National Post (National Edition)

Consumer insolvenci­es fall to lowest since 2002



Canadian consumer insolvenci­es fell last year to the lowest level in two decades, as government support measures and creditor deferral programs allowed borrowers to keep making monthly payments.

There were 96,458 filings in 2020, the lowest since 2002, the Office of the Superinten­dent of Bankruptcy Canada reported Friday. That's down 30 per cent from 137,178 consumer insolvenci­es in 2019, the largest one-year decline in records back to 1987.

The drop in bankruptci­es represents perhaps the starkest metric for what has been the biggest economic surprise over the past year: the sharp improvemen­t of Canadian household finances during the pandemic.

Income support from the federal government and payment holidays from lenders kept Canadian households from fraying during the worst months of the pandemic, even as more than 3 million people were thrown out of work. Official data from Statistics Canada showed disposable income and savings rates actually increased during the lockdowns.

“With households having more income on average, that accounts for a lot of this diminution in activity,” André Bolduc, executive board member at the Canadian Associatio­n of Insolvency and Restructur­ing Profession­als, said in a phone interview. “But in addition to that, creditors were not enforcing, people were getting deferrals.”

But there are indication­s things may be gradually returning to normal. Fourth-quarter insolvenci­es jumped 13 per cent from the three months before that, the largest quarterly increase since 2009.

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