Insolvency filings push Canada toward a historic breaking point

Canadian insolvency filings reached 13,254 in June, the second-highest monthly total ever recorded and the sixth consecutive year of June-over-June growth.

According to data from the Office of the Superintendent of Bankruptcy (OSB) analysed by Servus Credit Union, total filings were 11.5% higher than a year earlier and more than double the June 2020 level. The trajectory puts Canada within striking distance of its worst-ever annual total.

The quarterly picture reinforces the pressure. The OSB reported 37,523 consumer insolvency filings in Q2 2026, a 6.9% increase from the same period in 2025 and the highest quarterly volume since 2009. It marked two consecutive quarters above 2009 levels — the worst full year on record.

Over the 12 months ending June, 150,505 insolvencies were filed, up 5.3% from the prior year and within 0.4% of the all-time 12-month record set in 2010.

Homeowners are increasingly in the mix

Consumer proposals — formal arrangements to renegotiate debt with creditors — accounted for roughly 76% of June filings and rose 11.3% year-over-year, according to Servus economists Charles St-Arnaud and Oriane Kacoutie.

Bankruptcies climbed 12.2% over the same period. On a seasonally adjusted basis, total filings rose 9.4% from May alone. Total insolvency volumes now stand 12.5% above their 2019 level.

The shift within the homeowner segment is the detail mortgage brokers should watch most closely. A February report by Hoyes, Michalos & Associates, a licensed insolvency firm in Ontario, found homeowner insolvencies now represent 8% of all filings, up from 5% in 2024.

Two-income households accounted for 23% of Q2 filings, the highest proportion since 2017. Declining property values have closed off refinancing as a debt management tool.

With Canadians filing for insolvency now carrying record levels of unsecured debt— averaging $67,496 in 2025, up 11.2% in a single year — the options for staying solvent are shrinking.

Provincial divergence and the labour market risk

Prince Edward Island posted the largest year-over-year gain in June at 50%, followed by Saskatchewan at 28.1% and New Brunswick at 27.1%. British Columbia recorded a 17.2% increase and Ontario 14%.

Against 2019 baselines, the national picture is most strained in B.C., where volumes run 56% above pre-pandemic norms, and Ontario, up 33.8%. Both provinces carry above-average household debt-to-disposable-income ratios, according to Servus.

Ontario and British Columbia are driving Canada's steepest mortgage balance delinquencies and insolvency increases, with mortgage stress in those markets skewing the national figure upward.

Servus economists flagged employment as the key variable. Job losses remain the principal risk to the outlook, they said, warning that deteriorating employment conditions and declining incomes would push insolvency volumes higher still in the months ahead.

CMP

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