Personal bankruptcies up 50 percent in December
By Claire Sibonney
TORONTO (Reuters) - Personal bankruptcy filings in Canada rose more than 50 percent in December from the same month of 2007, according to data released on Monday, a trend that parallels a jump in unemployment and consumer debt as the economy slid into recession.
Figures released by the Office of the Superintendent of Bankruptcy Canada also showed that bankruptcies filed by businesses increased by just 2.4 percent over the same period.
Total bankruptcies in Canada last year rose 12.3 percent over 2007, an increase driven by personal insolvencies as business bankruptcies dropped 2 percent year over year.
"I'm seeing individuals that are trying to consolidate their debt through a bank loan, an unsecured bank loan, and they're being refused," said Linda Stern, vice-president of personal restructuring services at Deloitte & Touche Inc in Toronto.
Stern, attributing the latest statistics to job losses and tighter lending conditions, said that in the past two months her office worked on more than 30 percent more filings -- actual bankruptcies or proposals to pay off a portion of debt -- than at this point last year.
"People may want to start the holiday season a little more stress-free," said Stern, adding that filing for bankruptcy at the end of the year may provide more tax benefits.
Canadians now carry more debt as a percentage of their disposable income than Americans, according to a report issued last week by Deloitte & Touche consulting group, posing risks for lenders and challenging the country's reputation for financial prudence.
The ratio of debt to disposable income has hit more than 130 percent, the Deloitte report found, citing Bank of Canada figures. That may be a troubling sign for Canada's banks, which have seen their customers' outstanding credit card balances increase by almost 40 percent since 2004. Continued...