In statistics just released by the Office of the Superintendent of Bankruptcy, consumer proposals are on the rise, with filings in the first six months of 2011 increased by 8.7% over the same period last year.
Douglas Hoyes, Consumer Proposal Administrator
As I wrote earlier this year in my post on the massive increase in consumer proposal filings in 2010, this continues a trend to increased consumer proposal filings that started in late 2009 when the government changed the rules to make personal bankruptcy in Canada more expensive, therefore making consumer proposals more attractive.
In the first six months of 2010 there were 21,133 consumer proposals filed in Canada. That number increased to 22,975 in the first six months of 2011.
This contrasts with a decreasing rate of personal bankruptcy filings in Canada, dropping by over 15% in the same period.
The trend is now well established, and the percentage of proposals filed will continue to increase.
In my experience, there are many reasons for this new trend.
1 First, as noted above, bankruptcy now costs more, so people are looking for an affordable alternative to deal with their debts.
2 Second, no-one wants to file bankruptcy, so reaching a negotiated settlement with your creditors is a preferable alternative. We simply feel better about ourselves when we can reach an agreement on our debts.
3 Finally, a proposal gives certainty. Once it’s accepted, you know exactly what you have to pay, which greatly simplifies your personal budgeting.
Unless the economy stages a dramatic recovery, I suspect that consumer proposal filings will continue to increase in the months ahead.
About Douglas HoyesDouglas Hoyes, CA, is the Co-Founder of Hoyes, Michalos & Associates Inc., the largest independent firm of consumer proposal administrators in Canada.
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