On March 18, the Office of the Superintendent of Bankruptcy (OSB) released its official statistics for consumer insolvencies (bankruptcies and proposals) for 2010. You can see the complete report here. The numbers convey a bit of a mixed message.
First off, the totals for all of Canada were down about 11% compared to 2009. So that’s good news. The troubling part is that there were more than 135,000 filings in 2010. That’s still a lot of people. It’s down compared to 2009 only because 2009 was, by far, the worst year on record for personal insolvency filings. The numbers for 2010 are still up considerably from historic pre-2009 levels.
The trend is consistent on a local level for Kitchener-Waterloo. For 2010, the total filings were approximately 2,100. That’s down more than 20% compared to 2009. However, the 2009 levels were almost 40% higher than 2008.
It’s difficult to draw too many hard conclusions from such statistics, but the one thing that is clear is that the last few years have been a real roller coaster for a tremendous number of people.
Another trend is emerging. Consumer proposals are becoming a more popular choice for people to resolve their debts problems. Despite total insolvencies being down in 2010, the number of proposals filed increased by almost 20%. Furthermore, in 2009 proposals were only 23.3% of the total filings. For 2010, proposals represented 31.3% of the total filings.
I’ve commented on this trend before. My impression is that people fell behind when they were off work or had their hours reduced. Now, more people are getting back to work, but it’s not enough to get caught up on payments. When somebody in this situation is looking at his options to deal with his debts, a consumer proposal is often a better choice than personal bankruptcy. That is because bankruptcy could mean losing assets and paying surplus income. A consumer proposal is a way of dealing with your debts through one reasonable monthly payment, while maintaining control over your house and vehicle.
As always, my role is to listen to what’s happened and help you understand the merits and consequences of the different options for dealing with your debts. To talk more about your options, you can call me at 310-PLAN. You can also send more your questions by e-mail.
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