Personal insolvencies continue to climb as more and more Canadians struggle with the cost of living crisis.
The Office of the Superintendent of Bankruptcy reported an increase of 15.4% over the 12-month period ending Sept. 30, 2024, when compared to last year.
“Consumer bankruptcies increased by 11.6%, while consumer proposals increased by 16.4%,” reads the latest Statistics Canada Insolvency report. “Consumer insolvency filings accounted for 95.5% of total insolvency filings.”
A total of 34,588 people across Canada filed for insolvency in the third quarter of this year.
Ontario alone saw 13,140 filings, an increase of 20.2% compared to last year.
Business insolvencies also rose by 16.2% nationally and by 40.2% in Ontario.
High interest rates are the primary factor in relation to the increase with many Canadians still trying to get back on their feet following the ten consecutive interest rate increases that began in March 2022.
While the rate peaked at 8.1% in June 2022, the central bank has since reduced its key interest rate several times, most recently to 3.75% last month.
However, the struggle for many Canadian households to stay afloat remains ongoing.
Inflation is the other major contributor to the insolvency trend, which started to ease more recently as well, with the rate dropping to 1.6% in September.
“After the inflation we’ve gone through in the last few years and the significant increase in interest rates that was necessary to fight it, it unfortunately doesn’t come as a surprise that insolvencies are up this much,” vice president of communications at the Montreal Economic Institute Renaud Brossard told True North.
Business insolvencies also shot up by 48.8% over the last year when compared to the year before.
Accommodation and food services, construction and transportation and warehousing were the sectors to see the largest increases of insolvencies last year.
Mining, quarrying, and oil and gas extraction saw a decrease of insolvencies over the same period.
“This is a stark reminder that there’s no such thing as free money in government spending; we always end up paying either through taxes, deferred taxes i.e. debt, or through inflation,” said Renaud.