OTTAWA ― Consumer insolvencies are expected to spike in the wake of the COVID-19 pandemic despite a reprieve in the number of filings in March.
The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) says the number of people filing for insolvency will resume its growth even though government relief in the form of income support, along with increased payment flexibility among creditors, landlords and administrators have temporarily allowed many to make ends meet.
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The Office of the Superintendent of Bankruptcy says the number of Canadians who filed for insolvency in the first quarter of 2020 was down 5.5 per cent compared to the fourth quarter.
In March alone consumer insolvencies decreased by 8.5 per cent compared to the same time last year.
Despite the dips, the total number of insolvencies filed for the 12-month period ending March 31 increased by 8.4 per cent compared to the same period last year.
The number of consumers filing over the last year increased 8.7 per cent to 138,166. The number of business filings decreased 0.9 per cent in the last year.
“For those who were already overstretched with more debt than they could reasonably afford, the government relief and short term payment reprieve have allowed many to stay afloat. But their underlying debt is a gaping hole in the lifeboat,” stated CAIRP chairman Mark Rosen.
“The pandemic will magnify the debt problems Canadians were already facing and insolvency will be the way out for many.”