Dealing With Increasing Insolvency Rates

Dealing With Increasing Insolvency Rates

Dealing With Increasing Insolvency Rates

Dealing With Increasing Insolvency Rates

Updated:  March 1, 2022

I’m a Licensed Insolvency Trustee (a.k.a. bankruptcy trustee), and I love my job. People often think of me as some form of grim reaper seizing assets and shuttering businesses – that’s a bad rap. I spend most of my time helping individuals and businesses extract themselves from the stress and burden of unmanageable debts so they can start over, the so-called “fresh start”.

Debtor’s prison is long gone. The Federal Government has developed procedures for individuals and businesses to reduce or eliminate debts through bankruptcy or restructuring (called a proposal), and a Licensed Insolvency Trustee administers these procedures under the provisions of the Bankruptcy and Insolvency Act.

Personal insolvency has become more and more commonplace over the last 30 years. In 1987, the rate of personal insolvency filings in Canada was 1.3 people for every 1,000 over the age of 18. For New Brunswick, the rate was 0.4/1,000, and for the Saint John area was 0.7/1,000.

Roll-forward 27 years to 2014, and the rates were 4.2/1,000 for Canada, 7.2/1,000 for New Brunswick and 7.5/1,000 for the Saint John area. The rates for New Brunswick and Saint John have increased more than 10-fold.

I don’t want your eyes to glaze over but think about this. At the 2014 insolvency filing rate for Saint John, 7.5 people per 1,000 of the population (over the age of 18) will either file personal bankruptcy or a consumer proposal.

If those rates continue, 375 out of 1,000 people now aged 18 will file personal bankruptcy or a consumer proposal in the next 50 years to age 68. That’s 37.5% of that peer group. The rate is a bit high because some people will file two or more times, but it is still a staggering statistic.

Why are the insolvency rates so high? There are lots of factors but, I think the greatest single contributor is the proliferation of easy credit combined with low levels of financial literacy. Debt is leverage; it can enhance rewards (financial and personal gratification) but also creates increased risk. High debt levels limit financial flexibility and the ability to weather and recover from financial setbacks resulting from job loss, reduced income, illness, separation/divorce, and other life events.

Canada, New Brunswick, and Saint John are facing some significant economic challenges particularly post-COVID 19. This translates into financial stress for their individual and business citizens. Some will weather the storm better than others. Some will have to use my services to reset so they can move forward again.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of significant financial stress;

  • You won’t be stuck in an assembly line process.

  • You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

  • We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

  • We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone, a video chat, or in-person in Saint JohnMonctonFrederictonCharlottetownDartmouth, or Miramichi.