How Many People Go Bankrupt?

In Canada, we have progressive insolvency laws that allow individuals to get a fresh financial start. The major piece of law is the Bankruptcy and Insolvency Act, the ”BIA” which contains the 2 common options used by individuals to get a fresh start.

These 2 common options are consumer proposals or bankruptcy. Statistically, people with unmanageable debt chose one of these options at a rate of about 130,000 times in 2016 which is consistent with the population of Canada with previous years and looks likely to continue in the future.

Between these 2 options, Canadians chose more or less equally,

Are these large numbers? Does this make these procedures common?

It depends on how you look at it.

The population of Canada is 36,290,000 in 2016. If 130,000 people used a consumer proposal or bankruptcy that means; 130,000 / 36,290,000 = 3.5 people out of 1,000 used one of these procedures in 2016 which does not seem common.

But looking at it another way, if the average person lives 75 years, then the chance that any person would use one of these procedures in their lifetime would be; 75 years x 3.5 people out of a 1,000/year = 262.5 people out of 1,000 people over their 75 year lifetime. This means more than 1 person out of 4 will use a consumer proposal or bankruptcy sometime in their life. So if there are 4 people in your immediate family, namely Mom, Dad, You and a Brother or Sister, chances are pretty good that one of you will choose one of these options at some time. Now it looks it quite common!

In Alberta (where Goth & Company operates) about 3.15 people per 1,000 people/year used a consumer proposal or bankruptcy in 2016 or a total of 13,338 out of which 5,548 were bankruptcies and 7,790 were proposals. This works out to about 236 people out of 1000 people in their lifetime or a little less than 1 out of 4 people.