Statistics

Personal Bankruptcy Trends & Insights

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Statistics show a modest uptick in personal bankruptcy figures, with consumer insolvencies and proposals rising. Proposals, accounting for nearly 79% of cases, remain popular due to asset retention and a shorter credit impact compared to full bankruptcy.

Recent Trends in Personal Bankruptcy

January 2025 saw a 20% increase in total insolvencies compared to December 2024., Consumer bankruptcies rose by 11% during the same period., Consumer proposals surged by 22.8%.

January 2025 saw a significant increase in personal bankruptcies and insolvencies in Canada, with total insolvencies rising by 20% compared to December 2024. Among these, consumer bankruptcies increased by 11% and consumer proposals surged by 22.8%. This shift illustrates a growing trend where more Canadians are seeking formal debt relief options as financial pressures mount. For example, 11,196 consumer insolvencies were filed in January 2025, reflecting a 3.8% increase from January 2024. This trend indicates that even as the economy recovers from past difficulties, many individuals are still grappling with high debt levels and rising living costs.

Over the past year, total consumer insolvencies rose by 9.9%, with consumer proposals now accounting for an impressive 78.9% of these filings. This preference for consumer proposals is likely due to their potential for debt consolidation and asset protection compared to traditional bankruptcy. As households continue to face financial strain from increased living expenses and interest rates, many are opting for proposals, which often have a less severe impact on credit scores compared to declaring bankruptcy. As a result, it’s important for Canadians experiencing financial difficulties to explore all available debt relief solutions, including the growing popularity of consumer proposals.

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Year-Over-Year Increasing Patterns

Total insolvencies in January 2025 were 0.6% higher than January 2024., Consumer insolvencies grew by 3.8% year over year., Business insolvencies dropped 44.1% from January 2024 to January 2025.

In January 2025, Canada saw a 0.6% increase in total insolvencies compared to January 2024, with consumer insolvencies experiencing a notable 3.8% rise. This growth reflects a shift in financial stress among Canadians as factors like rising living costs and high household debt begin to weigh heavily. Interestingly, while consumer insolvencies climbed, business insolvencies dropped sharply by 44.1% over the same period, indicating some sectors might be stabilizing or recovering better than others. For example, businesses in areas like retail and hospitality may be seeing less financial strain as they adapt to post-pandemic conditions.

Digging deeper, for the year leading up to January 2025, consumer insolvencies rose 9.9%, with consumer proposals becoming increasingly popular, making up 78.9% of total filings. The appeal of proposals lies in their ability to allow individuals to retain assets while managing debt more efficiently. This trend shows that many Canadians are taking proactive steps to address their financial situations rather than opting for bankruptcy, which involves more drastic measures and longer credit impacts. With 50% of Canadians reporting they are close to insolvency, understanding and exploring options like consumer proposals may provide crucial relief in these challenging times.

Dominance and Appeal of Consumer Proposals

Proposals accounted for 78.9% of consumer insolvencies over the recent 12 months., Their rising popularity is linked to asset retention and a shorter credit impact., Proposals are preferred due to a 3-year impact on credit records versus 6 years for bankruptcy.

Consumer proposals have emerged as a dominant choice for debt relief in Canada, making up a remarkable 78.9% of consumer insolvencies over the past year. This rise can be attributed to their appealing features, such as allowing individuals to retain their assets while offering a structured payment plan to settle debts. For many, this option is much more attractive than traditional bankruptcy, which can lead to the loss of property and a more extended impact on credit ratings.

One key advantage of consumer proposals is their shorter impact on credit records—only three years compared to six years for bankruptcy. This shortened duration makes proposals a more viable option for those concerned about rebuilding their credit. For example, a Canadian family struggling with $30,000 in unsecured debt might opt for a consumer proposal that allows them to make manageable payments without losing their home or savings. This combination of benefits explains the increasing preference for consumer proposals as a debt solution across the country.

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