NOTE: THIS ARTICLE CONTAINS ESTIMATED NUMBERS FOR 2005; PLEASE CHECK BACK ON FEBRUARY 3, 2006 AT 11:00 AM FOR UPDATED NUMBERS
According to personal bankruptcy statistics for 2005, released by the Office of the Superintendent of Bankruptcy, 100,400 Canadians filed a bankruptcy or proposal in 2005. It is the first time in Canadian history that more than 100,000 people have filed a bankruptcy or proposal. Consumer bankruptcies and proposals increased by 3.0% in Ontario in 2005, and by only 1.4% in Canada in 2005.
Douglas Hoyes, a trustee with Hoyes, Michalos & Associates Inc., explains that Canadians are carrying too much personal debt. The average Canadian now owes 118% of what they earned last year, the highest level ever. As long as interest rates stay low and there are no unpleasant surprises, most people can afford to make their monthly payments. For families at their limit, however, a high debt-to-income ratio means they are less able to deal with life's unexpected financial traumas
Ted Michalos, a trustee with Hoyes, Michalos & Associates Inc., is concerned that debtors with low income or poor credit are relying on high cost alternative credit. We completed a study about the average person who goes bankrupt and we found that our average consumer bankrupt had four credit cards with a total balance owing on the cards of $35,960. That's an average balance of $9,625 per card compared to $2,329 for the average Canadian. In addition, the number of our bankrupts using payday loans has doubled from 2003 to 2005.
Ted and Doug believe that many debt burdened consumers are teetering on the edge of financial distress, one negative life event away from bankruptcy find it increasingly difficult to meet their financial obligations.
With 65% of couples now relying on two incomes and personal savings declining, Canadians are becoming more financially vulnerable. This will eventually translate into more bankruptcies. We are predicting a growth in consumer insolvencies of 3 to 5% over the next two years. Every 1% increase means another 1,000 people and families dealing with financial hardship or proposal.
But there is hope.
The professionals at Hoyes Michalos &
Associates can explain how consumer proposals or a personal bankruptcy in Ontario may be the correct solution to your money problems.
More information on consumer bankruptcy and proposal filings trends
can be found in our Annual Consumer
Bankruptcy and Proposal Report 2005, a report prepared by Hoyes
Michalos & Associates Inc.
For more information on personal bankruptcy statistics
for 2005 read bankruptcy
statistics for 2005 and 2004.