This is what financial experts have been warning about for months—rising interest rates coupled with a record-large debt burden is prompting an increasing number of Canadian households to file for insolvency hitting an eight-year high in the first quarter of this year.
There were 32,239 consumer insolvencies in the first quarter of 2019, according to the Office of the Superintendent of Bankruptcy Canada. That number that includes both bankruptcies and consumer proposals, an increasingly popular alternative to bankruptcy.
It’s the highest number of insolvencies since 2011 and marks a 6.1-per-cent increase from a year earlier, the largest such jump since 2009, when Canadians were dealing with the fallout from the global financial crisis.
Media reports suggest that many households are foregoing basic necessities and are plagued by calls from debt collection agencies.
Research shows roughly half of Canadians don’t believe they would be able to cover their expenses if they came up just $200 short in a given month. Much of the pressure comes from debt payments, which are eating up a near-record share of Canadians’ incomes, at 14.9 per cent.
Household debt rose to yet another record high at the end of 2018, according to Statistics Canada, reaching $1.79 in debt for every dollar of disposable income. -CINEWS