Canadians Enter Insolvency With Record Debt, More Accounts, Higher Balances

KITCHENER, ON, Feb. 9, 2026 /CNW/ - Canadians filing insolvency are carrying more debt, across more accounts, with higher balances than at any point since tracking began, according to the latest study by Licensed Insolvency Trustees Hoyes, Michalos & Associates Inc.

The annual study, which examines the financial profile of individuals filing insolvency, found that the average insolvent debtor owed $67,496 in unsecured debt in 2025, the highest level recorded since the study began in 2011. Debt loads increased 11.2% in just one year and nearly 37% over the past three years.

"This isn't about one bad financial decision or a sudden crisis," said Doug Hoyes, Licensed Insolvency Trustee and co-founder of Hoyes, Michalos & Associates. "Canadians are layering borrowing on top of borrowing, leading to insolvencies with unprecedented debt levels."

Scale and Accumulation

Key indicators of financial strain among insolvent Canadians in 2025 include:

• A higher number of creditors (10.5 on average, the highest level since 2013)
• More credit cards (3.5 per debtor, up 13.3% in one year)
• More payday loans among users (4.9 loans, the highest ever)
• Higher balances across nearly every major debt category

"Canadians are using credit as a coping strategy," said Ted Michalos, Licensed Insolvency Trustee and co-founder of the firm. "That strategy works for a while, but it's a delaying tactic, not a solution. By the time people file, they're not dealing with one problem -- they're dealing with ten."

Credit card debt continued to play a leading role. Average credit card balances increased 20.2% in 2025 and now account for 36% of total unsecured debt, the highest share seen in more than a decade.

Homeowner Insolvency Risk Is Rising

While homeowners still account for a relatively small share of insolvency filings, their presence is growing. In 2025, homeowners represented 8% of all insolvencies, up from 5% in 2024. More concerning is the deterioration in their financial position. Nearly one in four insolvent homeowners (23%) filed with negative home equity. At the same time, unsecured debt among insolvent homeowners increased 12.6% year over year, compounding the strain of higher mortgage payments. On average, insolvent homeowners carried $111,995 in unsecured debt.

"For years, home equity has acted as a pressure valve," said Doug Hoyes. "That buffer is eroding. When homeowners lose the ability to refinance or consolidate, unsecured debt starts to pile up quickly, and insolvency risk rises."

Why Insolvencies Haven't Surged -- Yet

Despite worsening debt profiles, insolvency filings increased by just 1.2% in Ontario and 1.4% nationally in 2025. This apparent stability does not signal improving financial health. Instead, it reflects households stretching their finances further by borrowing more, prioritizing minimum payments, and delaying financial reckoning.

"Layering credit can buy time, but it doesn't fix the problem. Once borrowing capacity runs out, insolvency filings tend to rise quickly," said Ted Michalos.

Debtors are entering insolvency later in the debt cycle, with higher balances and more accounts, suggesting that financial stress is being stored rather than resolved. As higher interest rates and mortgage renewals continue to work their way through household budgets, insolvency filings are likely to rise in 2026.

For more information, see the complete Joe Debtor study at https://www.hoyes.com/press/joe-debtor/.

About Hoyes, Michalos & Associates, Inc. Hoyes, Michalos & Associates Inc., a Licensed Insolvency Trustee firm co-founded by Doug Hoyes and Ted Michalos in 1999, has established itself as the leading voice on personal debt issues in Ontario. Hoyes Michalos provides real debt management solutions to help Ontarians climb out of debt, including consumer proposals and personal bankruptcy, with offices throughout Ontario. Further information is available at www.hoyes.com

SOURCE Hoyes, Michalos & Associates Inc.

Contacts:  Douglas Hoyes, CPA, Licensed Insolvency Trustee, [email protected]; Ted Michalos, CPA, Licensed Insolvency Trustee, [email protected]; 1-866-747-0660