Although the Canadian economy has been hit hard by the coronavirus pandemic, the swift monetary response by the federal government has kept many Canadians from filing personal bankruptcies.
The Office of the Superintendent of Bankruptcy Canada has recently released data regarding bankruptcy filings, and only 6,700 people have filed for bankruptcy in the month of April. The figure represents a 43% decline compared to the same time a year prior. Furthermore, the data is reflective of the biggest decrease in bankruptcy filings within a month on record.
Although such a low number of bankruptcy filings suggest that Canadians are faring through the pandemic modestly, that may not quite be the case. The data more likely suggests Canadians are doing whatever it takes to make ends meet. According to Statistics Canada, over one million people had lost their job in March, meanwhile another 2 million became unemployed in April. Then, over 7 million Canadians have applied for CERB payments as a means of staying financially afloat.
However, if household income levels continue to be diminished as a result of the pandemic, then there is a good chance the low bankruptcy-filing rate will not last for long. Albeit Canadians have been able to defer their mortgage and credit card payments in addition to receiving federal stimulus checks, but once those options run dry, the number of personal insolvencies will most likely increase.
Information for this briefing was found via CBC and OSBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
