Personal bankruptcies rose 22.5% in third quarter of 2022 compared to same time last year

There is a concern that more Canadians are reaching their financial breaking point as bankruptcies across the country have increased significantly.

The latest bankruptcy and insolvency data released by the Office of the Superintendent of Bankruptcy Canada (OSB) found consumer insolvency filings in Canada rose 22.5% in this year’s third quarter compared to the same quarter last year.

This is the highest increase in 13 years.

The third quarter rose 2.3% compared to this year’s second quarter.

Filings are still 25.5% lower than pre-pandemic levels in 2019.

Meanwhile, business insolvencies are up 48.5% during this year’s third quarter compared to last year — which is the largest percentage increase in 35 years of records.

“The concern is that more Canadians are reaching their breaking point financially, and as many desperately search for solutions to their debt problems, they may be lured by unrealistic promises to quickly solve their debt problems or fix their credit score,” says André Bolduc, Licensed Insolvency Trustee and Vice Chair of Canadian Association of Insolvency and Restructuring Professionals (CAIRP).

“Unfortunately, those promises can end up being too good to be true.”

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CAIRP is urging Canadians facing financial challenges to speak with government-regulated licensed professionals.

Some unlicensed debt advisors can cause unknowing Canadians to be charged hundreds or even thousands of dollars for services that are unnecessary or are not licensed to provide.

Instead, Canadians are being urged to speak to a Licensed Insolvency Trustee (LIT) if considering a consumer proposal or bankruptcy.

“LITs provide independent, unbiased advice about the options to deal with debt and they are required to discuss all options available for solving financial difficulties, including insolvency and non-insolvency options,” CAIRP explains.

Beware of unregulated unlicensed debt advisors claiming to be authorized to assist with insolvency options. https://t.co/wOgLweapNP #ConsumerAlert #FLM2022 #debtadvice

— CAIRP (@CAIRP_ACPIR) November 9, 2022

Usually, the initial consultations with LITs are free, “so those facing debt problems can get advice with no commitment and no upfront fees.”

“Those struggling with debt have three main options: They can obtain relief through bankruptcy; formulate a consumer proposal; or seek debt counselling.

“Licensed Insolvency Trustees take a customized approach to help people make the best decision to deal with their debt based on their circumstances. For individuals in significant financial difficulty, a consumer proposal or bankruptcy may be the best solution.”

CAIRP

Jean-Daniel Breton, Chair of CAIRP, encourages business owners to learn about their options if they need help with their business because closing their doors is not the only solution.

“When a business is struggling with debt, the best recourse is to speak with a Licensed Insolvency Trustee. They can assess the unique financial and operational aspects of the business to provide advice that can help make the business viable again, and assist the business owners in developing a restructuring and recovery plan that addresses the needs of all stakeholders,” Breton said.

“Or if the business is burdened with debt and no longer viable, they can offer options to formally wind down the business and will handle the liquidation process while ensuring a balance between the rights of the creditors and the debtors.”

Insolvencies rose the most in the 12 months before September 30 in the accommodation, food services, and construction sectors.

The mining, oil and gas extraction, and finance and insurance sectors saw the biggest decreases.