Canadian bankruptcies exploded in September compared to 2021.
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According to new data from the federal government, bankruptcies exploded 22.5% in September among Canadian households.
Thus, 9,441 bankruptcies have been registered this year compared to 7,705 in 2021, according to Canada’s Bankruptcy Supervisor’s Office.
These numbers include both personal bankruptcies and consumer proposals, where agreements are negotiated with creditors, the latter accounting for nearly three-quarters of all consumer bankruptcies.
The situation is even worse for companies, with bankruptcies and proposals to creditors up 37% in September compared to the previous year.
According to Pierre Fortin, chief bankruptcy trustee Jean Fortin and others, the increase in bankruptcies is a return from the particularly low level recorded during the pandemic.
“We’ve had half the number of insolvency filings we’ve had during the pandemic. We see there’s a certain upside. At the business level, we’re at -13% of what we had in volume before the pandemic. On the individual level, we’re at -40% of what we had before the pandemic. We see that Canadian households resist what is happening much better than companies, which are in a much worse situation, especially small and medium-sized businesses,” noted Pierre Fortin.
While public funds have helped families significantly, Pierre Fortin notes that creditors have also shown greater resilience.
“Add to that the fact that people can’t spend, we have a record savings rate,” he adds.
Economists believe that the situation should continue to deteriorate in the coming months.
While consumers have amassed a lot of savings during the pandemic, rising inflation and a return to “normal” spending are significantly increasing the debt ratio.
Pierre Fort concludes, “People with large mortgages may suffer the consequences after Christmas or next spring, when we have exhausted all options, namely wool stocks and credit cards.”
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