Consumer insolvencies in Canada jumped by 9.3 per cent in April, compared to the same month a year earlier, according to data from the federal Office of the Superintendent of Bankruptcy.
Consumer proposals are an increasingly popular alternative to bankruptcy, where the debtor works out a deal with creditors to pay a portion of their debt.
The 11,785 insolvencies recorded in April are the highest for the month since 2010, when Canadian consumers were still recovering from the Great Recession.
Insolvencies rose most in Newfoundland (up 51 per cent) and Alberta (up 18.7 per cent) but also saw significant increases in Ontario (up 11.2 per cent), British Columbia (up 5.8 per cent) and Quebec (up 5.3 per cent). Saskatchewan (down 11.7 per cent) is the only province to have seen a decline.
The problem is that many households are struggling to adjust to higher debt payments, especially given that consumer debt once again hit record-high levels in the final months of 2018.
Although mortgages have been responsible for a great deal of the run-up in household debt, it may be more frivolous forms of borrowing that are driving households to insolvency. One very common is making the minimum payment on one’s credit card. This is one of the easiest ways to get trapped in debt given the high interest rates. – CINEWS