Tag: consumer proposals ontario

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Insolvency Searches Q2 2026: Why Bankruptcies Are Sadly Seriously Outpacing Consumer Proposals in Ontario

Couple worried about their debt doing insolvency searches to see the number of consumer proposals and personal bankruptcies filed.

If debt is making it difficult to sleep, pay essential bills, or plan for the coming months, know this: financial trouble is not a personal failure. Official insolvency searches and national statistics show that thousands of Ontario households are facing a severe, persistent gap between income, living costs, and debt obligations.

Data from the Office of the Superintendent of Bankruptcy (OSB) and insolvency searches reveals a distinct shift: personal bankruptcies are rising rapidly across the Greater Toronto Area (GTA), while consumer proposal growth is slowing. This shift underscores why running insolvency searches or evaluating your debt relief options requires careful, compassionate attention.

Insolvency Searches Key Takeaways

What do recent Canadian insolvency searches and Office of the Superintendent of Bankruptcy Canada (OSB) data show?

According to the Canadian Association of Insolvency and Restructuring Professionals, quoting OSB statistics:

  • Record National Filings: Insolvency searches statistics show that Canada recorded 37,523 consumer insolvencies in Q2 2026—a 6.9% increase year-over-year and the highest quarterly volume since 2009.

  • Surging Bankruptcies: Nationally, consumer bankruptcies rose 10.3% year-over-year, while consumer proposals grew by 5.9%.

  • Ontario Sharp Shift: In Ontario, bankruptcies jumped 24.8% year-over-year in Q2 2026, compared to a 6.6% growth in consumer proposals.

  • GTA Impact: In the Toronto Census Metropolitan Area (CMA), bankruptcies surged 35.2% year-over-year, while proposals grew by just 3.1%.

  • Affordable Debt Relief: While insolvency searches and OSB data show that consumer proposals remain the majority of formal filings, consumer debtors may feel nervous about committing to multi-year fixed payments that they worry may be unsustainable for many households, prompting a return to personal bankruptcy.

Insolvency Searches Highlights

What does the Canadian 2026 insolvency searches data actually show?

Public records and official insolvency searches show that the OSB’s Q2 2026 data presents a clear national trend.

Canada recorded 37,523 consumer insolvencies between April and June 2026. That was:

  • 6.9% higher than the 35,114 filings in Q2 2025;
  • 1.1% higher than Q1 2026; and
  • the highest quarterly volume of consumer insolvencies since 2009.

CAIRP described the volume as roughly 17 consumer insolvencies filed every hour during the quarter.

The composition of those filings is equally important:

  • 8,600 consumer bankruptcies, up 10.3% year over year and 13.5% from Q1 2026;
  • 28,923 consumer proposals, up 5.9% year over year but down 2.1% from Q1 2026.

In other words, bankruptcies are increasing faster than proposals.

Ontario’s figures are more pronounced. In Q2 2026, Ontario recorded 14,642 consumer insolvencies. Of those:

  • 3,271 were bankruptcies, up 24.8% year over year and 23.6% from Q1 2026;
  • 11,371 were consumer proposals, up 6.6% year over year and 0.9% from Q1 2026.

For the 12 months ending June 30, 2026, Ontario recorded 55,968 consumer insolvencies, an increase of 8.8%. Bankruptcies rose 22.0%, while proposals increased 5.8%.

The Toronto CMA recorded 5,495 consumer insolvencies in Q2 2026, up 8.4% year over year. Toronto bankruptcies rose 35.2% year over year, compared with 3.1% growth in proposals. Over the 12 months ending June 30, Toronto recorded 21,241 consumer insolvencies, with bankruptcies up 25.6%.

A clean teal folder, calculator and budget materials representing financial clarity and planning before performing an insolvency searches

Why are bankruptcies growing faster than consumer proposals?

The insolvency statistics and insolvency searches do not tell us why each individual chose bankruptcy or a proposal. They do, however, identify a meaningful change in the overall pattern. Insolvency searches and insolvency market analyses show that growing inflationary pressures—housing, food, utilities, and transportation—are making the fixed monthly payments of a consumer proposal unworkable for many budgets.

