Annual Consumer Insolvency Rates By Province 2010-2018

Annual Consumer Insolvency Rates By Province 2010-2018

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated April 29, 2021

The latest data from the Government of Canada shows that insolvency rates have been quite steady over the years, suggesting a stable economy. Insolvency rates are affected by different economic factors and can be used as an indicator of how the economy is doing. Knowing the insolvency rates of each province is also important as the stability of the Canadian economy does not directly reflect the economic state of a single province but rather all the provinces as a whole.

Insolvency Rates 2010 – 2018

Insolvency 2010 - 2018 trend

Importance of Insolvency Rates

For example, during March of 2016, Alberta experienced the highest levels of unemployment since 1994 due to a number of economic factors including the drop in oil prices. This drop particularly affected provinces whose economy is heavily reliant on the oil sector. In fact, that year, Newfoundland and Labrador, Saskatchewan. and Alberta saw an increase in insolvency rates by almost one percent when on average it typically only changes by a few decimal points.

Insolvency Rates Of Oil Reliant Provinces

oil-provinces-grey logo

Though these provinces were experiencing a downturn in their economy, the other provinces were fairly consistent, thus balancing out the overall Canadian insolvency rate in 2016 (4.4%). Of course, the unemployment rate is not a direct reason people declare insolvency, but rather is a contributing factor. To understand how the economy affects insolvency and how an increase in insolvency can be a predictor of economic health, we’ll look at things from an individual perspective.  

When the economy takes a turn for the worst, it’s inevitable that some Canadians will lose their jobs. When that happens some are able to survive the temporary slump with their savings, while others need to turn to credit to make ends meets. When these individuals are finally able to re-enter the labour market, the debt they’ve accumulated while being unemployed is too much to manage with their new income, leaving them insolvent. 

This is also why insolvency rates keep climbing even after the economy starts doing better as the effects of the slump tend to linger and can take time to recover from.

What Is Insolvency?

Insolvency is a financial condition where a person cannot fulfill their financial obligations. This means the person is unable to pay the debts within the allotted time. These debts include both secured and unsecured debt such as mortgages, car loans, student debt, credit card debt, personal loans, payday loans, and any other form of debt. When your assets are unable to pay off such debts, you become insolvent. Depending on how severe your financial circumstances are you can address your debts by either declaring bankruptcy or filing for a consumer proposal.

What Is Bankruptcy? 

Bankruptcy is a legal process in Canada that absolves you from the majority of your debt obligations. Debts include all unsecured debt like credit cards, personal loans, payday loans, and other forms of unsecured debt. However, there are a few exceptions such as school loans, court-ordered fines, child support, and debts from fraud and other illegal activities. Bankruptcy is typically considered an extreme measure in managing debt problems. The reason being, when you file for bankruptcy you end up with the lowest possible credit score level, which in turn will affect your ability to get approved for new credit for several years.

Bankruptcy And Consumer Proposal Rates  2010 – 2018

Consumer-vs-bankruptcy logo

Bankruptcy is a choice that comes with heavy consequences that will follow you for years to come, so it is interesting to see that despite insolvency rates being relatively steady, the direction of bankruptcy and consumer proposals rates are shifting. Since 1987, bankruptcy rates have always been higher than consumer proposal rates, but over the years things have been changing. The data shows that bankruptcy rates have been on a steady decline, as consumer proposal rates are on the rise. In 2017, consumer proposal rates surpassed bankruptcy rates for the first time since the government recording. Overall, over the course of the 8 years, we have seen bankruptcy decrease as the use of consumer proposals increase.

What Is A Consumer Proposal? 

A consumer proposal is an insolvency proceeding that is carried out by a Licensed Insolvency Trustee (LIT). A consumer proposal involves your LIT creating a legal agreement between you and your creditors that allows you to settle your debts by repaying a portion of what you owe within 5 years. A consumer proposal is a preferable alternative to bankruptcy as the consequences are not as heavy. Though it may seem like a daunting concept, it’s one that can free you from financial distress and give you a fresh start without having to declare bankruptcy.

Consumer Proposal Rates 2010 vs. 2018

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In Canada, consumer proposal rates have been on a steady rise, increasing from 1.6% in 2010 to 2.4% in 2018. As seen in the graph above, by 2018, every province except Ontario has seen a significant jump in consumer proposals rates. New Brunswick, Newfoundland and Labrador, and Quebec have the highest rates of consumer proposals while Nunavut, Northwest Territories, and Yukon have the lowest.

The more knowledge you have on such statistics, the more you’ll understand about the Canadian economy and how it can affect the environment in which you live. It can also help you make financial choices that reflect the adversities you face in your province. 

Annual Consumer Insolvency Rates By Province Over The Years

As mentioned, understanding the insolvency rates by province can indicate the health of its economy. While Canada as a whole is doing well, some provinces are fairing better than others.  unemployment Below, we look into the insolvency trends of the province over the years.


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Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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