Canadian insolvency statistics — the number of people who file for bankruptcy or for consumer proposal in a month or year — give us a good insight into the state of consumer and business debt in our country.

The March 2020 insolvency numbers are particularly interesting as this was the first month that our national economy was significantly affected by the novel coronavirus (COVID-19) pandemic.

In March, public health measures shut many businesses, schools, and public gatherings down. The Canadian Centre for Policy Alternatives reported on March 25 that two million Canadian workers had been laid off or were at “immediate risk” of lay off as a result of the public health measures. The Globe and Mail reported that between March 15 and March 20, Employment and Social Development Canada received about 500,000 applications for employment insurance (EI).

But what was the impact on insolvencies?

The Office of the Superintendent of Bankruptcy Canada released the March 2020 statistics this week. At first glance, it actually looks like Canadian insolvencies decreased from February 2020 to March 2020 — and from March 2019 to March 2020.

• The total insolvencies filed went from 11,575 in February 2020 to 11,198 in March 2020 — a decrease of 3.3%.
• They went from 12,325 in March 2019 to 11,198 in March 2020 — a decrease of 9.1%.

However, as we dig into the numbers further, we can see that this decrease isn’t quite what it appears…

A Closer Look at March 2020 Insolvencies in Canada

When we break down the March 2020 numbers by province, things get much more interesting.

Some provinces did see a big drop month-over-month and year-over-year. For instance, Newfoundland and Labrador went from 289 insolvencies filed in March 2019 to 228 filed in March 2020 — a decrease of 21.1%.

But other provinces actually saw increases — some of them quite significant.

Alberta, for instance, had 1,402 insolvencies filed in February 2020 and 1,491 filed in March 2020 — an increase of 6.3%.

And when we look at consumer proposals year-over-year, we see another rising trend. Albertans filed 964 consumer proposals in March 2019, but 1,081 in March 2020 — an increase of 12.1%.

We can see some similar trends happening in other provinces, such as Ontario, Manitoba, and New Brunswick:

• In Ontario, the number of bankruptcies filed increased from February 2020 (1,066) to March 2020 (1,105) — a rise of 3.7%.
• In Manitoba, the number of bankruptcies filed went from 69 in February 2020 to 79 in March 2020 — an increase of 14.5%.
• In New Brunswick, bankruptcies filed went from 137 in February 2020 to 173 in March 2020 — an increase of 26.3%.
• Not only that, but New Brunswick also saw a rise in consumer proposals filed. In February 2020 there were 2019 proposals filed and in March 2020 there were 236 — a rise of 7.8%. This also increased year-over-year, going from 193 in March 2019 to 236 in March 2020 — a rise of 22.3%.

What Does This Mean for Debt?

While it appears positive that insolvency filing numbers did not skyrocket during March 2020, this could be a false positive.

The decreases in filings could also be related to several alternate factors, including:

• Insolvency filings increased in February by 2.1% month-over-month, which could indicate that people who were already close to the brink filed earlier and did not need to in March.
• In March, as the COVID-19 pandemic came on, we saw many economic measures come into place, such as deferring bills or payments, which could lessen the debt burden — or at least buy some time. (Find out the truth about debt deferrals or suspensions.)
• It may also have just been too early for the true economic impacts to be known. Some of the public health measures that affected income and jobs did not come into place until the second half of March, or even closer to April.
• People struggling may also have turned to other debt management solutions first, such as using home equity or consolidating payments.

The increases that we did see show that there are still people struggling — and March may only be beginning. It will be interesting to see what the April 2020 statistics bring.

What to Do If You are Struggling Financially

If you are dealing with a high debt load, or worried about making ends meet due to COVID-19 impacts, you might be thinking about filing for bankruptcy or a consumer proposal.

If you do, you need an advocate on your side. A debt counsellor, like the ones at DebtCare Canada, will help evaluate all of your financial options. If you decide to file, we will make sure that you are protected, and your best interests are kept in mind throughout the process. (See how a trustee in bankruptcy is different from a debt counsellor.)

Learn more about our services and solutions today. DebtCare Canada is open 100% remotely during the COVID-19 pandemic. Reach out to us by phone or text at 1-888-890-0888 or visit www.debtcare.ca.