Consumer proposals still represented 78.4% of Canadian consumer insolvency filings in the 12 months reported by Wealth Professional, down slightly from 78.9% in the previous period. Proposals remain the majority. The gap is narrowing because bankruptcies are growing faster.

That may indicate that a growing number of households are concerned that they cannot support the payment commitment required by a proposal. A proposal usually requires a fixed monthly payment for several years. If rent, food, transportation, childcare, mortgage costs, or other essential expenses rise, the payment may become unsustainable.

As explained in Wealth Professional, a consumer proposal “may allow someone to repay an agreed portion of what they owe, but it will not be suitable or affordable in every situation.”

This is an important distinction. A consumer proposal is not automatically the best answer simply because it may allow someone to retain assets or repay a portion of their debt. It must be affordable from the beginning and remain workable over time.

CAIRP Vice Chair Wesley Cowan said, “The latest insolvency data suggests that many highly indebted Canadians have not yet regained enough room in their budgets to reduce what they owe.”

He also described the problem as an absence of recovery time between one higher bill and the next. When every paycheque is already committed, a small increase in an essential expense may have to be charged rather than absorbed.

The broader annual data tells the same story. For the 12 months ending January 31, 2026, Canada recorded 140,669 consumer insolvency filings, approximately 385 per day. Wealth Professional reported this was the second-highest annual total since tracking began in 1987.

There is also important balance in the data. Canada’s population-adjusted consumer insolvency rate eased from 4.2 insolvencies per 1,000 adults in 2024 to 4.1 in 2025. However, it remained above the levels recorded from 2020 through 2023. Business insolvencies were essentially flat year over year in Q2 2026, with 1,281 filings, up 0.2% from Q2 2025 and 4.0% from Q1 2026.

The picture is serious, but it is not a reason for panic. It is a reason to obtain clear information before the available choices become narrower.An image depicting insolvency searches being performed showing a high rate of increase in personal bankruptcies and a slow and steady increase in consumer proposals.

What is a consumer proposal under Canadian law?

A consumer proposal is a formal, legally binding offer made under the Bankruptcy and Insolvency Act to settle debts on modified terms.

A Licensed Insolvency Trustee administers the process. The proposal offers creditors:

  • a repayment of part of the debt;
  • a longer period to pay;
  • or another settlement structure permitted by the legislation.

A consumer proposal generally must be completed within five years. For the proposal to become binding, creditors must accept it, or at least not vote against it.

Approval generally requires:

  • deemed approval is obtained when creditors holding 25% or more of the proven claims filed do not request a meeting of creditors; or
  • if a meeting is requested by at least 25% of the unsecured creditors who have filed a proof of claim and therefore it must be held, a simple majority of those creditors entitled to vote do so in favour of the approval of the consumer proposal.

A proposal can be a valuable lifeline when the payment is realistic, and the household has enough stable income to sustain it. But the payment is not simply a number chosen in isolation. It must fit the household’s actual budget, assets, debts, and likely financial changes. It must also satisfy the federal statute in that the proposal offers a better alternative for the unsecured creditors than they would receive in the person’s bankruptcy.

That is why a proposal that looks manageable on paper may become difficult if income falls or essential expenses rise. The goal is not merely to obtain acceptance. The goal is to complete a legally binding solution that genuinely improves your quality of life.

What is personal bankruptcy, and what happens to income and assets?

Personal bankruptcy is a formal insolvency process administered by a Licensed Insolvency Trustee. When insolvency searches are performed, it not only tells you the type of insolvency process the person has undertaken, but also provides you with the name and address of the Licensed Insolvency Trustee. A person makes an assignment in bankruptcy, and the Trustee administers the estate under the Bankruptcy and Insolvency Act and applicable Ontario rules.

Non-exempt assets may be realized for the benefit of creditors. Non-exempt assets are assets that are not protected under the applicable provincial rules. The treatment of a home, vehicle, investments, tax refunds, inheritances, and other property depends on the specific facts.

