Cost of Living Surge Drives Canadian Debt Levels Skyward

As living costs continue to rise, an alarming trend has emerged in Canada, with nearly one in four individuals incurring new debt over the last year. Findings from a recent survey conducted by the Office of the Superintendent of Bankruptcy (OSB) and the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) indicate that over half of Canadians (54%) are finding it tough to keep up with their bills. In 2024, the rate of insolvency applications surged to 4.2 per 1,000 adults, marking the steepest rate since 2019.

Renowned economist Moshe Lander from Concordia University emphasizes that this trend is concerning, suggesting that many individuals are living beyond their means and face challenges in regaining financial equilibrium, particularly during their most productive working years.

According to TransUnion, consumer debt in Canada reached a staggering $673 billion in the third quarter of 2025, reflecting an 18% increase from the previous year. Car loans significantly contributed to this figure, with the average balance soaring from $29,138 to $30,396, while credit card debt has also risen to an average of $4,652.

Younger families and urban homeowners are experiencing a surge in defaults on non-mortgage loans. Experts contend that the uptick in interest rates since 2022 has unveiled financial strains that were previously veiled by lower income rates.

Close to half of Canadians (48%) do not possess enough savings to sustain living expenses for three months. Financial advisor Stacy Yanchuk Oleksy recommends starting with achievable objectives like the 52-week savings challenge to foster an emergency fund.

To mitigate debt, specialists recommend assessing all borrowing and establishing a detailed budget. Strategies like debt consolidation, management plans, or consumer proposals could be beneficial. Bankruptcy should only be considered as a last option when other avenues prove unviable, enabling individuals to stabilize their finances.