Data on consumer insolvency and bankruptcy, as well as laws on personal property exemptions, show great variances between regions, provinces and territories.
This article references Statistics Canada’s most recent Annual Consumer Insolvency Rates by Province and Economic Region – 2010-2019 (Per 1,000 Population Aged 18 Years and Older).
Insolvency is a person’s inability to pay the debts they owe on time. Bankruptcy is one legal procedure for dealing with insolvency. Other options include debt consolidation, consumer proposals and more.
In 2019, New Brunswick, Nova Scotia and Newfoundland had Canada’s highest insolvency rates at 8.0, 7.8 and 7.6 people per 1000, respectively. The national average for insolvency in 2019 was 4.6 people per 1000. In contrast, British Columbia was at 2.8 people per 1000, followed by Manitoba at 3.2 per 1000. Let’s look closer at these regional anomalies.
Low Rates in Canada’s Northern Territories
Canada’s three northern territories – with adverse weather, harsh climate and terrain, remoteness and higher living costs – have amazingly lower insolvency rates than most of Canada:
- Yukon at 2.3 per 1000,
- the Northwest Territories (N.W.T.) at 1.1 per 1000, and
- Nunavut at 0.2 per 1000 population.
Furthermore, their respective bankruptcy rates are 0.3, 0.4 and zero, all per 1000 people.
… Atlantic Canadian rates averaged 50% to 100% higher than the national average in 2019.In Nunavut (an Inuit Land Claims settlement and governance region), the 2016 Canada census reports that 85.9% of the population is Inuit and 85% of housing is public housing. This data indicates an entirely different economic structure versus non-Indigenous communities, where housing is privately financed. As well, employment in the North includes traditional and seasonal work. This work does not always fit with institutional lending and financial practices of colonial systems. Such practices are often incompatible with Inuit culture, governance and land ownership systems.
The N.W.T. and the Yukon have different demographic and culture profiles both from Nunavut and from the rest of Canada. Per the 2016 Census, the N.W.T. and the Yukon are inhabited by 50.7% and 23.3% Aboriginal peoples, respectively. The N.W.T and Yukon Indigenous populations are comprised primarily of First Nation and Metis, with Inuit as a minority. This is compared to Nunavut’s population being predominantly Inuit, at 85.9% of the total population.
When it comes to Aboriginal governance and title in the three territories, a communal land ownership system is in place where Indigenous land claims and self-governance exist, particularly in Nunavut and the N.W.T. Title is typically held by either the Crown or an Aboriginal government, and public housing is the norm. Long-term land leases exist for private and commercial use (e.g. 99 years).
Debt, insolvency and bankruptcy rates are low, nominal or non-existent in the northern and Aboriginal territories and communities. Traditional forms of living and self-sustenance are maintained, including seasonal hunting, trapping and barter. These activities are not compatible with ‘colonial settler style’ western world lending practices. Also, remoteness and communications challenges make data from the region not as reliable or easy to get. Such challenges may also contribute to the absence of any significant insolvency or bankruptcy in these regions.
Cape Breton Island Triples Canada’s Consumer Bankruptcy Rate
Turning now to Canada’s earliest settled region, the East Coast, we see that Atlantic Canadian rates averaged 50% to 100% higher than the national average in 2019. Within that region, Cape Breton Island (C.B.I.) had nearly triple the national average personal bankruptcy rate at 5.2 per 1000 people versus 1.8 per 1000. The insolvency rate was more than double at 10.9 per 1000 versus the national average of 4.6 per 1000.
The national average for insolvency in 2019 was 4.6 people per 1000. Comparatively, Halifax and P.E.I. stand at 5.9 and 6.1 per 1000 for insolvency, approximately half C.B.I.’s rate. Numbers like these, along with C.B.I.’s chronic child poverty and perennially high unemployment, are indicative of unaddressed systemic economic issues. These social-economic markers are tell-tale of chronic underlying causes not existing in other areas of our country. C.B.I. was involuntarily annexed to rival and neighboring Nova Scotia in 1820, and remains today a colonial appendix of that province.
Property Exempt from Seizure in Bankruptcy Proceedings
We see further regional differences in what property the laws protect from seizure in bankruptcy across Canada. In Nunavut, communities are only accessible by sea or air, and some only receive bulk goods by shipment once or twice a year during the ice-free period. Because of this, essentials which are not readily purchasable year-round in the region are exempt from seizure. This includes clothing, household furnishings and appliances, and medical or dental aides.