Bankruptcy also considers household income. If income exceeds the federal surplus income standard, surplus income payments will be required. Surplus income is calculated using actual household income and household size. The thresholds are set and updated by the Office of the Superintendent of Bankruptcy.

As a general rule, a first-time bankrupt may be eligible for an automatic discharge after nine months where there are no surplus income obligations, objections, or other circumstances affecting discharge. Where surplus income obligations apply, the period may extend to 21 months for a first-time bankrupt. Individual circumstances matter.

Bankruptcy is not a promise that someone will lose everything. Nor is it a process that allows every asset to be kept automatically. The result depends on the applicable exemptions, the assets owned, the household’s income, creditor claims, and the facts of the case.

Insolvency searches: How do a consumer proposal and bankruptcy compare?

The following table is a general educational guide only. It is not legal or financial advice for a particular person. Neither option is better in the abstract. The appropriate choice depends on the complete financial picture.

DimensionConsumer proposalPersonal bankruptcy
What it isA formal, legally binding offer to creditors to settle debts on modified terms, administered by a Licensed Insolvency Trustee.A formal insolvency process administered by a Licensed Insolvency Trustee under the Bankruptcy and Insolvency Act.
Creditor approval required?Yes. Generally, approval requires a majority in number and two-thirds in value of voting creditors.No creditor vote is required to make an assignment in bankruptcy.
Payment commitmentA fixed proposal payment must generally be made for a period of up to five years.Payments may arise from administration costs, agreed obligations, and surplus income requirements where applicable.
Treatment of surplus incomeSurplus income does not apply in the same way as it does in bankruptcy. The proposal payment must nevertheless remain affordable.Surplus income is assessed using actual income, household size, and the federal standard updated by the Office of the Superintendent of Bankruptcy.
AssetsPeople generally retain their assets, although asset value can affect the proposal terms.Non-exempt assets may be realized for creditors, subject to the BIA and Ontario rules.
Credit-report record in OntarioGenerally reported until the earlier of three years after completion or six years after filing, subject to credit-bureau policies.Under Ontario’s Consumer Reporting Act, a first bankruptcy is generally removed seven years after the date of discharge, and a repeat bankruptcy may remain up to 14 years. Credit bureaus may voluntarily remove a first bankruptcy earlier.
Who it typically suitsSomeone with sufficient, stable income to maintain the agreed payment and a proposal that creditors are likely to accept.Someone whose debts cannot be managed through a sustainable proposal or informal repayment plan, after considering income, assets, and legal consequences.

What should an Ontario household do when debt is no longer manageable?

I recommend taking the following steps:

  1. Stop relying on estimates. List every debt, interest rate, minimum payment, collection notice, asset, and source of income.
  2. Protect essentials first. Housing, food, utilities, medication, transportation, and other basic needs must be part of any realistic assessment.
  3. Do not wait for a crisis to ask questions. I find that people often wait until they have missed several payments or exhausted all available credit. Earlier outreach to a Licensed Insolvency Trustee can provide a clearer picture of the wider range of available options.
  4. Speak with a Licensed Insolvency Trustee. A Trustee will review your debts, income, assets, and creditor action and explain the available formal and informal options, including their costs and consequences.
  5. Do not choose based on headlines. Bankruptcy may be appropriate for one household, while a proposal may be appropriate for another. The right answer is the one that is legally available and financially sustainable for you.

As Wesley Cowan explained, “When someone is repeatedly reorganizing debt without materially reducing it, the problem has moved beyond day-to-day budgeting.”

Seeking help is not admitting failure. It is taking back control.

Insolvency Searches Frequently Asked Questions (FAQ)

Is a consumer proposal always better than bankruptcy?

No. A consumer proposal may be suitable where its payments are affordable, and creditors approve it. Bankruptcy may be more appropriate where a proposal payment cannot be sustained, although assets, income, surplus income, and other consequences must be assessed.

Recent insolvency searches and OSB filings show that bankruptcies are growing significantly faster than consumer proposals in Ontario. This indicates that sustained high costs of living are making consumer proposal payment plans harder for households to maintain.

What happens if a consumer proposal fails or is annulled?

