Households face growing financial strains

Insolvency filings rose in May, led by an increase in consumer proposals, according to new data from the Office of the Superintendent of Bankruptcy (OSB).

Total insolvencies — bankruptcies and consumer proposals — rose by 2.3% in May, on a month-over-month basis, and for the 12-month period ended May 31, insolvencies were up by 4.2%, compared with the same period in 2024.

In May, the increase was driven by consumer proposals, which rose by 4% in the month, while bankruptcy filings declined by 2.7%, the OSB said.

Over the 12 months ended May 31, the volume of consumer insolvencies (including both consumer bankruptcies and proposals) was up by 5% compared with the prior year.

Specifically, consumer bankruptcies increased by 5.4% year-over-year, while the number of consumer proposals was up by 4.9% over the same period.

According to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), consumer insolvency volumes this year remain higher than their normal pre-pandemic levels.

“Although recent interest rate cuts and subsequent pauses may have offered some initial relief, many households are still grappling with persistent high living costs, stagnant incomes and debt accumulated during a period of steep borrowing rates,” said André Bolduc, chair of the CAIRP, in a release.

At the same time, business insolvencies for the 12‑month period declined by 13.3% compared with the same period in 2024, the OSB reported.

“Although headline numbers show a decline, business insolvency levels remain elevated compared to pre-pandemic norms,” Bolduc noted.

“This ongoing trend reflects the lasting impact of economic disruptions, inflationary pressures and evolving uncertainties for Canadian businesses that continue to challenge business stability across multiple sectors,” he added.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.