In fishing regions (such as Nova Scotia) and in farming regions (such as P.E.I., Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta), equipment or seed and livestock are protected. In P.E.I. – a long-established agricultural producer of potatoes and other crops – bankruptcy legislation protects enough seed for up to 100 acres. In Nova Scotia, farm equipment and fishing nets are protected. In Newfoundland, if the bankrupt’s primary occupation is farming, fishing or aquaculture, then personal property used to earn income are exempt up to $10,000. In New Brunswick, certain amounts of seed grain and potatoes for seeding or planting purposes are protected: 40 bushels of oats, 10 bushels of barley, 10 bushels of buckwheat, 10 bushels of wheat and 35 barrels of potatoes. In Quebec, where French culture is a priority policy, farm property is fully exempt. And, in Ontario, up to $29,000 for livestock, fowl, bees, books, tools and implements of the trade are protected from bankruptcy for farmers.
In the prairie provinces, farms are largescale and a core part of the economy. In Manitoba, bankruptcy protected productive agricultural assets include:
- farm machinery, dairy utensils and farm equipment needed for the next 12 months,
- all animals reasonably necessary for the next 12 months,
- one motor vehicle, if required for agricultural operations (for all other bankrupts, the exemption is a personal vehicle up to a value of $4500),
- enough seed for all land under cultivation,
- the horses, stables, barns and fences on the farm, up to 160 acres, and
- up to 160 acres of farm land.
In Saskatchewan, the protection for agricultural assets include livestock & equipment (enough for up to 12 months), two bushels per acre under cultivation, and enough cash or current crop for farming costs to the next harvest. Alberta is somewhat like Manitoba, though to a lesser extent, and provides protection for up to 160 acres along with livestock & equipment for up to 12 months of operations.
Other categories of protected property under provincial and territorial legislation include:
- food and fuel
- clothing for the claimant and their dependents
- household furnishings for the claimant and their dependents
- motor vehicles
- medical and dental aids for the claimant and their dependents
- sentimental items
- pets
- home equity
- tools needed for work
- business and hunting income
- pension plans
Debt, insolvency and bankruptcy rates are low, nominal or non-existent in the northern and Aboriginal territories and communities.Only Ontario and British Columbia do not protect food and fuel. Other provinces and territories either exempt or provide some limited protection of food and fuel. Of the remaining categories, the most protective jurisdiction is Nunavut. It exempts clothing, household furnishings, medical and dental aids, tools of trade for business and hunting. These exemptions recognize the difficulty of accessing goods in the region, the harshness of the environment and, to a large extent, a continued reliance on hunting. They also recognize the need for weapons for protection in the pristine and wild environment. Clothing is also exempt in all jurisdictions except Newfoundland and Alberta, which both set a limit of up to $4,000 per bankruptee.
With respect to sentimental items (including religious, jewelry and furniture items), most jurisdictions do not give complete protection:
- Newfoundland exempts up to $500 in value,
- Saskatchewan exempts up to $7500,
- Manitoba protects only religious articles and furniture, and
- Quebec exempts family papers and portraits, medals and other decorations, along with items needed for religious services.
With respect to pets, only Newfoundland and New Brunswick give protection from bankruptcy within legislation.
Given Canada’s recent super hot residential real estate market, the protection of home equity varies across Canada. With hyper-inflated home values, this category may now fall under policy review for future increases in protected value limits. As it stands now:
- Nova Scotia, P.E.I., New Brunswick and Ontario do not protect home equity,
- Manitoba offers home equity protection up to $2,500 while the Yukon offers $3,000,
- B.C. offers $9,000 to $10,000, depending on location,
- Newfoundland and Quebec offer up to $10,000 of protection,
- Nunavut offers $35,000 while the N.W.T. offers $50,000,
- Alberta, for one owner, allows up to $40,000, and
- Saskatchewan offers the most favourable protection at $50,000 plus up to160 acres of land.
Tools of the trade in Quebec and Nunavut are exempt. Other jurisdictions have value limits ranging from $650 in New Brunswick to up to $10,000 in Alberta and B.C. Finally, quite significant is the category of income and pension plans, which again provinces across Canada treat differently. The Yukon, N.W.T., Nova Scotia and B.C. provide no exemption for income and pension plans. Other jurisdictions offer some exemption.
For complete information on personal property exemptions for bankrupts, see legislation in each province.
Looking for more information?
And check out these free legal information resources from CPLEA:
- Consumer info sheets (including on bankruptcy, being a guarantor, collection agencies and foreclosure in Alberta)
- Help with Debt Alberta (connecting you to resources depending on your situation)
- Consumer Law in Alberta FAQs
- Bankruptcy in Canada FAQs
Disclaimer
The information in this article was correct at time of publishing. The law may have changed since then. The views expressed in this article are those of the author and do not necessarily reflect the views of LawNow or the Centre for Public Legal Education Alberta.
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About Mark Macneill
