After falling fairly significantly for the past two months, insolvency statistics (Canadian bankruptcy and consumer proposal filings) increased again in April. The increase was small, only 3.7% higher than the year before. On a year to date basis, total consumer insolvencies are still 5.5% below last year’s levels largely reflecting an improvement in consumer income levels combined with a stabilizing of consumer debt growth.
Consumer insolvencies typically peak in the March to May period. There are reasons to wait to file bankruptcy which is why we see some seasonality in the overall bankruptcy statistics. As we approach the summer months, we expect a continued decline in the overall number of consumer insolvencies. Whether fall levels will be higher than in previous years will depend largely on whether or not consumers with heavy debt levels fall prey to higher interest rate costs.