Here’s another reason for our clients to remain vigilant in both their credit granting processes as well as their accounts receivable follow-up, including outsourcing problem accounts to Case Receivable Management Inc.
Let’s start with the good news. Less Canadians are filing for bankruptcies. Yay! Now for the bad news, more are asking for help with their debt. New numbers from the Office of Superintendent of Bankruptcy Canada (OSBC) show that while bankruptcies are down, consumer proposals are up across the country.
Bankruptcies Are Down 5.8%
Less Canadians declared bankruptcy in June 2017. OSBC reported 60,459 bankruptcy filings in June, a 6.7% decline from the month before. This represents a 5.8% decline from the same time last year. Bankruptcies are a tool used by people that need immediate relief from creditors. Generally speaking, this is pretty good news for Canada.
Consumer Proposals Are Up 2.6%
Consumer proposals are on the rise across the country however. OSBC reported 62,718 consumer proposals in June, a 3.7% decline from the month before. This still represents a 2.6% increase from the same time last year. While bankruptcies are down, more people are asking their creditors for more time.
For those unaware, a consumer proposal is a formal agreement to settle debts with creditors. Basically, it’s like telling your creditors “I can pay you back, just not all of it, and I need more time.” Consumer proposals can only be filed if debts are less than $250,000. This is a potential precursor for bankruptcies, so these are still of concern to the broad market.
The fact that more Canadians are utilizing consumer proposals is a good thing. The temporary arrangement with creditors to prevent going into full bankruptcy is a tool that those struggling to make payments should seek before dealing with the consequences of bankruptcy. How effective consumer proposals will be at staving off debt remains to be seen.
Usually there isn’t a flood of new income to help manage bills in the near future, but hopefully these people just needed a few months. Although there is increasing evidence that people are using their real estate to pay off debt, using loans secured against their equity or by utilizing reverse mortgages.
This post originally appeared in betterdwelling.com Canada’s largest independent housing news outlet