Personal bankruptcies highest in 4 years

LORI McLEOD,  Globe and Mail Update

Personal bankruptcies in Canada reached their highest level in more than four years in April, data released Wednesday by the Office of the Superintendent of Bankruptcy Canada show.

Across the country, 8,035 consumers declared bankruptcy in April, up 19.3 per cent from a month earlier, and an 18.3 per cent year-over-year increase.

Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said that “8,000 a month is definitely on the high side. If you look at the last 10 years, monthly consumer bankruptcies have tended to swing around the 7,000 mark.”

It's the first month personal bankruptcies have crossed 8,000 since March of 2004, Mr. Porter added.

The largest numbers of bankruptcies were in Ontario and Quebec, which have been hit hard by the downturn in the manufacturing sector.

In Ontario personal bankruptcies rose to 3,292, up 24 per cent from last April, and in Quebec they were up 21 per cent to 2,548.

While some provinces and territories saw larger increases in bankruptcies on a percentage basis, the actual numbers filed were very small.

Mr. Porter said that while one month's data doesn't make a trend, the numbers bear watching.

“They [personal bankruptcies] were only up 2.9 per cent in the first three months of the year, so for now April's data is a red flag. We will be waiting for May's data to see if the year-over-year number continues to move higher.”

In the 12-month period ended April 30, personal bankruptcies were up 3.8 per cent from the same period the year before.

Bankruptcies filed by businesses were also higher, rising by 9.2 per cent in April from the previous year to 592. Again, the bulk of those filings were in Ontario and Quebec with 241 and 221 filings respectively.

However business bankruptcies were down 5 per cent for the 12 months, compared with the same period the previous year.