Canadians have long been struggling with personal debt, but Scott Terrio, a manager at Hoyes, Michalos Licensed Insolvency Trustees told The Hub that the bigger story is who is now feeling the pinch.
“The big thing we’re seeing now that we weren’t seeing a year ago or a year and a half ago is homeowners calling us…. We didn’t speak to homeowners for a decade in this industry because of the housing boom. When houses are going up 20 percent a year, and you’re swimming in equity, you don’t need an insolvency trustee.”
The latest data from Statistics Canada reveals this marked increase in household debt, up 4.4 percent from a year prior. Canadian households now have the highest debt burden among G7 countries and the second-highest of 38 Organisation for Economic Co-operation and Development countries (only Switzerland is higher).
Hoyes Michalos has a homeowner bankruptcy index, which shows that insolvent homeowners have an average of $112,000 in unsecured debt in addition to their mortgage. The index shows that the percent of bankruptcy filers who own homes has increased from 0 percent in 2022 to 11 percent today and “we are going to be back at 36 [when it peaked in 2011] at some point. Guaranteed,” Terrio added.
The fact that 1 out of every 7 dollars is now being spent on debt payments verifies the wisdom of the Teacher in Proverbs 22:7 when he said that “the borrower is slave to the lender.” A home can be very attractive, especially when home values increase year after year. But the Great Teacher also reminds us in Luke 14:28 to first count the cost: “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” Sadly, many don’t, and are now paying for it.
