Total Canadian consumer insolvencies (both bankruptcies and consumer proposals) edged up slightly in January 2013 as people continue to struggle with unmanageable debts. Total insolvencies increased 4.5% compared to the same month a year ago. The largest growth came from higher consumer proposals – up more than 10% from a year earlier while bankruptcies grew less than 1%.
Canadian household debt to disposable income rose to 165% last quarter, another record, despite the Bank of Canada’s assertion that Canadians are listening to warnings about reducing their debt levels. While the pace of growth may be slowing, the fact is consumer debt is still increasing. Although interest rates are not expected to rise in the near future, we could see an upward trend in insolvencies as more Canadians realize they are under water.