The debt pile-up: New report shows Canadians entering insolvency with more accounts and higher balances

“This isn’t about one bad financial decision or a sudden crisis,” said Doug Hoyes, Licensed Insolvency Trustee and co-founder of Hoyes, Michalos & Associates, in a statement. “Canadians are layering borrowing on top of borrowing, leading to insolvencies with unprecedented debt levels.”

More debt, spread across more accounts

The firm reviewed 3,870 personal insolvencies in Ontario in 2025 and found what it describes as a problem of “scale and accumulation,” pointing not a single trigger, but years of compounding over-reliance on credit (1).

On average, insolvent Canadians had 10.5 creditors, the highest level since 2013. They carried 3.5 credit cards each, up 13.3% in one year, and those who used payday loans had an average of 4.9 loans, which is also a record high.

“Canadians are using credit as a coping strategy,” said Ted Michalos, Licensed Insolvency Trustee and co-founder of the firm, in a statement. “That strategy works for a while, but it’s a delaying tactic, not a solution. By the time people file, they’re not dealing with one problem — they’re dealing with 10.”

Notably, 85% of those filing in 2025 were employed at the time, underscoring the fact that insolvency is no longer primarily linked to job loss, but to income failing to keep pace with debt and living costs. The average insolvent debtor earned $3,434 per month, yet carried unsecured debt equal to 193% of their annual income.

Homeowners are increasingly vulnerable

Homeowners still represent a minority of filings, but their share is rising. In 2025, 8% of insolvencies involved homeowners, up from 5% a year earlier.

Nearly one in four insolvent homeowners (23%) had negative equity at the time of filing, and average unsecured debt among this group reached $111,995 — up 12.6% year over year. Average credit card balances for insolvent homeowners climbed to $47,197, roughly double that of non-homeowners.

“For years, home equity has acted as a pressure valve,” Hoyes said. “That buffer is eroding. When homeowners lose the ability to refinance or consolidate, unsecured debt starts to pile up quickly.”

The report also found that vehicle loan shortfalls are rising, too. More than half of insolvent debtors with a vehicle loan owed more on the car than it was worth, delivering another sharp increase from previous years.

Why filings have yet to surge

Despite record debt loads among those filing, total insolvencies increased by just 1.4% nationally in 2025. The report cautions that this stability shouldn’t be mistaken for an improvement in financial health.

Instead, many households appear to be stretching repayment as long as possible by borrowing more, juggling balances and prioritizing minimum payments to stay afloat.

As noted in the report, Bank of Canada data shows the share of borrowers more than 60 days behind on payments has begun to creep higher, and national credit card debt rose 3.6% year over year as of October 2025.

The study suggests that debtors are entering insolvency later in the debt cycle, with higher balances and more accounts.