If a proposal is rejected, withdrawn, or annulled, the legal protection associated with it ends, and creditors generally regain collection rights. The next steps depend on the circumstances and should be discussed promptly with a Licensed Insolvency Trustee.

Does surplus income apply to a consumer proposal?

Surplus income is not applied in the same way as it is in bankruptcy. The Bankruptcy and Insolvency Act states that any proposal must offer a better alternative for the unsecured creditors than the person’s bankruptcy offers. So in a proposal, the amount of surplus income that would be paid if the person went bankrupt must be taken into account (without considering any increase or decrease from any future change in income) and form part of the total amount paid in the proposal.

Remember, however, the proposal payment must still be affordable, and changes in income or expenses can create difficulty during the proposal term.

Does bankruptcy mean losing everything?

No. Bankruptcy does not automatically mean losing everything. Exemptions and asset treatment depend on the Bankruptcy and Insolvency Act, Ontario rules, and the individual facts. Non-exempt assets may be realized for creditors.

How long does bankruptcy stay on an Ontario credit report?

Under Ontario’s Consumer Reporting Act, a first bankruptcy is generally removed seven years after the date of discharge, while a repeat bankruptcy may remain for up to 14 years. Credit bureaus may voluntarily remove a first bankruptcy after six years. Policies can vary.

When should I speak with a Licensed Insolvency Trustee?

You do not need to wait until you have missed multiple payments, received a lawsuit, or used every available credit product. Early information may help you understand your choices before the pressure becomes more severe. The longer you wait, the fewer options you will have other than bankruptcy.

A professional adviser and client reviewing debt-relief options in a calm, modern office to confirm what trends insolvency searches are showing.

Sources and important context

All statistics in this article come from the Office of the Superintendent of Bankruptcy’s “Insolvency Statistics in Canada, Second quarter of 2026,” CAIRP’s August 14, 2026 release, “CAIRP: Q2 2026 Canadian Insolvency Statistics,” and Wealth Professional’s September 11, 2026 report, “Consumer insolvencies top 140,000 as household debt bites.”

For more information about personal insolvency services, visit our bankruptcy services page, review our resources, or contact our office.

Starting Over, Starting Now

Don’t let financial uncertainty dictate your future. If you or your business is struggling with debt, losing sleep, or facing legal action, contact Ira Smith Trustee & Receiver Inc. today.

We offer a free, confidential consultation to discuss your situation, explain your options in plain language, and help you develop a clear, actionable plan. Our team of Licensed Insolvency Trustees, Brandon Smith and Ira Smith, are dedicated to providing the compassionate, professional support you need to regain control and achieve a debt-free life.

Take the first step towards a brighter financial future; call us now.

Ira Smith Trustee & Receiver Inc. is licensed by the Office of the Superintendent of Bankruptcy. Ira and Brandon Smith are members of the Canadian Association of Insolvency and Restructuring Professionals.

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Disclaimer: This analysis is for educational purposes only and is based on the cited sources and professional expertise as a Licensed Insolvency Trustee. The information provided does not constitute legal or financial advice for your specific circumstances. Every situation is unique; the outcomes discussed may not apply to your particular case. Please contact Ira Smith Trustee & Receiver Inc. to discuss your specific needs.

About the Author:

Ira Smith is President of Ira Smith Trustee & Receiver Inc., and is a CPA CA and a Licensed Insolvency Trustee. His experience includes consumer insolvency and complex court-ordered receivership and corporate bankruptcy administration, giving him practical insight into navigating challenging financial situations to achieve optimal outcomes for businesses, creditors, and professionals. Ira stays current with landmark developments in Canadian insolvency law, ensuring his clients benefit from a cutting-edge understanding of their rights and options.

An image depicting insolvency searches being performed showing a high rate of increase in personal bankruptcies and a slow and steady increase in consumer proposals.

#BankruptcyOntario #ConsumerProposal #OntarioInsolvency #TorontoDebtRelief #GTAHouseholds #PersonalBankruptcy #DebtRelief #OSBStatistics #LicensedInsolvencyTrustee #StartingOverStartingNow

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Brandon Blog Post

CONSUMER PROPOSALS ONTARIO: THE SOLUTION TO YOUR TORONTO DEBT PROBLEMS

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Consumer proposals Ontario: Make a federal case out of it!

