Toronto Residents Are Filing For Creditor Relief On Lower Debt Levels

Toronto area insolvencies are being filed at a lower threshold than last year. Our analysis of number from the Office of the Superintendent of Bankruptcy (OSB) show that the total number of insolvency filings by Greater Toronto residents showed mild growth. However, more people are seeking formal creditor relief on lower debt levels.

Total Consumer Insolvencies Are Up 1.03%

Total insolvencies showed a mild increase. If you’re unaware, total insolvencies are the number of consumer bankruptcies and consumer proposals combined. July 2017 saw 1,116 insolvencies, a 1.03% increase compared to the same month last year. These borrowers had a grand total of $51,531,447 in assets, compared to $99,687,450 in liabilities. That works out to $67,098 in assets, compared to $85,495 in liabilities for the average insolvent filer. Let’s break that down by filing.

Source: Better Dwelling, OSB.

Consumer Bankruptcies Are Flat

Total bankruptcies remained flat across Toronto area postal codes. The OSB reported 398 bankruptcies, strangely the same amount that was reported this time last year. The total assets of those filing for bankruptcy were $11,398,373, versus $44,829,009 in liabilities. While the total number of consumer bankruptcy filings were flat, assets in those filings were down 3.39%, and liabilities were up 12.98% compared to the same month last year. These borrowers has less assets, and significantly more debt.

Consumer Proposals Up 1.58%

Consumer proposals showed a slight increase across Greater Toronto. For those that don’t know, a consumer proposal is formal attempt to negotiate debts with creditors. It’s a less severe insolvency filing, but the write down of debt from creditors still has a significant impact on business revenues. Additionally, consumer proposals are sometimes a precursor to a more formal bankruptcy filings.

Toronto saw 768 consumer proposals, up 1.58% compared to the same month last year. Those filing had $40,133,074 in assets, compared to $54,858,441 in liabilities. The interesting thing here is consumer proposals are up, but the total amount of liabilities is down a massive 26.55%. Consumers are attempting to negotiate with creditors at a much lower threshold than last year.

Overall, growth was flat but there was a concerning trend to keep an eye on. The liabilities required to trigger insolvency decreased, showing that consumers are less prepared to handle debt compared to last year. This trend will likely accelerate with rising interest rates, as the cost of carrying debt becomes more expensive.

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