Bankruptcies hit record low in Canada during pandemic

It seems that banks and other creditors providing deferral periods for their clients actually worked. And a federal benefit probably helped, too.

I recently encountered information on bankruptcies in Canada.

The data went back to January 2011 and went up to this past July. There was no central set of data that I could download, so I had to create my own spreadsheet, which you can find here.

It seems that bankruptcies have been trending down over the last decade. And it doesn’t seem that the numbers differed dramatically between when Stephen Harper was prime minister (2011–2015) and when Justin Trudeau was prime minister (2015–present). No matter the party in power, bankruptcies were dropping pretty steadily.

Then the pandemic hit.

In April 2020, bankruptcies fell to 2,289, which was a huge drop from the 3,916 bankruptcies seen in March, which itself was already at the lowest level since at least 2011.

That’s a drop of 1,627 fewer bankruptcies, or a 42% decrease. This was the single largest drop, by far, during this 9.5-year reference period.

The next largest drop was in December 2012, when it decreased by 1,489 bankruptcies, itself only a 23% drop—nearly half the amount seen in April 2020—from the 6,343 seen in November of that year.

Then it fell by another 90 in May to reach a new low of only 2,199 bankruptcies.

And since that time, bankruptcies have been climbing again.

It seems that banks and other creditors providing deferral periods for their clients actually worked. Delaying when people had to make payments on their debts may have prevented a significant number of bankruptcies this past spring, as Canada hit record unemployment of nearly 14%.

With unemployment that high across the country, had there not been payment and rent deferrals, as well as pandemic-specific subsidies and benefits from the federal government, not only would bankruptcies have been higher, we may have seen a record high instead of a new record low.

And with national unemployment still at 9%, deferral programmes coming to an end, and CERB being phased out, we may still see significant increases in bankruptcies.

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By Kim Siever

Kim Siever is an independent queer journalist based in Lethbridge, Alberta. He writes daily news articles, focusing on politics and labour.

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