However, the annual change in the insolvency rate tells a very different story
Consumer insolvency filings in Canada posted a slight 2.4% decline in the third quarter after reaching a four-year high in Q2, according to the latest statistics released by the Office of the Superintendent of Bankruptcy.
This amounted to an average of 331 Canadians filing for insolvency every day in Q3, for a total of 30,471 filings.
However, on an annual basis, consumer insolvencies increased by 17.8%, placing the overall level closer to its pre-pandemic rate.
“Year-over-year consumer insolvenciesv are way up and have been for the last six consecutive quarters as they work their way back to pre-pandemic numbers,” said Andre Bolduc, licensed insolvency trustee and chair of the Canadian Association of Insolvency and Restructuring Professionals.
RBC Economics study shows Canadian spending slowing due to debt pressures. While spending is steady, early signs of weakness coincide with a slight unemployment rate increase.https://t.co/r5amlMW8vO#mortgagenws #mortgageindustry #householddebt #economy
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 11, 2023
Indebted Canadians at higher risk of fraud
With many Canadians struggling to keep up with rising costs and being forced to take on more debt to pay off their bills, Bolduc warned of debt relief scams that often involve lofty promises of debt relief.
“Debt relief scams often target indebted consumers by falsely promising insolvency options like consumer proposals and bankruptcies,” CAIRP warned.
“Some unlicensed debt advisory firms charge hundreds or even thousands of dollars in unnecessary fees for services they are not licensed to provide and often misrepresent the services they can offer,” Bolduc added. “With many Canadians struggling financially, there is more potential for them to be lured in by promises of a quick fix which will leave them worse off.”
