Insolvency Filings Returning to Normal Levels in Canada

November 1, 2022

Key points:

  • Insolvency filings in Canada are returning to normal levels after record-low numbers during the last couple of years. Inflation, cost of living, and rising rates are causing some Canadians to feel overextended.
  • Debt doesn’t have to last forever, but reaching out to an insolvency trustee is often the necessary first step to discovering your options depending on your situation.

Insolvency filings in Canada, and the people who need them

In this video, I chatted with Graeme Hamilton, a licensed insolvency trustee with Spergel, about how insolvency filings are developing in 2022. We compare today’s numbers to those during and before the pandemic, and who might be in need of insolvency services.

Graeme Hamilton’s contact information:



Don’t feel like watching? Find the full transcript below!

Chris: [00:00:11] Today I am joined by Graeme Hamilton from SPERGEL Licensed Insolvency Trustees. Graeme, how are you?

Graeme: [00:00:20] Good. How are you doing today?

Chris: [00:00:21] Good. Good. I think this is the third time that you’ve joined me on the video.

Graeme: [00:00:26] I think so, yeah. I think it’s every every fall we have.

Chris: [00:00:30] That’s that’s right. And so when we started the first time, it was during COVID, which was a very uncertain time, we were in lockdowns and there was a feeling of pessimism, pessimism about the future that a lot of households would struggle because work had changed, cashflows had changed. And to our surprise, it never really precipitated the way that we thought during COVID, right? 2020, 2021 were kind of good years, and then all of a sudden real estate started to pick up, our home values went up, equity went up, we’re rebuilding our lives. And it was quite good for quite some time. And then inflation happened and now it kind of feels like the the the chickens are coming home to roost. Finally, if that’s the expression.

Graeme: [00:01:31] I think Warren Buffett had one where when when the tide goes out, you see who’s wearing swimsuits or not.

Insolvency numbers are returning to “normal” levels

Chris: [00:01:36] Yeah right. I did hear that. So the tide has gone out now, we see who’s got trunks on and who doesn’t and it’s exposing a lot for, from my side of the business, we’re seeing a lot of change on the real estate side. Transactions are going down. People are losing equity. And so that has a lot of people concerned. And we are an indebted society here in Canada. We live a lot off of debt. We’ve carried a lot of debt during COVID. So I would imagine that in your business and in your line of work, you’re starting to see some changes. So I’m really curious to hear how, in fall of 2022, your world has changed and the work that you’re doing.

Graeme: [00:02:22] Yeah. So we we constantly get calls from people. But I think what what we’re seeing now is more people ready to to do something. So as as far as our last two conversations, those were the two lowest levels of insolvency filings in Canada, I think almost ever. And what we’re seeing now is the insolvency numbers are up 20 per cent from last year. So we’re kind of coming back into a normal number each year, which is about 110 (thousand) to 130 thousand filings a year is kind of our number across Canada … Employment rate, right? Usually there’s usually that is unemployment between 5 to 7 per cent. And so there’s also kind of this insolvency norm each year. And so we’re we’re coming back to just a normal level. But I think the media stories will be, insolvencies are up, and really they should be saying they’re just kind of coming back to where they were. But, you know, I’ve I’ve had people that I first spoke to a year ago call me and say, I’m ready. Right. And I think, as you said, the the the compounding rising rate, the cost of living, a lot of people that are homeowners are realizing, or recently got into homes, right? There’s this, you and I were speaking before. There’s a lot of people calling us that structured a transaction nine months ago and now they’re realizing it’s not sustainable. Right. And it was based on a hypothesis that was correct for the last eight years that real estate in Toronto just goes up. It doesn’t stay flat and it will never go down. Right. And so a lot of people that were speaking to me the first time, they did maybe go a bit overextended and and now they’re looking at their budget through different lenses and maybe realizing whether their variable or their fixed or other costs have gone up. And really, when you’re at that limit, all it takes is one event, right? You have a partner lose their job, you have an illness, you have your car breaks down, all these little things can really trigger these pressure points, to calling us. Right. So that’s, we’re seeing a lot more. It is. It is getting.

Chris: [00:04:52] And I see that. I mean, you mentioned the number of normal years, 120 to 130 filings. And I mean, we talk about it high level here, but each one of those filings is a personal story, a business or a story or some life event that’s happened to somebody. And it affects people in real ways. And so I’d like to ask you, I mean, who should be talking to you? How does it look? Because I think people don’t fully understand what it is that an insolvency trustee does, when they be talking to you, and how you really help. So talk to us about that. What does it look like?

