Fewer Canadians seeking debt relief during COVID crisis, those struggling urged to seek help from licensed professionals
TORONTO – May 11, 2020 – After consistently climbing higher over the last year, the number of Canadians who filed for insolvency in the first quarter of 2020 was down 5.5 per cent compared to the previous quarter, according to the latest official figures released today. In March alone consumer insolvencies decreased by 8.5 per cent compared to the same time last year.
The decline is largely the result of increased payment flexibility among creditors, landlords and administrators coupled with temporary income supports provided by the government. While these measures have allowed many to make ends meet, bankruptcy professionals agree that consumer insolvencies will spike in the wake of the coronavirus pandemic.
“For those who were already overstretched with more debt than they could reasonably afford, the government relief and short term payment reprieve have allowed many to stay afloat. But their underlying debt is a gaping hole in the lifeboat,” says Mark Rosen, Chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). “The pandemic will magnify the debt problems Canadians were already facing and insolvency will be the way out for many.”
Prior to the widespread income shock and economic uncertainty brought on by COVID, consumer insolvencies were already on the rise in Canada. In spite of the dip in the first quarter, the total number of insolvencies for the 12 month period ending March 31 increased by 8.4 per cent compared to the same period last year.
With no clear end to the pandemic in sight, Rosen says that severely indebted Canadians should seek professional advice now from Licensed Insolvency Trustees before they find themselves even more in over their heads.
Licensed Insolvency Trustees are federally regulated debt professionals who can offer guidance regarding all of the debt-relief options available to Canadians. With solid accounting expertise and extensive knowledge of governing legislation, they are empowered to provide protection from creditors and can discharge people from debt. They take a customized approach to determine which restructuring option is most suitable based on individual circumstances.
If it is determined that bankruptcy or proposal is the best course of action, the dual role of the Licensed Insolvency Trustee is to ensure that the debtors’ rights are not abused while protecting the rights of creditors.
“For individuals and families in financial distress, the insolvency process is really about moving forward after hardship to focus on a brighter future. For creditors, the process formalizes negotiations and cushions losses,” says André Bolduc, executive board member of (CAIRP) and Licensed Insolvency Trustee.
He points out that as soon as an individual files for insolvency, they are protected from creditors, which can also include protection from collection agency calls and wage garnishment.
“It’s so easy to become paralyzed with fear or shame and let the bills pile up even more but that is the absolute worst thing you can do right now. You do not need to tough out this crisis on your own. Help is available,” adds Bolduc.
In an effort to maintain social distancing measures while continuing to support those in need of financial assistance, many Licensed Insolvency Trustees across the country are providing free contactless consultations virtually or by phone.
To find a trustee in your area, visit https://cairp.ca/cgi/page.cgi/find-a-cirp.html.