Insolvencies rising in Sask.

A growing number of Saskatchewan residents are insolvent.

A person must be insolvent in order to file for bankruptcy or a proposal under the Bankruptcy and Insolvency Act.

To be insolvent, a person must have debt of $1,000 or more, no ability to pay it and no assets to cover the debt.

A person might file for bankruptcy if he owes more money than he earns, is unable to make regular debt repayments on credit cards or loans, is unable to pay monthly bills or has had wages garnisheed.

Filing for bankruptcy protects an individual from unsecured creditors taking legal action against him, protects certain assets from ordinary, unsecured creditors and releases him from most debts and stops wage garnishments.

Certain things like court fines, traffic tickets, student loans, child support or spousal support are not included under bankruptcy protection.

“PEOPLE ARE DOING MORE PROPOSALS BECAUSE THEY’VE GOT THE ABILITY TO PAY SOMETHING.” MICHELLE STATZ

Proposals have existed for years, but have been used more recently so people can avoid bankruptcy, says Michelle Statz, a licensed trustee in bankruptcy with Deloitte.

“They’re still insolvent, it’s still a filing under the Bankruptcy and Insolvency Act legislation, but it’s not a full bankruptcy,” Statz says. “It’s a consumer proposal where they’re making an offer of settlement with their unsecured creditors.”

Insolvencies in Saskatchewan increased 14.7 per cent from 2013 to 2014 (1,938 from 1,690).

In that time frame, bankruptcies increased 30.6 per cent in Regina and region — 226 from 173.

The Regina stats include Weyburn and Estevan, with direct or indirect ties to the oilpatch industry.

Meanwhile, in Saskatoon and region, bankruptcies decreased three per cent — 292 from 301, but proposals increased 43 per cent from 158 to 226.

“People are doing more proposals because they’ve got the ability to pay something,” Statz says. “People generally have good incomes, but just can’t pay their debt so they’re not going through full blown bankruptcy and they can do proposals ... The 43-per-cent increase is huge!”

Most people who turn to bankruptcy trustees have been in troubled financial waters for a number of months, or even years.

“It could be attributed to lower interest rates and people just getting into more debt over a period of time,” Statz said. “We do see people with more secure debt now. People will have a bunch of debt and then consolidate and then consolidate again. Sometimes, they will secure it to their house or sometimes it’s not secured and then they’re looking at a bankruptcy or proposal.”

She wonders if Saskatchewan residents are getting more extravagant and using access to their housing equity.

“For a while, things have been good in Saskatchewan when across the country they weren’t,” Statz says.