Consumer proposals Ontario are governed by federal legislation; the Bankruptcy and Insolvency Act (Canada) (BIA). The proposal provisions used by companies and creatively used for people with extremely large debts is commonly referred to be “restructuring” or “reorganization”. In the United States, it is what is commonly called “Chapter 13 proceedings”.

Consumer proposals Ontario: Debt solutions for the smaller debtor

However, there was no similar provision available to small individual debtors in the BIA. Parliament wished to find a way to offer these smaller consumer debtors to have a restructuring alternative. So, after consultation with the stakeholders in the Canadian insolvency world, in the 1990s, the consumer proposal process legislation was enacted. It benefits people who owe $250,000 or less (not including mortgages against your principal residence).

Consumer proposals Ontario: Avoiding personal bankruptcy in Canada

Now, the consumer proposal process provisions for consumer debtors are used more than the consumer bankruptcy provisions of the BIA. So Canadians are now avoiding personal bankruptcy more while still obtaining the help and counselling of a Licensed Insolvency Trustee.

The main use of the (consumer) proposal provisions of the BIA is to allow you as a debtor to keep your assets if you can afford to in your budget, it is a great way for how to avoid bankruptcy in Canada, and give a better alternative to your creditors than a bankruptcy would. In this way, you are allowed to be relieved of your debts, for an amount less than the total face value of all of your debts.

It is best used when you have extra income and can afford to pay back some debts if the рауmеnt plan is structured properly, but not enough income to pay back all of your debts, especially with penalties and interest! The consumer proposal legislation allows you to pay back less than you owe, but what you can afford. Interest and penalties stop and in most cases, you are able to settle your debt for less than 50 cents on the dollar.

You can structure your repayment plan in monthly payments for up to 60 months. Again, no interest or penalties. So, it is very much like an interest-free loan for less than half of your debt to settle all of your debts.

Consumer proposals Ontario: What should I do if I have too much debt?

So if you’rе ѕtіll dеtеrmіnеd to рау your debts in full but you can’t see a way to ассоmрlіѕh that goal, this may be just the ѕесrеt you need to know! If you’re a Canadian with financial concerns seek the counsel of a professional trustee.

We can help you deal with how to solve your financial problems while you still have options available to you so that Starting Over, Starting Now you can be on your way to enjoying financial health. Make an appointment with us for a free, no obligation with the Ira Smith Team today. You’ll be happy you did.

consumer proposals ontario

 

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Brandon Blog Post

CONSUMER PROPOSAL ONTARIO: AVOID BANKRUPTCY AND ELIMINATE DEBT NOW

consumer proposal ontarioConsumer Proposal Ontario. Information for you on a Consumer Proposal and how it can help you clear your debts and AVOID bankruptcy. Watch this 4-minute video explaining the bankruptcy alternative of consumer proposals.

In addition to the video about consumer proposal Ontario, you can also check out two other blogs we have written on consumer proposals: CONSUMER PROPOSALS OR PERSONAL BANKRUPTCY; WHICH IS RIGHT FOR YOU? and Are Consumer Proposals Right for You?

The advantages of a consumer proposal Ontario are:

  • You keep all of your assets
  • Actions against you by unsecured creditors, such as wage garnishments will be stopped
  • Unlike informal debt settlement, the consumer proposal is a forum where all of your creditors must deal with your restructuring
  • You don’t have to declare bankruptcy

We also have more information and you can click on this link to find out more about Consumer Proposals and have many of your questions answered by clicking on our Bankruptcy FAQS link. You can also find out more by clicking on this link – Consumer Proposal Ontario.

 

The reality is that debt is increasing across all demographics and it should not be ignored. Whether their debt originated with student loans, credit card debt or some other issue, it needs to be managed as quickly as possible by a professional trustee. Contact Ira Smith Trustee & Receiver Inc. for professional advice and a solid financial plan so that you can live a debt free life Starting Over, Starting Now.

Call a Trustee Now!