More Canadians considering bankruptcy or consumer proposals this year, survey finds
Interest in financial insolvency is up nearly 20 per cent, a survey found
More Canadians are considering bankruptcy this year while attitudes toward financial insolvency are becoming more understanding, a recent survey found.
The survey found 19 per cent of Canadians may consider financial insolvency this year. The information comes from the COVID Economy Poll conducted by Bromwich and Smith: Licensed Insolvency Trustees.
The survey results show a far higher proportion of Canadians are considering insolvency than those who actually did claim bankruptcy or file a consumer proposal last year, according to the Office of the Superintendent of Bankruptcy Canada.
The survey also found 17 per cent of Albertans are considering filing for bankruptcy or a consumer proposal in the near future, and one in 10 Albertans are likely to seek advice on the matter in the next month.
Ontario topped the survey with 22 per cent of respondents considering financial insolvency.
"We're all in or around, hovering around that one-in-five. But it's still a large explosion around Canada," said Jasmine Marra, a Bromwich and Smith Vice-President. Marra was interviewed on CBC's Edmonton AM on Wednesday.
The survey polled 1,510 Canadians last month.
Financial insolvency can mean bankruptcy or a consumer proposal. Last year Canada saw a surge in consumer proposals — debt repayment arrangements with creditors where consumers don't have to get rid of assets as they do in a bankruptcy.
Federal government figures show that last year in Canada, 4.6 out of every 1,000 adult consumers filed for insolvency, either by declaring bankruptcy or filing a consumer proposal.
Across Canada there were 137,178 consumer insolvency filings in 2019; 60 per cent were consumer proposals and the rest were bankruptcies.
In Alberta last year, 4.9 out of every 1,000 adult consumers filed for insolvency. The rate had been rising steadily since 2014, when it was at 2.6 per 1,000 people.
Edmonton had a consumer insolvency rate of 0.49 per cent last year, while Calgary's rate was 0.47 per cent. Both of these figures have risen steadily, just like the provincial rate, since 2014.
This year, insolvency filings are down by around 40 per cent. But Marra and other experts fear that will be short-lived after COVID-19 financial aid plans end.
Adding to the concern, the Canadian COVID Wake Up Call, an Angus Reid study of 1,500 Canadians sponsored by Credit Canada, found that 39 per cent of Canadians receiving financial assistance don't know what they'll do when their support ends. The online survey was conducted last week.
That could lead to more people considering bankruptcy or consumer proposals, but a stigma is still attached to financial insolvency, Marra said.
Divorce, job loss can be triggers
The Bromwich and Smith survey showed there's still a substantial portion of people who believe that others who don't pay their debts are lazy, irresponsible and selfish.
But the COVID-19 pandemic could help change those attitudes by providing a teachable moment, Marra said.
"One of the things many people don't realize is people who seek out a bankruptcy or consumer proposal to restructure, most of the time it's not just because they can't handle their money, it's likely because of an unexpected trigger," Marra said, citing divorce, job loss, illness and the current pandemic as examples of triggers.
The Bromwich and Smith survey found that may already be happening, with more respondents expressing empathy for others considering bankruptcy.
Marra hopes more people will be able to move past the shame that's still often associated with declaring bankruptcy to reach out for professional advice if they're struggling with their finances.
"That shame and those money stories that we tell ourselves prevent us from reaching out early, but reaching out early is so critical."