Consumer insolvencies rose sharply in 2023 as Canadians racked up credit card debt to keep up with the high cost of living, according to the results from a new study.

The annual “Joe Debtor” study from insolvency trustee firm Hoyes, Michalos & Associates, published Monday, found that even higher-income people are now having difficulty managing their debts.

Doug Hoyes, co-founder of the firm that conducted the research, told BNN Bloomberg that the results marked a shift away from people using payday loans and rapid loans to make ends meet.

“Last year, the story was that now they're using credit cards,” Hoyes said in a Monday interview with BNN Bloomberg.

Canadians with access to a line of credit typically have better paying jobs and a higher credit profile than average insolvent consumers in the past, he noted.

“We're seeing insolvent people, in effect, moving up the income curve,” he said.

Debt picture

The study, which examined consumer insolvency data and trends across Canada, found insolvencies rose by 23 per cent nationwide last year compared to 2022.

The average debtor owed $54,084 in unsecured debt last year – up nearly 10 per cent from the year before.

This year-over-year pace of debt accumulation was the highest since Hoyes, Michalos & Associates published their inaugural bankruptcy study in 2011, and it was “primarily driven by a resurgence in credit card debt,” the firm said.

“Credit card debt emerged as a notable concern, with 91 per cent of insolvent debtors filing with outstanding credit card balances, averaging $17,816— an increase of 12.8 per cent,” the firm said in the study.

“Insolvent debtors across all age groups saw a rise in credit card debt, with the most significant increase among debtors aged 18 to 29, whose balances increased 34.5 per cent in 2023.”

'It just gets worse and worse'

Elevated inflation and the record-high cost of living were the main reasons why Canadians accumulated credit card debt last year, Hoyes said, rather than irresponsible spending.

However, he noted that consumers can only live outside of their means for so long.

“The cracks are already starting to form, and I think it just gets worse and worse and worse,” he said.

Homeowner insolvencies up

The study found that homeowner insolvencies, which describe insolvent consumers who own a home, saw a sharp rise in 2023.

“While still historically low, the percentage of homeowner insolvencies doubled in 2023 to four per cent,” the firm noted in the study.

“Insolvent homeowners had nearly double the unsecured debt of the typical insolvent debtor, as homeowners resort to credit cards to meet rising mortgage payments.”

In Monday’s interview, Hoyes noted that many mortgage holders are set to renew at higher interest rates in the coming years, and he expects that will begin to affect insolvency numbers as people contend with higher payments.

“I think we're going to see increasing numbers at least for this year and perhaps for the next two or three,” he said.

Average insolvent debtor

Using insolvency data collected last year, the study created an “average insolvent debtor” to demonstrate what a typical indebted Canadian might look like.

“The typical insolvent debtor in 2023 was 43 years old, relatively evenly distributed by gender, and half lived in a single-person household,” the firm said in the study.

The study found that debtors in their thirties still made up the highest percentage of personal insolvencies, accounting for 31.7 per cent of all filings.

It also found that 82 per cent of insolvent debtors were employed at the time of filing. Hoyes said that is consistent with what he sees in his practice.

“That's kind of one of the myths, that if you're going bankrupt, it's because you've got no income and you have no choice,” he said.

“The reason you file a bankruptcy or a consumer proposal is that you’ve got a lot of debt, but you’re working and you don’t want the creditors to take you to court… so it's the person who is employed and who has something to protect that is filing.”


As required by law, Hoyes, Michalos & Associates gathers information about each person who files a consumer proposal or personal bankruptcy with the firm. The firm examines this data to develop a profile of the average consumer debtor who files for relief from their debt. The firm uses this information to gain insight and knowledge as to why consumer insolvencies occur.

Its 2023 consumer debt and bankruptcy study reviewed the details of 3,400 personal insolvencies in Ontario from January 1, 2023, to December 31, 2023, and compared the results of this profile with study results conducted since 2011 to identify any trends.