Canadian Consumer Bankruptcies Rise 22.8%

Consumer bankruptcies in Canada are surging.

The number of consumer insolvencies rose 22.8% month-over-month in March, according to the Office of Superintendent of Bankruptcy (OSB).

That increase was the largest one-month rise in new filing activity in more than a decade as many consumers hit a breaking point when it came to staving off bankruptcy.

Several factors led to the month-over-month rise, including consumers running out of income supports, the return-to-work trend, resumption of wage garnishments, and legal courts gradually returning to more normal activities.

On a monthly basis, insolvencies rose the most in Prince Edward Island, New Brunswick and Saskatchewan.

However, insolvencies were still down 15.7% compared to a year earlier, when the federal government instituted a slate of wage and income supports in the early days of the pandemic, courts shuttered for in-person hearings and meetings with creditors were halted.

Overall, the number of consumer insolvencies filed throughout Canada fell 37% over the past 12 months due to wage supports and limited court dates.

In a news release, the OSB said the eye-popping jump in insolvencies in March reflected a backlog working its way through the system.