The Office of the Superintendent of Bankruptcy announced today that the number of personal bankruptcy filings in Ontario in November 2013 declined 8.6% compared to the previous month, and are down 7.7% over the last twelve months.
Consumer proposal filings declined by 7.9% compared to the previous month, and are 8.0% lower over the past twelve months.
2013 is the fourth consecutive year that personal insolvency filings have declined, after achieving all-time highs in 2009.
In November 2009 there were 3,393 personal bankruptcy filings and 2,115 consumer proposal filings in Ontario, for a total of 5,508. The total of 3,640 filings in Ontario in November 2013 is a 34% drop from those lofty levels. A drop of one third is significant.
Of equal interest is that in November 2009 consumer proposals represented 38% of total personal filings; by November 2013 that ratio had increased to 50%, and in many months in 2013 there are more consumer proposals filed in Ontario than personal bankruptcies.
Low Interest Rates, Stable Employment
Residents of Ontario continue to carry very high levels of personal debt, but the slow economic recovery since the credit crisis of 2008 has kept interest rates low, and unemployment at reasonable levels, so borrowers are in the “sweet spot” with low interest rates and stable income, allowing them to have sufficient cash flow to make their monthly interest payments.
If interest rates remain low, and unemployment remains moderate, it is possible that this “perfect storm” will continue, and bankruptcy rates may continue to fall. However, if interest rates increase, or if job growth stalls, our high debt levels may lead to a return to the lofty bankruptcy numbers of 2009.