Insolvency filings on the rise in B.C., across Canada as possible recession looms

32% increase in insolvencies in B.C. More B.C. residents are being crushed by debt, and the number of bankruptcies in the province is spiking.

The number of people and businesses struggling with insolvency in British Columbia increased substantially in November, according to recently released data from the federal government.

There were 974 insolvency filings under the federal Bankruptcy and Insolvency Act in B.C. in November 2022, up from 735 in November 2021, an increase of 32.5 per cent.

Most of the filings were not bankruptcies, but rather "proposals" – formal agreements under the act that offer to settle debts on conditions other than their existing terms.

B.C. saw 789 proposals and 185 bankruptcies during the month in question. Both types of filings are considered insolvencies in the statistics released by the federal Office of the Superintendent of Bankruptcy this week.

The B.C. numbers reflect a nationwide pattern. Across Canada, there were 9,784 insolvencies in November, a 17.5 per cent increase from the same month in 2021.

Looking at the 12 months ending in November, insolvencies were up 10.2 per cent nationwide compared to the preceding 12 months. In B.C., filings grew by 15.9 per cent over the same period.

Grant Bazian, a licensed insolvency trustee and the president of MNP Ltd., told CTV News the increase is the result of several different factors.

Beginning in 2020, banks and other creditors responded to the COVID-19 pandemic by giving their customers leeway, Bazian said. Debt collection efforts paused or slowed down at the same time that federal and provincial governments dramatically increased their financial support for individuals and businesses, he added.

Now, high inflation has increased the cost of living and prompted the Bank of Canada to sharply increase interest rates, making debt more expensive at the same time that government subsidies are ending.

"Most of the relief that was given during COVID has come to an end," Bazian said. "I think the reality's hitting home for certain households and people, and as a result they're talking to people like myself – licensed insolvency trustees – looking at their options, and as a result, the filings have gone up."

Canada-wide, the number of insolvency filings is still below what it was in 2019, according to Bazian.

He said he expects filings to continue to grow in the coming months as costs remain high and economists forecast a recession.

"There's a different tipping point for different people," Bazian said. "Interest rates have increased over the last little while, and I think every time there's an interest rate increase or a reduction in government subsidy, that pushes more people over the edge and they come to see us."