TORONTO, March 3 /CNW/ - The Office of the Superintendent of Bankruptcy reports that 151,712 Canadians filed either a personal bankruptcy or a consumer proposal in 2009, a record level. Nationally the personal bankruptcy filings increased by 31%. In Ontario the increase was 32.7%.
"Household debt in Canada is a ticking time bomb," says Douglas Hoyes, a bankruptcy trustee with Hoyes, Michalos & Associates Inc. "Canadians with jobs have managed to service their high debt levels thanks to low interest rates, but that period of relative peace will end the moment interest rates start to rise later this year," warns Hoyes.
The sharp increase in personal insolvencies is due to reduced incomes during the recession and a significant increase in personal debt. The average Canadian now has $141 in debt for every $100 of income that they earn. "That's the highest level in Canadian history," says Ted Michalos, a bankruptcy trustee with Hoyes, Michalos & Associates Inc.
New federal bankruptcy rules that came into effect on September 18, 2009 dramatically increased the cost of filing for bankruptcy, causing a significant number of Canadians to file consumer proposals to deal with their debts instead.
"In the broad scope of our practice, we are seeing three categories of debtors: Swimmers who have high debt, but have jobs and are able to service it, for now; Treaders, who have suffered reduced income, but still have sufficient credit to tread water and service their debts, but they are at significant risk; and Sinkers who held on as long as they could, but job loss put them at the brink of bankruptcy because they could no longer service their debts," says Hoyes.
"The best advice we can offer all consumers is that now is the time to reduce debt and develop a plan to deal with their financial problems. Talk to a professional now if you are treading water; don't wait until you are sinking," cautions Michalos.
Hoyes, Michalos & Associates Inc., a trustee in bankruptcy firm with offices throughout Ontario, helps people in financial difficulty. Further information can be found at http://www.hoyes.com/press.htm.
SOURCE Hoyes, Michalos & Associates Inc.
For further information: For further information: Douglas Hoyes, CA, Trustee in Bankruptcy, firstname.lastname@example.org; Ted Michalos, CA, Trustee in Bankruptcy, email@example.com, 310-PLAN (310-7526, no area code required) or 1-866-747-0660