The Office of the Superintendent of Bankruptcy (“OSB”) just released the new bankruptcy statistics for the period ended June 30, 2011. As the Trustee in charge of the Vaughan office for Hoyes Michalos & Associates Inc., I think the best way to make sense of the numbers is to compare the twelve months ended June 30, 2011 with the twelve months ended June 30, 2010. I am only referring to consumer insolvencies which represent over 95% of all insolvency filings. The bottom line is overall insolvency filings were 129,392 and are down 10.9% as compared to the same twelve month period last year. That would appear to be a good sign when looking at the overall health of the Canadian economy.
The statistics for Ontario seem even more promising. Ontario represents just over 40% of all insolvency filings in Canada and the total of all filings here were 53,718, down by 14.4% as compared to the 12 months ended June 30, 2010. That beats the national average by almost 3%, a good indication that Ontario is leading the recovery.
What’s even more interesting is the makeup of the insolvency filings. In Canada, the personal bankruptcy filings were 85,236, down by 19.1% compared to last year. However, the number of consumer proposals filed was 44,156, an increase of 10.7%. In Ontario, bankruptcy filings were 28,753, down a whopping 28.8% from the same period last year but ,there were 11.7% more consumer proposals filed. Here in Vaughan, we see similar results with overall insolvency filings down by about 9%, with bankruptcies declining 24%, and consumer proposals rising by approximately 6%.
So what does all this mean? Yes, overall filings are declining which is a good sign for the economy, but the interesting part is the trend away from bankruptcy filings and the move towards more consumer proposals. One of the reasons for this trend is the result of significant changes to the bankruptcy laws in Canada introduced in the fall of 2009.
I think people in financial trouble are finding consumer proposals more attractive because there is a lot less reporting required than in a bankruptcy. Under the new laws, a bankrupt person must report on their income and expenses every month and the amount they have to pay varies depending upon their income so not only is there more work, there is a lot more uncertainty. Once a consumer proposal is approved by the majority of the creditors, then it‘s just a matter of making sure you don’t miss your agreed upon payments. There are many more reasons why people are finding consumer proposals better than the bankruptcy alternative, and I know that when I am meeting with prospective clients, once they understand what a consumer proposal is and how it works, more often than not; a consumer proposal is the preferred option.
If you would like to know more about your options and how a consumer proposal can be a good option for you, then send me an email, or give me a call @ 905-856-2930 or call 310-PLAN and book a free consultation so I can go over all of your options with you.
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