Canadians entering insolvency are showing financial strain at record levels, new study reveals
Canadians who are filing consumer insolvencies are reaching that point with unprecedented unsecured debt totals and a higher number of credit accounts than ever before.
A new study from Hoyes, Michalos & Associates Inc. analyzes individuals seeking formal debt relief and shows that the average unsecured debt among insolvent filers in 2025 climbed to $67,496. That is the highest level recorded since tracking began in 2011, reflecting sharp year-over-year growth and a significant increase over the past three years. The findings point to escalating financial pressure on households.
Another notable trend is timing. Debtors are entering insolvency later in their debt cycle, carrying more active accounts and larger balances when they finally file. This suggests many Canadians are attempting to manage mounting obligations on their own for longer periods before turning to formal solutions.
The data highlights a broader pattern of stress in consumer balance sheets. Rising reliance on revolving credit and the accumulation of multiple debts can make it harder for clients to regain stability once conditions deteriorate.
The report also highlights the role of the current economic environment. Higher interest rates and the impact of mortgage renewals are continuing to strain cash flow, increasing the likelihood that more households will seek insolvency protection in the period ahead.
The report is just the latest in a line of red flags for the financial state of many Canadian households.
A recent report from Spergel found shows that more than half of Canadians (51%) carried new holiday debt into January, while 29% report starting the year with over $6,000 in fresh holiday-related balances. Three quarters say they feel more financially stressed than in previous years, and nearly one in three expect it will take at least six months, or an unknown amount of time, to recover financially.
Advisors monitoring client risk may consider earlier discussions around debt management, restructuring options, and cash-flow resilience could help clients address problems before they reach a critical breaking point.
