The Economy People Voted For

Grade school math and a sense of responsibility could have avoided this:

After the pace of insolvency filings fell during the pandemic, it is now back on the upswing, with millennials leading the pack in 2022.

Millennials accounted for 49 per cent of total insolvency filings in Ontario even though they only make up about a quarter of the 18-and-over population, according to the latest Joe Debtor report from Ontario-based insolvency firm Hoyes, Michalos & Associates Inc. Total Ontario insolvencies rose by 15 per cent year over year while Canadian filings rose by 11 per cent and were notably higher than pre-pandemic levels.

“The average insolvent millennial is just 33 years old, yet they are 1.7 times more likely than baby boomers and 1.4 times as likely as generation X to file (for) insolvency, relative to the population,” licensed insolvency trustee Ted Michalos said in a press release. “We’ve noticed an overall trend since 2016 that the average insolvent borrower continues to get younger, with student loan debt and extremely high-cost loans being the main drivers of their insolvency.”

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The forecasts come after Canadian business insolvency filings grew 37.2 per cent in 2022, representing the largest year-over-year percentage increase in more than 30 years, according to a report from the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) released on Feb. 7. CAIRP also said that consumer insolvencies rose 11.2 per cent in 2022 and were up 16.3 per cent in the fourth quarter of last year compared with the same time in 2021.

“Inflation has pushed up the cost of everything from raw materials to fuel, putting significant financial strain on businesses. At the same time, consumers are grappling with the cost of living and reducing their spending,” said Jean-Daniel Breton, chair of CAIRP. “As business owners struggle to manage these impacts in addition to debt carrying costs becoming increasingly expensive, we anticipate the number of businesses seeking restructuring or debt relief options will continue to grow in 2023.”

Approximately 3,400 Canadian businesses filed for insolvency in 2022, said CAIRP, citing the latest statistics from the Office of the Superintendent of Bankruptcy, an increase from 2,480 insolvencies in 2021. The majority of insolvencies were bankruptcies (77 per cent) and the remainder were proposals to renegotiate the terms of loans (23 per cent).

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Nearly 4 in 10 Canadians are now borrowing money to pay for groceries, shelter and other daily expenses, say federal researchers. One report described it as the worst of times for many Canadians, “the biggest financial challenges of their lives.”