Posted on Friday, February 17, 20062005 was a record year for bankruptcy in CanadaIn 2005, for the first time in Canadian history, more than 100,000 Canadians filed a personal bankruptcy or consumer proposal. That means that if you were in a room with 250 Canadian adults, statistically one of them went bankrupt last year.Why is the bankruptcy rate so high? One reason is that Canadians are carrying the highest level of personal debt in Canadian history. 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. Every day I meet with people who have gone through a job loss, reduced overtime, a marriage break up, or even a medical problem that prevents them from working. When your debts are high, any unexpected life event can cause severe financial distress. Our research indicates that the personal bankruptcy rate in Canada will continue to increase. 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. If you want more information, read our six page Special Report, 100,000+ Consumer Insolvencies in 2005: Many Canadians Teetering on the Brink of Financial Distress by Hoyes-Michalos. You can find more information at these links:
Posted by J. Douglas Hoyes, CA, Trustee @ 6:53 PM
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