Despite the pandemic, personal bankruptcies are at their lowest level in years—for now
By Erika Morris
Although upwards of three million Canadians have lost their jobs since the beginning of March, personal bankruptcies are at their lowest levels in years—but that may not last.
According to the most recent figures from the Office of the Superintendent of Bankruptcy Canada, 6,700 people across Canada filed for bankruptcy or made a formal proposal to their creditors in April.
Ontario saw the most personal bankruptcies, with 2,416 applicants, down from 3,791 last year. Quebec follows with 1,587 applicants, then Alberta with 990, and British Columbia with 638. All other provinces saw fewer than 300 applicants for personal bankruptcies.
This is the steepest drop in personal bankruptcies since 1988, and they’re now at their lowest level since 2007.
Experts are saying that this is because during the pandemic Canadians are doing whatever they can to make ends meet and are focusing on necessities. In addition, because the courts are closed and people who have been laid off have no income to garnish, a lot of debtors are safe from creditors for the time being. And Canada’s major banks have all announced mortgage and credit-card payment deferrals, which have helped people keep their heads above water.
Moreover, as of mid-May, about seven million Canadians have applied for Canada’s COVID-19 emergency response benefit (CERB), a $35 billion program for laid-off Canadians. CERB payments cannot be garnished. People are using their $2,000 per month allowance on food, housing, clothing, and other necessities.
If income levels remain depressed, Canadians’ personal finances could become more complicated. Once the CERB and deferral programs end, analysts say they expect a striking increase in defaults and consumer insolvencies.
Photo: iStock/artisteer.
