Canadian Consumer Insolvencies Only Surpassed By 2010 & 2020 Peaks

Consumer insolvency filings in Canada surged sharply in March, rising by 11.2 percent to reach 12,126 filings, which is about 4.9 percent higher than at the same time last year. This marked the largest monthly jump since mid-2020 and surprised observers, given that year-on-year growth had recently been slowing down. Over a 12-month period, Canadians filed for insolvency 137,635 times—an annual total that nearly matches levels seen during the economic stress of 2010 and 2020.

Those two earlier peaks—2010 and 2020—happened during major economic downturns. In 2010, the country was still recovering from the global financial crisis, and in 2020, the COVID-19 pandemic caused a sudden and severe economic shutdown. Insolvency filings surged in both cases, and now, current numbers are back to those high levels, showing how serious today’s household financial challenges have become.

Experts point out that consumer insolvencies usually rise at the start of a recession. The increase in filings this year could be a warning sign that Canada is heading into a period of broader economic trouble. Even though the pace of growth had slowed to around 7.4 percent in February, March’s big jump erased that trend and suggests financial pressure on households is building again.

At this point, it’s hard to say if this rise is just a one-time spike or the start of something more long-lasting. One month’s data doesn’t always tell the whole story. Still, the sudden increase—especially after months of slower growth—raises concerns that financial stress on consumers may soon affect the wider economy.

Many households are still struggling with high interest rates, rising living costs, and flat incomes. Even though interest rates have been cut recently, any relief may be too little, too late for some. People are still trying to manage debts they took on when borrowing was much more expensive. The rise in insolvencies mirrors growing issues with mortgage, car, and credit card payments, which have been trending upward since the pandemic.

Overall, Canada’s consumer insolvency rate is now at levels only seen during the worst downturns of the past 25 years. The sharp rise in March, combined with near-record annual totals, signals that financial trouble is spreading among Canadian households. Whether this leads to a full-blown recession is still unknown—but the data is a strong warning that many Canadians are struggling to stay afloat.