Consumer bankruptcies in Ottawa-Gatineau jumped up yet again in February, Industry Canada reported Thursday, and one local expert attributes part of the increase to the fallout of the holiday shopping season.
Industry Canada reported that 179 local consumers filed for bankruptcy in February. That was up marginally from January's 178, but a jump of 18 per cent from the 151 reported a year ago.
On the business side, the number of failures hit 18, double the number reported in January and up by 20 per cent from 15 a year ago.
Increases in consumer bankruptcies have become an all too common trend over the past couple of years. The obvious culprits remain high levels of household debt driven by the lure of easy credit and the fallout from the collapse of the local telecom sector.
In 2003, 2,027 local households filed for bankruptcy, up by 16.8 per cent from 1,736 in 2002. Businesses fared somewhat better, with 192 local businesses filing for bankruptcy last year, up by only two per cent from 188 the year before.
Aside from the usual suspects, February's increases also stem from a seasonal trend specific to the holiday season, according to Stanley Kershman, a bankruptcy lawyer with local firm Perley-Robertson, Hill & McDougall.
"My feeling is that it has a lot to do with credit cards," Kershman said. "It's after the holidays and people have said they've had enough."
On the commercial side, businesses who may have been struggling have been able to take stock of their holiday sales and determine if they've made enough money to keep going, he said. Lenders will have also taken a look at those holiday receipts and decided if it is time to pull the plug.
The number of proposals also jumped in February from January, to 94 from 44. A proposal may end up in a filing for bankruptcy or a restructuring that avoids bankruptcy.
Kershman said about 20 to 30 per cent of proposals are usually made by individuals with high income and high debt--more than $75,000 excluding their mortgage. He added that people in this group usually manage to restructure their finances and avoid bankruptcy.
