined 11% overall in Canada last year, numbers are still 33% higher than pre-recession levels in 2007. The year 2009 was a big one for consumer insolvency filings for two reasons: first, the recession; second, changes to bankruptcy laws caused more people to file before the new “harsher” rules came in to effect. Numbers were similar in Ontario: 15% decline since last year, but 30% higher than pre-recession levels. The GTA was down 11% in 2010.
What I do find interesting is that, on a percentage basis, people in Ontario file more consumer proposals than anywhere else in the country: 42% vs. 31% nationally.
Are we out of the woods? Not a chance, in my opinion. Even if you ignore 2009 (the “perfect storm” year) filings have steadily increased year over year. The economists with the crystal balls see soft economic growth for Canada next year with moderate improvements in the unemployment rate. With respect to unemployment, economists do not see the unemployment rate falling to pre-recession levels in the next two years so overall consumer insolvencies are going to remain high.
About Benny MendlowitzBenny Mendlowitz, CA, CIRP, Bankruptcy Trustee is a graduate of the University of Toronto and solves debt problems in his North York and Scarborough offices.
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