In some good news, the number of consumer insolvencies showed an overall decline in Canada for August 2012. The Office of the Superintendent of Bankruptcy Canada reported consumer insolvencies (bankruptcy and consumer proposals) for the 12-month period ending August 2012 were 5.1% lower when compared with the same period the year before. Consumer bankruptcies decreased by 10.9% while consumer proposals decreased by 5.9%. This all appears to be good news until you dig a little deeper.
Statistics Canada also reported today that the economy shrank by 0.1% in August 2012, the first monthly decline in real gross domestic product since February 2012. Declines were felt in 10 out of 18 industrial sectors. While this may be the first monthly dip since the beginning of the year, it is an indication that the economy is still struggling. For Canadians this means continued struggles as well. Unemployment and underemployment remain high. Debt levels are increasing as more and more consumers are using credit to make it through tougher financial times.
Consumers are still finding it a challenge to regain their financial footing after the 2009 recession and appear to be slower in experiencing the recovery than Canadian businesses. The percentage of total insolvencies filed by consumers was 96.5% for the first eight months of 2012, unable as yet to get back to lower levels pre-recession. While total bankruptcy and consumer proposal numbers may be declining slightly, it appears that balance sheets for consumers are not improving as quickly as for businesses. Unfortunately for many Canadians, bankruptcy or a consumer proposal will still be a necessary route to dealing with their financial struggles as it will be a while before the threat of further economic downturns disappears.
If you are one of many Canadians struggling with personal debt and would like a no charge initial consultation, or would like a personal and confidential evaluation of your situation, please e-mail a bankruptcy Canada trustee today.