The three types of insolvency clients

Graeme: [00:05:34] So first of all, there’s about 1000 trustees in Canada, so we are licensed by the government. We are obligated to provide people with free, confidential consultations, friendly and –

Chris: [00:05:46] I’m going to pause you there for a second. You said free. And I think that that should be underlined. This is a almost like a public service. If you’re struggling, you should just pick up the phone and call in.

Graeme: [00:05:57] So we are required by, we have this obligation as as being licensed trustees to go through people’s present financial situation and lay out the options for them. And you’re not under an obligation to use our services. But if you’re Googling me, then there’s a good chance that that you probably will need some some type of help. And we have, I would say, 3 to 4 different types of people that call us. One is that person that is paying their bills each month. They know their budget, they’re attentive, they’re proactive, and they just see something not being sustainable and they’re exploring their options. Right. And and they’re they’re the ones that are paying each month. And they just see, I’m paying 800 bucks in minimum payments on three credit cards and my debt line is not moving and my bill’s just gone up. And so so we have those type of people that I call them planners, right? So they’re eventually going to use our services within 90 days. Right.

Graeme: [00:07:07] Then we have those that are in almost crisis mode and they are basically maxed out on all their credit and they’re maybe even using one credit facility to pay another credit facility. And they’re and it’s just there’s leaks everywhere. And when we see them, it’s really like we have to get you on the surgery table, right? Like you need an insolvency filing.

Graeme: [00:07:34] And then we have the kind of people that are past that, that are in aggressive collections. They’re basically not answering their phone because it’s nonstop collection agencies and they’re maybe even getting their wages garnished, which is kind of like the end. Once once you’re there, you need an insolvency filing because it stops all that. You do get your wages back and the collection calls stop because you’ve now gotten into creditor protection. But so those are those are the three types of people that I’ve been speaking to really over the last three years since I’ve been with Spergel. And it’s everyone’s got a story, like you said. Right. And but I think the important thing that people know is that we’re here to help at least 40 minutes of time, right. To to have that conversation, you’ll, you’ll finish feeling better. At least you’ll note you don’t have to do anything right if you don’t want to. But at least you’ll know what your rights are and what options are available to you in Canada.

Debts don’t have to be forever

Chris: [00:08:42] Yeah, and I think that that’s important. I mean, I can reflect from my own experience in talking to homeowners that come to us for private second mortgages and things like this to do debt consolidation. There’s a little bit of emotion tied to to money pride as well. And so it kind of forces people or makes people perhaps not face the music immediately. Saying, you know, I can I can fix this, I can deal with it, or they’re embarrassed about it or whatever it is that’s tied to the money which progresses through those different severities, I guess, of of the people that you see. And so if there’s one message that you have, I mean, what would it be for people? I think I’m hearing it like, get in touch. Yeah, you have nothing to lose and everything to gain, right?

Graeme: [00:09:39] And it is, there’s that human element, there’s the ego, there’s pride. And but at the end of the day, there’s nothing wrong with saying I need help. And, you know. It’s. It’s better to like. Maybe I’m just too much of an optimist. It’s just a chapter. It’s not the book. Right. So you’ve got all these financial moments in your life and people run into debt. And that’s the reason why we have this insolvency system in Canada that gives you a fresh start. And then you can kind of dust yourself off and get back out there. Right. And that’s that’s kind of my my, my philosophy when I’m speaking with people. Right? It’s like, you know, we’re here to help you out and, you know, to get your fresh start and you start over right and right.

Chris: [00:10:29] I love that. And so I think that’s really important. And if as we wrap up this call, if somebody would like to take that first step to get in touch with you, how how do you direct them? What’s the best way for somebody to find you.

Need more help or information?

Graeme: [00:10:47] End of the day, you can just Google me. I run I run a couple of the Spergel practices in Toronto and I’m on the Danforth. Not far from you, Chris, but you can, depending where you are, we are nationwide, so you can just look up Spergel and then maybe find the location that that works for you and then contact us and someone will start that process of, of, of helping you for free. Right.

Chris: [00:11:15] Very good, Graeme. I’ll flash your name at the bottom there and contact information so people can see. Thank you once again for joining me. And as we head into 2023 and we deal with inflation, we deal with recession, it’ll be interesting to see how these things come together at street level in the businesses that we run and affect affect those around us. So thank you once again. My name is Chris Molder. I’m a Toronto mortgage broker. We’ll see you next time.

You can book a call directly into my calendar below, or get in touch with me here.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.