Consumer insolvencies in B.C. rose 2.6% in June on a seasonally adjusted basis after falling for two consecutive months, according to a report by Central 1 Credit Union.
The bulk of the increase was due to a surge in consumer proposals, a stage where consumers can formally file to reorganize their debt with creditors instead of filing for bankruptcy.
Based on data from the Office of the Superintendent of Bankruptcy, the Central 1 report noted the number of consumer bankruptcies fell by 0.9% in June after rising in May.
Bryan Yu, a Central 1 economist, told BIV that consumer bankruptcies remain at a historically elevated basis at levels not seen since the last recession in the early part of the decade. While overall employment levels have recovered most of their losses since the downturn, “unemployment remains relatively high, so with wage gain issues and other factors, consumers are probably still struggling with their overall finances at some level.”
He noted, however, it is difficult to fully discern the current state of consumer financial health, given federal changes that came into effect last September to the Bankruptcy and Insolvency Act that has affected the statistics over the past year.
Consumer insolvencies spiked last fall prior to the changes, in part because, people decided to declare bankruptcy before the legislative changes took effect, Yu said.
Since then, consumer bankruptcies have been a smaller proportion of overall insolvencies, with an increase in the number of consumer proposals.
BIV first wrote about the changes to the bankruptcy legislation in July 2008 (See “Consumer creditor protection slated to expand” – issue 975; July 1-7, 2008).