Licensed insolvency trustee explains the benefits of consumer proposals vs. bankruptcy
The new year started with a further increase in the number of Canadians filing for insolvency, as the ongoing economic uncertainty and effects of higher prices left with few ways out of crippling financial situations.
Office of the Superintendent of Bankruptcy data shows that 11,196 consumers filed for bankruptcy in January 2025, a 20.5% increase from the previous month, a 3.8% increase year-over-year and averaging 361 filings every day. This level was a 12.3% increase from the pre-pandemic stats of January 2019.
The numbers have been analyzed by the Canadian Association of Insolvency and Restructuring Professionals, whose chair André Bolduc, who’s a licensed insolvency trustee, says there could be further increases ahead.
“Higher costs for goods and services, combined with existing financial pressures, could push more individuals towards needing debt-relief solutions,” he said, adding that those who are struggling should seek professional help to explore their best options.
The OSB insolvency stats reveal that New Brunswick experienced the largest year-over-year increase in consumer insolvencies in the 12-month period ended January 31, 2025, at 9.8%, followed by Quebec at 9.2%. The nationwide increase was 9.9%.
Bolduc said that bankruptcy is not the only route for those who are insolvent.
“Debt-relief options can include both insolvency and non-insolvency solutions, such as negotiating with creditors, debt consolidation, consumer proposals or bankruptcy,” he explained.
In fact, bankruptcies accounted for only around one fifth of the insolvency filings in January, while consumer proposals made up almost eight in ten. Bolduc says that creditors are becoming more open to negotiating consumer proposals and it means that debtors don’t lose assets such as their home.
“Unlike bankruptcy, a consumer proposal often offers a more flexible repayment plan of up to 60 months instead of nine to 36 months, no ongoing income reporting, and removes uncertainty and the risk of payment increases,” he said. “Additionally, those who have previously filed a bankruptcy often prefer to avoid going through the bankruptcy process again, particularly given the uncertainty of what the terms of their discharge from another bankruptcy might be.”
Business insolvencies
January also saw an increase in business insolvencies, albeit with a lower percentage increase than for consumers.
The OSB data shows 424 business insolvencies filed in Canada, increasing 7.6% from the previous month. On a 12-month period basis, there was an 11.7% increase year-over-year. Business insolvencies in January were more than 42% higher than in the same month of the pre-pandemic 2019.
Accommodation and food services, professional, scientific and technical services, and arts, entertainment and recreation, saw the largest month-over-month increases in filings with the accommodation and food services sector accounting for 14.1%, the largest single share.
A recent report from Hoyes, Michalos & Associates highlighted the prominent role that credit card debt played in insolvencies in 2024.
