‍Canada experienced its highest volume of consumer insolvencies in 15 years in 2024, surpassing levels not seen since the 2009 Great Recession. Consumer insolvencies rose 11.4% compared to 2023, reaching 137,295 filings. That's over 14,000 more than the previous year, averaging about 375 insolvencies per day.

The trend isn't slowing. Early 2025 data suggests the pace is accelerating, not stabilizing. And here's what makes it even more striking: unemployment was 7.1% in September 2024, far lower than the 8.3% recorded in September 2009.

When insolvencies climb to Great Recession levels despite a significantly stronger job market, something else is driving the problem. And that something is affordability.

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The Numbers Keep Getting Worse

A total of 34,588 consumer insolvencies were filed in the third quarter of 2024, an increase of 13.5% over the same quarter in 2023. In the 12-month period ending September 30, 2024, consumer insolvencies increased 15.4%, from 117,305 to 135,368.

The second quarter of 2024 saw 35,082 Canadians file a consumer insolvency, increasing 12.4% compared to the same quarter in 2023. That was the highest level in over four years, reflecting mounting financial pressures on Canadian households due to high living costs, debt servicing expenses, and the lingering impacts of rapid inflation.

By August 2025, the trend showed signs of a temporary pause. Consumer insolvencies remained essentially unchanged year-over-year in August, with Ontario filings rising just 0.7% and total Canadian consumer insolvencies declining 0.7%.

But that pause didn't last. According to analysis of Office of the Superintendent of Bankruptcy data, September 2025 saw 12,668 filings, up 10.6% from last year. It was the second-highest September ever reported, only surpassed in 2009.

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The Summer Slowdown Is Over

Many analysts expected consumer insolvencies to stabilize or even decline in late 2024 and early 2025 as interest rate cuts and slowing inflation provided relief. The Bank of Canada reported that delinquency rates improved modestly in the second quarter of 2025, with the share of loans 90-plus days in arrears declining slightly across nearly all credit product categories.

That improvement fueled optimism that the worst was over. But September's surge proved otherwise.

The 2.9% growth for September's 12-month sum was nearly double the pace in August. And September's year-over-year growth of 10.6% was substantially larger than the 12-month rate, clear evidence of acceleration, not slowing down.

"We are seeing some short-term stabilization of consumer insolvencies, likely due in part to this year's interest rate cuts and slowing inflation. However, a longer-term financial strategy will be critical for vulnerable individuals," says André Bolduc, Licensed Insolvency Trustee and Chair of the Canadian Association of Insolvency and Restructuring Professionals.

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Why Insolvencies Are Climbing Despite Lower Unemployment

The comparison to 2009 is striking because economic conditions are fundamentally different. The 2009 spike in insolvencies occurred during the depths of the Great Recession, when unemployment hit 8.3% and the economy was shedding jobs rapidly.

Today, unemployment sits at 6.9% to 7.1%, and the labour market just added 67,000 jobs in October. By traditional measures, the economy should be supporting households better than it did in 2009.

But traditional measures don't capture what's actually happening. The cost of living has risen dramatically. Housing costs, whether rent or mortgage payments, are consuming a larger share of household income than ever before. Grocery prices remain elevated. Energy costs fluctuate. And debt servicing costs, despite recent rate cuts, are still significantly higher than they were a few years ago.

Canadians aren't losing their jobs at alarming rates. They're working, earning income, and still can't keep up with expenses. That's a different kind of financial crisis than 2009, and it's showing up in insolvency numbers.

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Mortgage Renewals Are Creating Pressure

"Many homeowners with mortgages up for renewal in 2025 may still face challenges, as a significant proportion will be renewing at higher rates," Bolduc warned. "Additionally, those who accumulated significant debt during the period of high interest rates may still face a heightened risk of insolvency as they struggle to manage their growing financial burdens."

This is the mortgage renewal wave everyone has been talking about. Homeowners who locked in rates at 2% or less in 2020 and 2021 are now renewing at 4% to 5%. That's a massive payment shock, even with recent rate cuts.

The Hoyes Michalos Homeowners Bankruptcy Index rose to 9.7% in August 2025. They're seeing an increased number of calls from pre-construction purchasers and multiple condo holders who are unable to close or continue with their mortgage payments.

Pre-construction buyers who signed contracts in 2021 and 2022 when prices were peaking are now facing closings where the property is worth less than what they owe. Some can't qualify for financing. Others close and immediately find themselves underwater, holding mortgages that exceed their home's current value.

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Ontario Led the Surge

Ontario saw the largest year-over-year increase in consumer insolvencies in the third quarter of 2024, rising 20.2% to 13,140 filings. In the second quarter, Ontario increased 18.3% to 13,309 consumer insolvency filings.

By year-end, Ontario insolvencies were up 17.8%, with 51,637 Ontarians filing for insolvency in 2024.

Alberta followed with a 13.8% increase in Q3, bringing the total to 4,886 filings. In Q2, Alberta saw a 10% increase, rising to 4,900 filings.

