Consumer bankruptcies continue to soar

OTTAWA -- The recession continues to exact a heavy toll on financially strapped Canadians, sending 12,305 more individuals over the brink and in to bankruptcy in September.

The number of personal bankruptcies has soared 47.4% from a year ago, according to a report Friday from the Office of the Superintendent of Bankruptcy.

The near-term trend was also negative, with the number of consumer bankruptcies rising 29% in September from the month before.

Companies have been largely exempt from the carnage, a trend that continued into September, as the number of business bankruptcies fell 0.4%.

The wave of consumer bankruptcies has risen in direct proportion to the number of Canadians shunted onto the unemployment lines, said BMO Capital Markets economist Robert Kavcic.

Unemployment and bankruptcies tend to be “lagging indicators” that rise even after the economy returns to growth, and as such, “there’s more pain ahead,” he warned.

As a share of the economy, the 12,000-plus new consumer bankruptcies are a mere sliver, Mr. Kavcic noted. “But at the margin (the rise) does have an impact on consumer confidence and spending.”

The Office of the Superintendent of Bankruptcy also releases data on the broader category of “insolvencies” -- which includes bankruptcies as well as proposals to settle debt.

On that basis, consumer filings rose 45.5% to 15,465 in September from a year earlier, and were 28.5% higher than in August when insolvencies totalled 12,033.

Ontario and Quebec continue to lead the country in consumer bankruptcies.

Consumer filings jumped in Ontario by an annual rate of 45.3% in September, to 6,819. That’s up 28.6% from the 5,303 recorded a month earlier. Quebec had 4,120 insolvencies in September, a 32.3% rise from 3,113 the same time last year, and up 29% from 3,193 in August.

The two provinces also had the most business failures in September.

Ontario recorded 266 insolvencies, up 32.3% from 201 in September 2008, and 32% above the 177 filings in August. In Quebec, however, business filings were down on the year, falling 16% to 184 from 219 in September 2008. Month to month, insolvencies rose 8.2% from 170 in August.

Canwest News Service