May 20, 2026
Consumer insolvencies in Canada are hitting historical highs and it's revealing just how much Canadians are feeling stretched thin beyond their means.
New data from the Office of the Superintendent of Bankruptcy (OSB) shows that 37,121 Canadians filed for insolvency in the first three months of this year (1). This level of insolvency filings in a single quarter has not been seen since 2009 — the year following the Great Financial Crisis.
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Of the 37,121 insolvency filings, 29,545 were consumer proposals and 7,576 were bankruptcy proceedings. Compared to the last quarter of 2025, insolvencies increased 6.4% according to OSB.
"I'm not surprised by these numbers." Andre Bolduc, a licensed insolvency trustee and past chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) told CTV News, adding, "We know that half of Canadian households are living paycheque to paycheque, which means they have no savings and when something happens, they have to rely on credit. (2)"
What insolvency data reveals about consumer financial health
In Canada, filing for insolvency means you are unable to pay your debts and bills as they are due. Under the Bankruptcy and Insolvency Act, Canadians have two options: declare bankruptcy or file a consumer proposal (3).
Bankruptcy is the formal process of liquidating your assets (with some exemptions) and distributing the proceeds to creditors to release you from your payment obligations (4). It's a financial reset for those facing insurmountable financial difficulty.
Consumer proposals are formal agreements where the insolvent debtor agrees to pay their creditors a percentage of what they fully owe in exchange for the rest of their debt being forgiven (5).
People turn to bankruptcy or consumer proposals only when they are considered insolvent, as they are otherwise not eligible under Canadian law. In order to apply for either of these procedures, consumers must work with a licensed insolvency trustee.
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Insolvency filings rising to heights not seen since the aftershocks of the Great Financial Crisis shows that Canadians are struggling with economic headwinds — potentially from multiple directions.
The cost of groceries has ballooned over 30% since 2019 according to TD Economics (6), despite general inflation stabilizing. Shelter prices — the cost of rent, mortgage payment, taxes, utilities and other municipal services — rose 28.5% from 2020 to 2025 according to Statistics Canada (7).
Financial experts are also watching another looming pressure point for insolvency risk in Canada: mortgage renewals.
The Office of the Superintendent of Financial Institutions (OSFI) notes that 22% — 1.3 million — of the mortgages being renewed leading up to 2027 are renewing for the first time since they were created in 2021 and 2022: a time when mortgage rates dipped significantly (8).
Combined, these financial pain points push vulnerable Canadians to rely more and more on credit, putting them at risk for insolvency if their income cannot keep up to cover their debts.
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In fact, out of all the G7 countries, Canada carries the highest ratio of household debt compared to its overall GDP at 103% (9). According to StatCan, total household credit market debt (e.g. credit card debt, mortgages, lines of credit, bonds) across the nation reached $3.2 trillion at the end of 2025 (10). As a result, the ratio of household credit market debt to income is now 177%, which means for every $1 of income, Canadian households have $1.77 in household credit market debt.
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How to decide which insolvency option is best for you
Sometimes — through no fault of our own — life has a way of eroding our financial success. When this happens, you might find yourself having to choose between bankruptcy or a consumer proposal. How do you make that kind of choice? While not exhaustive, here are some expert-backed tips to help you select an insolvency option that fits your needs. If you are seriously considering filing for insolvency, consult with a licensed insolvency trustee (LIT) before making any major decisions.
- Review your debt load. In Canada, consumers can only file a consumer proposal if they have debts less than $250,000 (excluding their mortgage). If you have non-mortgage debts in excess of $250,000, a consumer proposal is likely off the table (11).
- Think about the effects on your credit report. Whether you file for bankruptcy or apply for a consumer proposal, both decisions vastly damage your credit report. Lenders will see a notification that you filed for insolvency, regardless of the type, when they pull your credit report. This notification can severely impact your ability to borrow down the road. That said, filing for bankruptcy typically has a longer effect on your credit report (12).
- Check cost differences. Consumer proposals typically cost much more than bankruptcy to complete, especially if you own a number of assets (e.g. equipment, multiple vehicles, etc.). This is because you are required to pay a percentage of your monthly payments to your LIT as part of the process. Those fees can add up quickly.
What you can do before going insolvent
Filing for bankruptcy or completing a consumer proposal are difficult paths to walk, but they are only available for Canadians who can't pay their debts. What about people who are nearly insolvent but want to change their trajectory quickly?
There are a number of options, such as: debt management plans (DMPs), debt settlement programs, or debt consolidation loans (13). If you're feeling at the end of your financial rope, get in touch with a credit counsellor through two government recommended organizations: Credit Counselling Canada (14) or the Canadian Association for Financial Empowerment (15).
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Office of the Superintendent of Bankruptcy (1); CTV News (2); BDO Canada (3); Credit Counselling Society (4, 12, 13); Hoyes Michalos (5); TD Economics (6); Statistics Canada (7, 10); Office of the Superintendent of Financial Institutions (8); The Hub (9); MNP (11); Credit Counselling Canada (14); Canadian Association for Financial Empowerment (15)
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Brett Surbey is a corporate paralegal with KMSC Law LLP and freelance writer who has written for Yahoo Finance Canada, Success Magazine, Publishers Weekly, U.S. News & World Report, Forbes Advisor and multiple academic journals. He and his family live in northern Alberta, Canada.
