Consumer insolvencies in Canada reached their highest quarterly volume since 2009 in the second quarter of 2026, as cost pressures continued to weigh on highly indebted households, according to data from the Office of the Superintendent of Bankruptcy.
There were 37,523 consumer insolvencies filed during the quarter, up 6.9 per cent from the same period a year earlier and 1.1 per cent from the first quarter. The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) said the volume works out to an average of roughly 17 consumer insolvencies filed every hour during the quarter.
Household debt pressures
The figures suggest some households continue to have limited room in their budgets to reduce debt, said Wesley Cowan, a licensed insolvency trustee and vice-chair of CAIRP.
“The latest insolvency data suggests that many highly indebted Canadians have not yet regained enough room in their budgets to reduce what they owe,” said Cowan. “For those households, the problem is no longer a temporary period of financial pressure, but a more entrenched gap between income, expenses and debt obligations. Greater stability in interest rates does not immediately reduce accumulated debt or the cost of other essentials.”
For the 12-month period ended June 30, consumer insolvencies increased 5.9 per cent from the previous 12-month period.
CAIRP said the population-adjusted annual consumer insolvency rate was 4.1 insolvencies per 1,000 Canadian adults aged 18 and older in 2025, down from 4.2 in 2024. The rate remained above levels recorded from 2020 through 2023.
The association said indebted Canadians continue to face the cumulative effect of higher costs, while changes in employment, income or essential expenses can leave limited time to rebuild savings or reduce debt.
“For households already stretched, the challenge is often the absence of recovery time between one higher bill and the next,” explained Cowan. “When each paycheque is already allocated, even relatively small changes in essential costs may have to be financed rather than absorbed. That is how a temporary reliance on credit can become a permanent feature of the household budget.”
Some consumers may respond by transferring balances, making minimum payments, delaying bills, refinancing or using one form of credit to pay another. Cowan said those measures can defer payment problems without reducing the underlying debt.
“When someone is repeatedly reorganizing debt without materially reducing it, the problem has moved beyond day-to-day budgeting,” said Cowan. “Transferring balances or using one credit product to service another may postpone a missed payment, but it does not change the amount owed or create additional income to repay it.”
Cowan said seeking advice before arrears deepen, collection activity intensifies or legal action begins can help people assess their financial position and available options.
“Debt problems become more difficult to resolve when every decision is being made under immediate pressure,” said Cowan. “A Licensed Insolvency Trustee can examine the complete picture—including debts, income, assets and creditor action—and explain how each available option would affect the individual. Getting that clarity earlier can help prevent a series of short-term decisions from further narrowing the path forward.”
Provincial trends
Prince Edward Island recorded the largest year-over-year increase in consumer insolvencies in the second quarter, with filings rising 14.7 per cent to 156. Saskatchewan followed with an 11.1 per cent increase to 984 filings, while British Columbia recorded a 10.9 per cent increase to 4,207.
For 2025, Newfoundland and Labrador had the highest annual consumer insolvency rate at 5.1 insolvencies per 1,000 adults, followed by New Brunswick at 4.9 and Nova Scotia at 4.8.
Business insolvencies edge higher
Business insolvencies were comparatively stable from a year earlier, with 1,281 filings in the second quarter, up 0.2 per cent. Filings nevertheless increased 4.0 per cent from the first quarter.
CAIRP said businesses continued to face uneven demand, higher operating costs and limited ability to pass those costs on to customers. Second-quarter business insolvencies were 33.7 per cent above the second-quarter pre-pandemic average.
Over the 12 months ended June 30, business insolvencies were 9.7 per cent lower than in the previous 12-month period. The annual business insolvency rate also declined to 1.0 insolvencies per 1,000 businesses in 2025 from 1.1 in 2024, although it remained above the 0.9 recorded in 2019.
Accommodation and Food Services had the highest annual insolvency rate among economic sectors in 2025, at 5.0 insolvencies per 1,000 businesses, followed by Manufacturing at 4.1.
“For many businesses, demand remains too soft to support the price increases needed to fully offset higher costs,” said Craig Munro, Licensed Insolvency Trustee and Chair of CAIRP. “When expenses rise faster than a company can adjust its pricing, those costs are absorbed through margins and working capital. The quarter-over-quarter increase in insolvencies is a reminder that, even as the longer-term trend has eased, some businesses remain under significant financial pressure.”
The sectors with the largest increases in the number of insolvencies in the second quarter compared with a year earlier were Transportation and Warehousing, with 136 filings, up 36; Accommodation and Food Services, with 191 filings, up 30; and Manufacturing, with 112 filings, up 18.
Construction accounted for the largest share of business insolvencies at 16.9 per cent, followed by Accommodation and Food Services at 15.1 per cent.
Pressure on business operations
CAIRP said higher fuel, transportation, supply and tariff-related costs can affect companies quickly, while pricing changes, contract renegotiations and alternative sourcing arrangements can take months to implement.
“When ordinary operations begin to depend on personal borrowing, overdue remittances or continual extensions from suppliers, the business is losing control of the timing of its obligations,” said Munro.
The association said businesses with a workable operational core can use Canada’s insolvency and restructuring system to address debt, co-ordinate creditor claims and preserve value before financial pressure results in an abrupt closure.
Licensed Insolvency Trustees are federally regulated debt professionals authorized to administer options including consumer proposals and bankruptcies. Initial consultations are generally free, according to CAIRP.
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