Posthaste: Insolvencies jump sharply as Canadians struggle with debt more than ever
A “sharp” increase in insolvencies in May suggests that households are struggling more than ever with debt.
Insolvencies, which include bankruptcies and proposals to renegotiate loans, rose 12.3 per cent in May from April and are up 30.9 per cent from the same time last year on an adjusted basis, according to data from Innovation, Science and Economic Development Canada. They are now at their highest level since the start of the pandemic, with proposal numbers cresting above the pre-COVID era, said Charles St-Arnaud, chief economist at Alberta Central, in an analysis of the latest figures.
May is historically a quiet month for insolvencies, St-Arnaud said in his analysis.
“The increase in 2023 has been more significant than usual in almost every province,” he said. “This situation could be a correction after a small decline in April. However, so far this year, the monthly increases have been notably bigger than historically and suggest a fast-rising trend in insolvencies.”
In Canada, insolvencies numbered 11,262 in May, down 4.1 per cent compared with 2019. Of that, bankruptcies totalled 2,735, down 42.6 per cent relative to 2109. However, proposals totalling 8,561 in May were 22.6 per cent higher relative to 2019. Year-to-date, insolvencies are now up 27.6 per cent.
Insolvencies rose above their pre-pandemic levels in Manitoba, British Columbia, Alberta, Ontario and Saskatchewan — all provinces with rates of debt-to-disposable income higher than the average.
Manitoba reported a 35.4 per cent jump in insolvencies relative to 2019, the highest increase among the five provinces where insolvency rates rose above pre-COVID levels. In B.C., insolvencies jumped 17 per cent, in Alberta 7.3 per cent, Ontario, 2.9 per cent, and
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