Are Canadians reaching their ‘breaking point’? New data shows more people filing for insolvency

Some 37,121 Canadians filed for insolvency in the first quarter of 2026 — the highest number of consumer insolvencies since 2009, when North America was reeling from the financial crisis.

Compared to the same time period last year, insolvencies are up 8.5 per cent.

However, the population now is higher than in 2009. Insolvency trustee Doug Hoyes says when that population growth is factored in, the rates of insolvency are much lower than 2009 levels.

Still, he says the increase is worrying, and he’s seen an uptick in calls to his office as the cost of everything from food to gas squeezes Canadians.

“Our expenses, for the most part, are rising a lot faster than what our incomes are,” Hoyes said. “How do you bridge that gap? Well, you do it with debt.”

Why consumer insolvencies are soaring to their highest since 2009 

The number of consumer insolvencies — where someone can not meet their debt load — have reached the highest quarterly level since the 2009 financial crisis largely because of a struggling job market and the rising cost of living. And analysts say the situation may not be improving soon.

Hoyes says most Canadians can get through one or two tough months, but when multiple factors, including trade wars and actual wars, drive up costs for a longer stretch of time, that’s when their debts start to pile up.

“A lot of people are now reaching the breaking point; they just cannot do it,” Hoyes said.

Bankruptcies rising faster than proposals in some provinces

British Columbia saw the biggest spike in insolvencies, with a 16.2 per cent increase compared to the same period in 2025. Prince Edward Island and Ontario weren’t far behind, with 15.3 and 14.7 per cent increases, respectively.

Among all insolvencies across Canada, bankruptcies made up 20 per cent of the first quarter filings while consumer proposals, which allow people to pay back their debt on a regular schedule over the span of a few years while keeping their assets, made up the other 80 per cent.

But in some provinces, including Ontario and Alberta, the number of bankruptcies grew faster than the number of proposals — which experts say is worrying.

Bankruptcies require the person who owes money to hand over their assets, such as cars and houses, immediately in order to get rid of their debt, explained Anna Lund, a law professor at the University of Alberta.

Why buy now, pay later plans might not be a good idea for everyday purchases 

Buy now, pay later plans give consumers the option to pay for everyday products in instalments, but some financial experts say it could create a hole that some people can’t get out of.

The trend in some places towards bankruptcies “suggests that people are in a deeper insolvency position where they can’t commit to those three to five years of debt repayments and instead are opting for the bankruptcy process,” Lund said.

Hoyes says he expects the number of insolvencies will likely keep climbing in the near future. For now, as uncertainty plagues the Canadian economy, he says prioritizing saving is important.

“Keep your expenses as low as you can to free up as much cash as you can to ride out these tough times. If you can build up an emergency fund, that’s great,” Hoyes said.