Posted on Monday, February 05, 2007Bankruptcies Decline Despite Rising Debt LevelsThe Office of the Superintendent of Bankruptcy just released statistics showing that the number of consumer bankruptcies and consumer proposals fell in Canada in 2006 by 4.3%, the first decline since 2002 and the largest decline since 1998, even though the level of debt is rising. Consumer filings in Ontario declined by 2.1% in 2006. The declining bankruptcy rate in the face of the increase in debt is largely due to a strong labour market. The unemployment rate in Canada declined for the fourth consecutive year to 6.3%, and is now at a 30-year low. Ontario's unemployment rate is also 6.3%. The tight labour market also helped median hourly wages increase by 2.6% in 2006. These factors, combined with lowinterest rates, are making higher debt loads manageable for the "average" Canadian. However, for every $4 the average Canadian earns in a year, they now have $5 in debt. Why should we care about high debt levels? For people living paycheque to paycheque, rising debt levels mean an increasing number of Canadians are only one or two missed paycheques away from financial disaster. A recent Bank of Canada survey found that the proportion of highly vulnerable debtors (those whose debt payments exceed 40% of gross household income) has risen by 23% in the first six months of 2006 (from 2.6% to 3.2% of the population). Each week I see an increasing number of Ontario residents with high debt who live paycheque to paycheque, and any drop in income could lead to serious financial problems. With these massive levels of debt, the average resident of Ontario cannot financially survive even a temporary job loss. If you have more debt than you can handle, don't wait for your financial problems to improve on their own. Give our office a call today at 310-PLAN (310-7526 in Ontario), or e-mail us your bankruptcy question, and let's get started. Posted by J. Douglas Hoyes, CA, Trustee @ 5:48 AM
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