Canadian consumer insolvencies have surged to their second-highest level on record, according to a recent report. In August 2024, the country saw 12,939 insolvencies, which include both bankruptcies and proposals, marking an 18.4% jump compared to the same period last year. This is the largest monthly total since the 2008 financial crisis, driven by the ongoing cost-of-living crisis and rising debt levels among Canadian households.
Several factors are contributing to the rapid rise in insolvencies. Inflation remains a significant challenge, making daily expenses harder to manage. At the same time, the Bank of Canada’s higher interest rates have increased the burden on borrowers with variable-rate loans and mortgages. Many Canadians are struggling to keep up with their debt payments, pushing them into financial distress.
Experts warn that consumer insolvencies could continue to climb if these economic pressures persist. Although the economy is showing resilience, wage growth has not kept pace with inflation, leaving many Canadians stretched financially. The surge in insolvencies is seen as a sign of deepening household financial vulnerability, particularly as more consumers turn to insolvency to resolve their mounting debt.
With no immediate relief in sight, Canadians may continue to face a tough financial landscape. The government and financial institutions are being urged to offer more support for households struggling with debt, while consumers are being advised to seek professional help to manage their financial situations before resorting to insolvency.
Comments