Canadian Insolvencies Hit 17-Year High as Debt Pressures Mount in Q1 2026
More than 37,000 Canadians filed for consumer insolvency in the first quarter of 2026, representing the highest volume of such filings in a single quarter since 2009, according to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).
That’s equal to about 17 Canadians filing for insolvency per hour, the group said.
Around half of Canadians carrying debt are living paycheque to paycheque, and polls show about one-fifth of Canadians are becoming overwhelmed with debt, said licensed insolvency trustee and CAIRP member Andre Bolduc.
“The minute something throws you off balance, as a household, you have no savings to fall back on,” Bolduc said.
The volume of insolvency filings in the first quarter of 2026 was 6.5 per cent higher than it was the previous quarter and 8.5 per cent higher than the same time last year, CAIRP said.
“Being insolvent means, technically speaking, that you have more debts than you have assets, or you’re unable to pay your payments as they come due, or you stop making your payments,” Bolduc explained.
Many people become insolvent and never file anything, he said, but the data published by the Office of the Superintendent of Bankruptcy, which licenses and regulates the insolvency profession at arms length from the federal government, counts only people who have made a proposal to their creditors or who have filed for bankruptcy.
Typically, about 80 per cent of insolvency filings include people doing a consumer proposal, while about 20 per cent would comprise bankruptcies, he added.
Factors that Bolduc said he has seen lead to insolvencies include health issues affecting income, a decrease in work hours available, divorce, higher mortgage rates at renewal, financing of increasingly costly cars, and alternative lending.
Of all the insolvency filings in the first quarter of 2026, nearly 14,000 took place in Ontario — a 14.7 per cent annual increase in the province.
Filings in British Columbia increased at the highest rate, however, growing 16.2 per cent to more than 4,200 filings.
Licensed insolvency trustee and co-founder of Hoyes, Michalos & Associates, Ted Michalos, attributed the trend to a “perfect storm for financial distress.”
He noted that generally, when someone files for bankruptcy, it’s because they can’t repay even a portion of the debt — they’ve often liquidated everything they own to pay their debts first. A consumer proposal, on the other hand, is a legal process in which people repay a portion of what they owe.
Michalos credited higher mortgage rates, food inflation, and rising unemployment for the rise in insolvencies.
“Just about anyone with a mortgage has had to renew sometime in the last three years, and now they’re going from two or 2.5 per cent to 4.5 per cent or five,” he said. “The major difficulty is that’s about $1,000 or $1,500 in mortgage payments each month.”
The biggest issue overall, he said, is that the cost of living has increased “dramatically” in the last two years.
“It finally got to a point where people can’t handle it.”
While consumer insolvencies rose year-over-year, business insolvencies declined 7.5 per cent annually to about 1,200 filings.
That rate, however, was a 9.8 per cent increase compared to the previous quarter.
While filings are down compared to last year, CAIRP noted that businesses continue to face high financing costs, lower consumer demand, and economic uncertainty around trade and supply chains, among other challenges.
Bolduc noted that many businesses that fail, particularly small- and medium-sized businesses, never go through formal insolvency proceedings because they can’t afford it.
“They just shut their doors,” he said.
The construction sector (17 per cent) and the accommodation and food services sector (14 per cent) had the highest number of insolvency filings, according to the data.
“I think changes in business tend to be quicker,” Bolduc said. “When you’re in trouble, there’s almost an immediate impact.”
For instance, challenges in real estate — such as the condo bubble — have affected large, multi-year projects in the construction sector.
This article was first reported by The Star
