Consumers in Canada filed 11,963 insolvencies in March, up 5 percent from a year ago and the highest number in eight years.
According to a report in Bloomberg, citing the Office of the Superintendent of Bankruptcies, the volume in March was the highest of any month since 2011. That is raising concerns about the state of household debt in Canada, which is at record highs, coming in at C$2.17 trillion as of the end of the first quarter of this year. That is prompting concerns that it is unsustainable, according to the report, which also noted that insolvencies in Canada are still lower than the 15,000 reached in September of 2009 after the financial crisis.
The Office of the Superintendent of Bankruptcies reported consumer bankruptcies declined 3.9 percent year over year in March while proposals — or agreements between debtor and creditor — increased 12.9 percent. The increase in insolvencies was highest in Manitoba, where insolvencies increased 29 percent year over year. Alberta was in second place with a 9 percent increase, and Ontario was in third with a 7.3 percent jump, according to the report.
In the U.S., consumer debt is at a record level, but consumers appear to be handling it well. Earlier this year the Federal Reserve forecast consumer debt to hit $4 trillion in the U.S. Still, consumers are able to manage it thanks to wages that are increasing and a U.S. economy that continues to grow. Unemployment is also at a 50-year low, which helps.
Insolvencies aren’t the only problem facing Canada. So are rising home prices, thanks to money laundering. Late last week The Wall Street Journal reported that home prices increased 5 percent in Canadian province British Columbia in 2018 because of money laundering. About $3.71 billion of dirty money went through the real estate market in 2018, including in Vancouver. Billions more were spent in casinos, on luxury cars and at horse racing tracks. The reports underscore the less-than-stellar enforcement efforts on the part of Canada.