Many people look at the statistics published by the Office of the Superintendent of Bankruptcy Canada regarding the numbers of people filing for personal bankruptcy or making a consumer proposal as an indicator of the overall health of our economy and a bad omen for the stock market. The reality is that this is a trailing indicator of the economy.
Recessions usually come from a series of dominoes falling: The housing market crashes, and then oil prices drop, and so on.
As oil prices have collapsed, the fear that energy companies would go bankrupt and that any negative impacts from this would spill into the broader economy has risen.
With that being said, when the stock market dipped in 2008 and people experienced money problems as the result of job loss, reduced overtime, health issues, etc., their first response was rarely to get debt help or see a trustee in bankruptcy. So, although statistics published by the Office of the Superintendent of Bankruptcy Canada show substantial increases in the numbers of people filing personal bankruptcy or making a consumer proposal since the beginning of the recession in November 2008, many other people will struggle for years before they seek help. Most people that have personal debt problems will struggle for years, exhaust their savings, attempt to get a debt consolidation loan, refinance their property, and sell assets all in an attempt to avoid filing drastic steps.
Given the record high levels of consumer debt that most Canadians are carrying, it’s reasonable to assume that these numbers will continue to increase for years to come, long after the stock market and economy have recovered. Even after people return to work and have their wages return to pre-recession levels the die will have already been cast.
Once someone has money problems and they get behind with their payments the mounting interest will force them to deal with their personal debt problems and consider their options. If you’re struggling, don’t wait until it’s too late. We offer free consultations and review all options available to you so you can feel comfortable with your choice.
