Insolvencies Ticked Up Among Consumers and Businesses in December 2024: Insolvency Stats Report
Canada’s latest insolvency statistics reveal a troubling trend, with both consumer and business insolvencies rising in December 2024. According to the “Insolvency Statistics in Canada – December 2024” report, financial pressures on Canadians continue to mount.
Consumer insolvencies reached a 15-year high in 2024, with 137,295 filings—over 14,000 more than in 2023. This surge reflects the economic challenges many Canadians face.
Consumer Insolvencies
Consumer insolvencies rose by 11.4% in 2024 compared to the previous year. December 2024 saw a 1.7% increase from December 2023. Proposals, which are formal offers to creditors, jumped by 11.6%, while bankruptcies rose by 10.8%.
Proposals dominated consumer insolvency filings at 78.8%, while bankruptcies accounted for 21.2%. Consumer cases made up 95.7% of all insolvency filings in December 2024.
Business Insolvencies
Business insolvencies increased by 28.6% in the 12 months ending December 31, 2024. Sectors like construction, transportation, and accommodation and food services were hit hard. However, insolvencies in mining and oil and gas extraction declined.
In December 2024, business insolvencies dropped by 26.1% compared to December 2023. Total insolvencies, including bankruptcies and proposals, fell by 20.6% from November to December 2024. Bankruptcies decreased by 20.1%, and proposals by 20.7%.
Regional Breakdown
Ontario had the highest number of insolvencies at 3,731, followed by Quebec with 2,287. Nunavut recorded only one insolvency in December 2024.
Total Insolvencies
Canada recorded 9,686 insolvencies in December 2024 under the Bankruptcy and Insolvency Act. Of these, 2,293 were bankruptcies, and 7,393 were proposals.
The rise in both consumer and business insolvencies highlights the financial challenges faced by Canadians, underscoring the need for effective insolvency and restructuring measures.
Annual Surge in Consumer Insolvencies
For the entire year of 2024, consumer insolvencies reached a 15-year high, marking an 11.4% increase compared to 2023. This surge resulted in 137,295 filings, which is over 14,000 more than the previous year. The daily average for 2024 was approximately 375 insolvencies per day, underscoring the growing financial strain on Canadian households.
Business Insolvency Trends
Business insolvencies saw a significant year-over-year increase of 28.6% in the 12 months ending December 31, 2024. This rise was particularly evident in sectors such as construction, transportation and warehousing, and accommodation and food services. However, the mining, quarrying, and oil and gas extraction industries experienced a decline in insolvencies during the same period.
Monthly Fluctuations in Business Insolvencies
In December 2024, business insolvencies dropped by 26.1% compared to December 2023. This decrease was part of a broader trend where the total number of insolvencies, including both bankruptcies and proposals, fell by 20.6% from November to December 2024. Specifically, bankruptcies decreased by 20.1%, while proposals declined by 20.7% during the same period.
Proposals Dominate Consumer Insolvency Filings
Proposals continued to be the preferred option for consumers facing financial difficulties, accounting for 78.8% of all consumer insolvency filings in December 2024. Bankruptcies, on the other hand, made up 21.2% of these filings. Consumer cases dominated the overall insolvency landscape, comprising 95.7% of all insolvency filings for the month.
Key Definitions
Understanding the terms is crucial for grasping the implications of the data. A “proposal” refers to a formal offer to creditors to settle debt under different terms, while “bankruptcy” is the state of a business or consumer that has filed for bankruptcy protection or been issued a bankruptcy order.
Conclusion
The latest insolvency statistics for December 2024 paint a concerning picture of Canada’s economic landscape. With consumer insolvencies reaching a 15-year high and business insolvencies seeing a significant increase, the financial strain on both individuals and companies is evident. The rise in proposals over bankruptcies suggests that many Canadians are seeking alternatives to discharge their debts, but the overall trend underscores the need for proactive measures to address the growing financial challenges.
As economic uncertainties persist, it will be crucial to monitor these trends and implement strategies to support both consumers and businesses in navigating these difficult times.
Frequently Asked Questions (FAQ)
What caused the surge in consumer insolvencies in 2024?
The rise in consumer insolvencies can be attributed to mounting financial pressures, including high living costs, debt levels, and economic uncertainty. Proposals were the preferred option, accounting for 78.8% of filings.
What industries were most affected by business insolvencies?
Sectors like construction, transportation, and accommodation and food services saw significant increases, while mining and oil and gas extraction experienced a decline.
What is the difference between a proposal and bankruptcy?
A proposal is a formal offer to creditors to settle debts under different terms, while bankruptcy is a legal process where individuals or businesses are declared insolvent and assets are liquidated.
Which region had the highest insolvency filings in December 2024?
Ontario recorded the highest number of insolvencies at 3,731, followed by Quebec with 2,287. Nunavut had the lowest with just one filing.
What does the future hold for insolvency rates in Canada?
Continued economic challenges may sustain high insolvency rates. Monitoring trends and implementing support measures will be essential to help Canadians navigate financial difficulties.
