Consumer, business bankruptcies poised to rise

Tue Nov 11, 2008 12:07pm EST
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By Lynne Olver

TORONTO (Reuters) - There will be a steady upward march in personal and business bankruptcy filings in Canada as overspending and falling home prices catch up with individuals and as a slowing economy hurts businesses, experts in the field say.

"We're definitely seeing an increase (in calls), I think that people are caught, they've been living on credit," said Linda Stern, vice president of personal restructuring services at Deloitte & Touche Inc in Toronto.

Stern estimates her office is working on 30 percent more filings -- actual bankruptcies or proposals to pay off a portion of debt -- than at this point last year.

"We're busy, every day we're getting many calls and e-mails" as people explore their options, she said.

Her colleague, Rebecca McKinley, a trustee at Deloitte in Windsor, Ontario, a manufacturing center a stone's throw from Detroit, said her office is dealing with about 17 percent more bankruptcies than last year.

"In the past year I have seen more and more instances of people who cannot afford their mortgages," while at the same time their house values have dropped, McKinley said.

Canada's Office of the Superintendent of Bankruptcy said last week that total bankruptcies in September jumped 28.4 percent from the same month a year earlier. Individual bankruptcies were up nearly 30 percent nationwide, but businesses also posted a 9 percent increase.

Economists at Bank of Montreal said this year-over-year surge in consumer bankruptcies marks the fastest rise since the mid 1990s.   Continued...