Increase in insolvencies could signal Canadians struggling with debt

They are up 22.5% in September from a year ago

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Canadian households are feeling economic pressure from many directions and it is manifesting in different ways, one of them being an increase in insolvencies.

Nationally, insolvencies — which include bankruptcies and proposals to renegotiate financial terms — rose 22.5 per cent in September from a year ago, according to federal government figures.

Insolvencies were also up year over year in almost every province: Newfoundland and Labrador, 51.1 per cent; Nova Scotia, 37.6 percent; Saskatchewan, 35.1 percent; British Columbia, 33.5 percent; Alberta, 9.3 percent; Ontario, 29.3 percent; Quebec, 18.1 percent; New Brunswick, 18.9 percent; and Prince Edward Island, 20 per cent.

They were down 9.2 per cent in Manitoba.

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While the number of bankruptcies remained mostly unchanged from a year ago, proposals “have increased sharply in recent months,” according to a note from Charles St-Arnaud, chief economist at Alberta Central. Proposals have risen above pre-pandemic levels nationally but also in the provinces of Saskatchewan, Alberta, Manitoba, BC and Ontario, St-Arnaud said.

“This situation suggests a rise in households struggling with their debt load as the Bank of Canada continues raising interest rates,” the Calgary-based economist said.

For September, the most recent month for which data are available, proposals were up 32.6 per cent from a year earlier, and 18.7 per cent from January. There were 7,027 proposals filed in September, on a seasonally adjusted basis. Meanwhile, bankruptcies were up a meagre 0.1 per cent from a year ago. Year to date, they are down 7.7 per cent. The number of bankruptcies filed nationally in September was 2,320.

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Nationally, insolvencies were down from August to September, having fallen 5.1 per cent month over month after jumping nine per cent in August.

“Nevertheless, the reduction in September does not alter the trend,” St-Arnaud said.

Canada and consumers are still swimming in an economic soup.

Inflation took off in late 2021, hitting a 40-year high in June of 8.1 per cent. It has since moderated somewhat to 6.9 per cent, according to Wednesday’s consumer price index release for October, but remains well above the Bank of Canada’s target of two per cent. To tame inflation, the central bank has had to raise its benchmark lending rate six times this year from 0.25 per cent to 3.75 per cent.

As interest rates go, so goes the cost consumers must pay to borrow.

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“Record levels of household debt, declining purchasing power due to rising inflation, and the sharp rise in interest rates are putting pressure on households’ finances,” St-Arnaud said.

According to data from Statistics Canada, as of the second quarter of this year, the debt-to-disposable income was 183.99 per cent, meaning Canadians owed almost $1.84 for every dollar borrowed. That figure was up from of 181.63 per cent in the first quarter of 2022.

“The question is whether the strength of the labor market … and the vast amount of saving(s) accumulated during the pandemic, estimated at $320 billion, will provide some relief,” St-Arnaud said.


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It’s starting to look like Canadian inflation has peaked. October’s consumer price index (CPI) reading came in at 6.9 per cent, the same as the month before.

Annual price increases surged to 8.1 per cent in June, and have slowed ever since. That’s notable because some of Canada’s peer countries are fighting double-digit inflation. The United Kingdom’s Office for National Statistics on Nov. 16 reported its consumer price index rose 11.1 per cent in October from a year earlier, up from 10.1 per cent in September.

The latest CPI won’t stop the Bank of Canada from hiking rates further, but it might pave way for a pause in the new year, writes Kevin Carmichael. Read more here.

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  • Jean Yves Duclos, Liberal MP for Quebec and minister of health, will announce Government of Canada financial assistance to support the growth of the Institut national de recherche scientifique, a unique, innovative academic institution dedicated exclusively to post graduate research and education
  • SaaS North, Canada’s largest, in-person B2B event where Canada’s fastest growing Software as a Service (SaaS) companies come to learn, network and grow, continues today
  • Carla Qualtrough, minister of employment, workforce development and disability inclusion, will highlight funding for the Canada Building Trades Union; a financial commitment that continues to support small and medium-sized enterprises in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador
  • Filomena Tassi, responsible minister for FedDev Ontario, will highlight economic growth through women-led tourism projects in southern Ontario. She will also make an announcement to highlight jobs and economic growth in Ottawa’s tech sector
  • Lloyd Longfield, Liberal MP for Guelph, will highlight support to supply-managed sectors as presented in the 2022 fall economic statement. He will be joined by representatives of supply-managed sectors, including Marie Ly, senior director of Dairy Processors Association of Canada; David Wiens, vice president of Dairy Farmers of Canada; Phil Boyd, executive director of Turkey Farmers of Canada; and Amrit Leighl, vice president of operations at Gay Lea Foods
  • Monte McNaughton, Ontario minister of labour, immigration, training and skills development; Peter Bethlenfalvy, Ontario minister of finance; and Marc Arsenault, business manager of the Provincial Building and Construction Trades Council of Ontario, will make an announcement about jobs for young people
  • Carbon Engineering will announce an investment from Airbus that supports the advancement of CE’s Direct Air Capture technology that pulls carbon dioxide directly out of the air at large, industrial scale
  • Karina Gould, minister of families, children and social development; and Pamela Gross, Nunavut’s deputy premier and minister of education, will make an announcement concerning affordable child care in Nunavut
  • Environment and Climate Change Minister Steven Guilbeault will attend the Net-Zero Government Initiative event at COP27
  • Today’s data: Canadian employment insurance data; US initial claims, housing starts, building permits, Philadelphia Fed index
  • Earnings: Gap Inc.

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Black Friday, the official kickoff to the holiday shopping season, is almost here. A Deloitte report suggests that seasonal spending is expected to drop about 17 per cent this year due to many Canadians tightening their budget as a result of inflation. There is also uncertainty about how the economy will fare in 2023. Many would-be shoppers are planning to trim their holiday spending or shop early for the holiday season in order to better capitalize on sales. Barry Choi, a columnist for our content partner MoneyWise provides tips on how to get the best prices as you hunt for those Black Friday deals.


Today’s Posthaste was written by Gigi Suhanic (@gsuhanic), with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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