Consumer insolvencies in Canada saw a significant spike in January 2025, with filings increasing by 20.5% compared to December 2024, according to the Office of the Superintendent of Bankruptcy (OSB). A total of 11,196 consumer insolvencies were filed, which is 1,904 more than the previous month, averaging around 361 filings per day. This represents a 3.8% increase from January 2024 and a 12.3% rise from pre-pandemic levels in January 2019.
The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) highlighted the role that ongoing financial stress, including the high cost of living and escalating household debt, continues to play in driving up consumer insolvencies. The association stressed the need for stronger debt literacy to help Canadians better manage their financial obligations.
André Bolduc, Licensed Insolvency Trustee and Chair of CAIRP said the potential impact of looming U.S. tariffs may further strain financially vulnerable Canadians, making it even more difficult for them to manage their debts.
“Higher costs for goods and services, combined with existing financial pressures, could push more individuals towards needing debt-relief solutions,” he explained.
Looking at the 12-month period ending January 31, 2025, consumer insolvencies saw a 9.9% increase from the previous year. Notably, New Brunswick experienced the largest year-over-year increase, with insolvencies rising by 9.8%, while Quebec saw a 9.2% increase.
Among insolvency filings, consumer proposals have become increasingly popular. In the 12-month period ending January 31, 2025, consumer proposals accounted for 78.9% of all insolvency filings, while bankruptcies made up 21.1%. Consumer proposals are often seen as a more flexible solution compared to bankruptcy, offering repayment plans of up to 60 months, no ongoing income reporting, and greater stability without the risk of payment increases.
“Unlike bankruptcy, a consumer proposal often offers a more flexible repayment plan of up to 60 months instead of nine to 36 months, no ongoing income reporting, and removes uncertainty and the risk of payment increases,” Bolduc noted. “Additionally, those who have previously filed a bankruptcy often prefer to avoid going through the bankruptcy process again, particularly given the uncertainty of what the terms of their discharge from another bankruptcy might be.”
Bolduc added that consumer proposals allow debtors to retain assets such as their homes and are increasingly being negotiated with more tailored, manageable terms by creditors. Many Canadians see consumer proposals as a more dignified option for regaining financial stability without the perceived stigma of bankruptcy.
Business Insolvencies Rise 7.6% in January 2025
Business insolvencies in Canada also saw an increase in January 2025, rising by 7.6% compared to December 2024, with 424 filings recorded. This marks a 45.2% rise from pre-pandemic levels in January 2019. The 12-month period ending January 31, 2025, saw a 11.7% increase in business insolvencies compared to the same period the previous year.
The sectors most affected by the rise in business insolvencies included accommodation and food services, professional, scientific, and technical services, and arts, entertainment, and recreation. The accommodation and food services sector accounted for the largest share of insolvencies in January, with 14.1% of the total filings.
As Canadians continue to face financial challenges, the increase in both consumer and business insolvencies signals the continued strain on the country’s economy, underscoring the need for accessible and effective debt-relief solutions.
