Meteoric rise in bankruptcy proceedings not done yet: expert
Consumer proposals up 158 per cent in 2016 from previous year
The number of consumer proposals in Newfoundland and Labrador is up an astonishing 158 per cent, but one insolvency expert says the bankruptcy trend is just beginning.
Nancy Snedden, a licensed insolvency trustee with BDO, says she can see it in businesses in downtown St. John's, and she can see the trend growing inside her workplace too.
"It surprises me every month how much the numbers go up, and I always say we can't see any more of an increase than that, then the next month will come and the numbers are up again," she told the St. John's Morning Show.
"I really think we're just at the beginning, to be honest."
Consumer proposals — one type of proceeding under the Bankruptcy and Insolvency Act — have increased dramatically in Newfoundland and Labrador.
There were 853 proposals in 2016, up from 330 in 2015, according to the Office of the Superintendent of Bankruptcy Canada.
The number of bankruptcies rose about three per cent.
Snedden said the vast majority of people who come into her office aren't overspenders, but people who've fallen into financial difficulty with dramatic life changes — layoffs, divorces or illness.
Recent changes in the province's tax policy aren't helping either, she said.
"There's always people who are living paycheque to paycheque, and with the cost of living increases in Newfoundland, the increased GST, insurance tax, gas tax, all those things are cutting back on their available cash flow and making it harder and harder to pay their minimum payments."
A consumer proposal is a process where individuals can make payment offers to their creditors, but retain their financial assets.
Bad signs in the economy
Snedden said she sees the signs of a bad economy often, even just taking a trip to downtown St. John's.
"Just if I look at even walking down the street on the weekend, and going out to dinner," she said. "Once upon a time it was almost impossible to get a dinner reservation in certain restaurants, and now there's empty tables everywhere."
The trustee said a consumer proposal isn't necessarily better than a bankruptcy, it just comes down to individual circumstances.
Snedden adds that people shouldn't feel bad about using the options that are available to them.
"You not being able to [pay back] is not going to put the big banks out of business. They'll be fine," she said.
"They know that this bankruptcy legislation is out there to help honest but unfortunate debtors. People who find themselves in difficult situations and need help to get out of it."
With files from the St. John's Morning Show