Quebec experienced a 12.2% rise in Q3, reaching 8,511 filings. In Q2, Quebec increased 17.6%, reaching 8,594 filings.

The regional pattern is clear. Ontario, with the highest housing costs and the largest concentration of pre-construction condo development, is seeing the most severe stress. Alberta and Quebec are following similar trajectories but at slightly lower rates.

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Consumer Proposals Dominate

Consumer proposals represented 80.7% of all insolvencies in Ontario and 78.9% nationally in August. A consumer proposal is an offer to creditors to settle debts under conditions other than the existing terms, a formal agreement under the Bankruptcy and Insolvency Act.

The high proportion of consumer proposals versus outright bankruptcies suggests people are trying to avoid bankruptcy if possible. Consumer proposals allow individuals to repay a portion of their debts over a set period, typically less than the full amount owed, while avoiding the more severe consequences of bankruptcy.

But the fact that so many people need to file consumer proposals at all indicates widespread financial distress. These aren't people who mismanaged their finances or lived beyond their means. These are working Canadians who got caught between stagnant wages and rising costs.

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Business Insolvencies Are Also Climbing

It's not just consumers. Business insolvencies reached a 15-year high in 2024, up 28.6%. The 1,312 business insolvency filings in the third quarter of 2024 marked the largest third-quarter volume on record since Q3 2009.

Business insolvencies had been climbing for 10 consecutive quarters with double-digit increases before showing signs of stabilization in Q4 2024. But the damage was done. Small businesses that struggled through the pandemic, then faced rapid inflation and higher interest rates, finally reached the breaking point.

"The record high number of filings last year shows that many businesses already face significant obstacles. Many have been struggling to stay afloat since the pandemic, grappling with ongoing pressures from high operational costs and weakened consumer spending," Bolduc said.

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What 2025 Holds

With many Canadians concerned about the impact of potential U.S. tariffs and upcoming mortgage renewals at higher interest rates, financial strain could worsen in 2025.

"The rising cost of living is putting increasing pressure on already stretched household budgets. At the same time, homeowners facing mortgage renewals this year may see significant increases in their monthly payments, leaving less room for essential expenses and debt repayment," Bolduc warned.

The August pause in insolvency growth appears to have been temporary. September's acceleration suggests the trend is resuming, and the structural factors driving insolvencies, high living costs, mortgage renewal shocks, elevated debt levels, haven't been resolved.

Interest rate cuts provide some relief, but they don't undo years of accumulated debt or close the gap between wages and living costs. For households already stretched to the limit, even modest rate cuts aren't enough to change the trajectory.

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What This Means for Real Estate

Rising consumer insolvencies have direct implications for real estate markets. When people file for bankruptcy or consumer proposals, they often lose their homes. That adds distressed inventory to the market, putting downward pressure on prices.

For homeowners underwater on pre-construction condos or struggling with mortgage payments after renewal, insolvency becomes a real option. That creates a feedback loop where financial stress leads to forced sales, which puts pressure on prices, which creates more underwater mortgages, which leads to more financial stress.

Mortgage lenders are watching insolvency data closely. Higher insolvency rates signal higher credit risk, which makes lenders more cautious about approving new mortgages or refinancing existing ones. That reduces credit availability exactly when buyers need it most.

For investors evaluating real estate opportunities, insolvency trends matter. Markets with rapidly rising insolvencies, like Ontario, face higher risk of price corrections and forced sales. Markets with more stable insolvency rates may offer better risk-adjusted returns.

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How Coldwell Banker Horizon Realty Can Help

At Coldwell Banker Horizon Realty, we understand that financial stress affects real estate decisions in complex ways. Whether you're facing mortgage renewal and wondering about your options, evaluating whether to sell before financial pressure intensifies, or looking for opportunities in a market experiencing distress, we provide the expertise and guidance you need.

Rising insolvency rates create both challenges and opportunities in real estate. Navigating those dynamics requires professional support from people who understand local market conditions and can provide objective advice tailored to your situation.

Contact Coldwell Banker Horizon Realty today to discuss how current economic conditions are affecting your real estate plans and how we can help you make informed decisions during uncertain times.

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The Bottom Line

Canadian consumer insolvencies reached a 15-year high in 2024, surpassing Great Recession levels despite significantly lower unemployment. The trend accelerated again in September 2025 after a brief summer pause, suggesting financial stress is intensifying, not easing.

This isn't about job losses. It's about Canadians working full-time and still unable to cover rising living costs. It's about mortgage renewals delivering payment shocks that households can't absorb. It's about debt accumulated during high-interest-rate periods coming due with no relief in sight.

Interest rate cuts help, but they're not enough to fix structural affordability problems. And with mortgage renewals continuing through 2025 and 2026, with potential U.S. tariffs threatening economic stability, and with living costs remaining elevated, the insolvency trend is more likely to worsen before it improves.

For Canadian households already stretched to the limit, and for real estate markets where those households are concentrated, the next year looks increasingly difficult.