Insolvency numbers in N.L. higher than during 2009 recession

Insolvency numbers in Newfoundland and Labrador continueto tick upwards, with new figures from Statistics Canada revealing that more people filed for insolvency during the 12-month period ending in May 2018than during the 2009 recession.

"It's a steady trend upwards, every month and every quarter," said Sean Stack, a licensed insolvency trustee in St. John's.

In 2009, when the recession was in full swing, 2,542 Newfoundlanders filed for consumer insolvency. That number was helped along by major changes to Canadian bankruptcy law that year, which led to "a flood of people filing" at once, said Stack.

"This year, there's no changes [to bankruptcy law]," said Stack. "What it is is over the last few years now we've been seeing a gradual increase in the number of Newfoundlanders and Labradorians who are struggling."

In the period between May 2017 and May 2018, there were 2,638 consumer insolvency filings in Newfoundland and Labrador higher than any year in the past decade.

Compared to the same period last year, the province's numbers also rose more sharply than any other province in Canada, with the majority of provinces seeing a slight decrease in filings.

The numbers dovetail with recent gloomy economic headlines, including dire warnings of province-wide insolvency, slumping employment numbers, and a sense of unease for Newfoundlanders as they look to the future.

Consumer insolvency numbers in Newfoundland saw a steady drop off in the early 2010s, only beginning their steep climb upward in the last two years.

Middle class and in debt

Another trend still gaining momentum is the rise in the number of people filing consumer proposals, rather than declaring bankruptcy.

Though both are declarations of insolvency, in a consumer proposal, people with some remaining income or assets will make an offer to their creditors to pay off their debt.

Between May 2017 and May 2018, bankruptcies in Newfoundland and Labrador went down by about 10 per cent, while consumer proposals soared by 37 per cent.

"It means that more of the people who are struggling with their debt have enough income coming into their household or enough assets in their household that it allows them to make an offer," said Stack.

"There's more people who you might consider to be middle class who are really feeling the pinch of everyday expenses."

As for what the near future will bring, Stack is less than optimistic.

"We haven't really felt the impact of the increasing electricityprices yet," he said. "As we can see from the numbers, people don't have a lot of wiggle room in their daily budgets."