Canadians filed 140,457 consumer insolvencies last year — including both personal bankruptcies and consumer proposals — according to data from the Office of the Superintendent of Bankruptcy Canada. The total marks a 2.3% increase from 2024 and pushes insolvencies above the previous peak recorded in 2019, though still below the 151,712 seen in 2009 during the global financial crisis.
While the annual increase was relatively modest, insolvency professionals say the more notable shift is the return of homeowners seeking debt relief after more than a decade of housing-driven financial flexibility.
“The biggest thing right now is homeowners,” Scott Terrio, Manager of Consumer Insolvency at Hoyes Michalos & Associates, told Canadian Mortgage Trends. “Insolvency trustees didn’t really speak to homeowners for a decade. What we’re seeing in the last 12 months is homeowners calling us again. Either they’re looking ahead and realizing the numbers aren’t going to work, or they’re already in trouble and can’t fall back on their equity the way they could before.”
Homeowners returning as equity cushion fades
During Canada’s housing boom, rising home values allowed many borrowers to manage growing debt loads by refinancing or consolidating unsecured balances into their mortgages. As housing markets have cooled and borrowing costs have risen, that option has become less accessible.
Terrio says his firm has seen a growing number of homeowners contacting insolvency trustees over the past year, often carrying significantly larger debt loads than renters.
“Renters who file typically have around $60,000 in unsecured debt. Homeowners tend to have closer to $90,000,” he said.
Early indicators suggest the trend may be accelerating. The Hoyes Michalos Homeowner Bankruptcy Index, which tracks the share of insolvency filings involving homeowners, has climbed to about 7% in early 2026 after hovering near 1% to 2% during the housing boom years.
Inflation and mortgage renewals driving financial stress
Several economic forces are now converging to pressure household finances, including higher mortgage payments, rising living costs and elevated borrowing rates.
Borrowers who took out mortgages during the ultra-low rate period between 2020 and 2022 are now beginning to renew at substantially higher rates, in some cases pushing monthly payments up by more than $1,000. At the same time, cost-of-living increases have persistently eroded household budgets.
“We’ve had generational inflation,” Terrio said. “If your grocery bill used to be $700 a month and now it’s $1,200, you’ve got a problem — and it’s not going away.”
Despite these pressures, mortgage delinquency rates remain relatively low, a dynamic Terrio says can obscure the underlying stress households are facing.
“A lot of people talk about mortgage delinquency rates, but frankly they mean very little,” he said. “Canadians will do almost anything before they miss a mortgage payment.”
Instead, borrowers typically turn first to unsecured credit to bridge gaps in their budgets, building balances on credit cards and lines of credit before seeking insolvency relief, often as a last resort.
A slow-building insolvency cycle
Looking ahead, Terrio expects insolvency filings to rise gradually over the next several years rather than spike sharply, as homeowners typically take longer than renters to exhaust financial options before filing.
“I think the next insolvency wave is going to be long and gradual,” he said. During the housing boom, rising property values allowed many borrowers to roll unsecured debt into their homes rather than resolve it through formal insolvency proceedings.
With that safety valve now weakening, the adjustment may take years to fully play out.
“You could end up with five years of elevated filings instead of a short spike,” Terrio said. “And mathematically, that’s a lot more insolvencies overall.”
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Last modified: March 12, 2026