Bankruptcy Chief Offers Stark Warning To Canadians

Monday, 17 January 2011 12:32
Written by Newsroom

Superintendent of Bankruptcy Household debtDebt to income ratioCanadian BankruptciesInterest ratesStephen HarperMark CarneyJames Callon Personal bankruptcies Pre-recession level InsolvencyBusiness bankruptcies Consumer bankruptciesDebt accumulationFinancial crisisIn yet another sign that disaster could be looming if Canadian household debt levels are not brought under control by tighter checks and balances, Superintendent of Bankruptcy James Callon issued a warning.
Callon says,” It’s important for Canadians to be aware of the risks and possible consequences of taking on a large amount of debt. Significant events, such as a change in employment or income, a change in family status or a serious illness, can cause a huge drain on finances. The combination of a large amount of debt and the sudden occurrence of a major life event could lead to the harsh realities of insolvency.”

Callon joins others, like Mark Carney and Stephen Harper, in voicing concerns about the swelling of the average Canadian debt load, possible increases in interest rates, and the disproportionate rate of debt to income growth.
The message is clear: It is time for over-extended debt holders to reel their debt in- and slow down in their accumulation. It is time for Canadians to get their financial houses in order- or run the risk of potential financial crisis.

Although personal bankruptcies rose a meagre 0.3% in October, the more concerning statistic, is that personal bankruptcies are still 22.5 % higher than the pre-recessionary levels of 2007-08.
So then, expect the unexpected, and try to prepare financially.

Consumers were the greatest numbers of financial fatalities during the recession, not having commercial strategies to paying out-of-control debt- like reducing staff or other expenses.

Since then, though, Canadians have taken advantage of historically low interest rates to load up on consumer credit- and the fear is- now with interest rates set to rise at some point, there will be consequences- and for some, they may be too much to bear financially.
According to the Office of the Superintendent of Bankruptcy, consumer insolvencies were 7,844 in October, - which indicates a slight rise from 7,822 a month earlier. Business bankruptcies dropped 0.7 % to 292 from 294 in September.

Bankruptcies rose modestly by 0.2 % to 8,136 from 8,116 altogether from September.