Canadian consumer debt has reached $2.6 trillion and those filing for insolvency are burdened by more debt than previous years.
Balances on home mortgage rose 4.1% year-over-year to $1.89 trillion in the third quarter of 2025 — this is where significant portion of the total consumer debt exists.
Debt layered on debt
On average, insolvent debtors owed $67,496 in unsecured debt last year. This is the highest level reported since licensed insolvency firm Hoyes, Michalos & Associates began the Joe Debtor study in 2011.
In one year, unsecured debt levels jumped 11.2% and nearly 37% since 2023.
“This isn’t about one bad financial decision or a sudden crisis,” said Doug Hoyes, licensed insolvency trustee and co-founder of Hoyes, Michalos & Associates.
“Canadians are layering borrowing on top of borrowing, leading to insolvencies with unprecedented debt levels.”
Insolvency filings rose by just 1.4% nationally in 2025. While that may seem like an improvement, the report implies that it reflects how households are taking on more debt to avoid insolvency.
Multiple loans & lenders
The Office of the Superintendent of Bankruptcy released data showing that consumer insolvency numbers were even higher, up 2.3% in 2025. This totalled at 140,457 verses 137,295 in 2024, the year prior.
Unfortunately, the average Canadian filing for insolvency in 2025 owed about 10 different lenders or organizations. This is the highest amount since 2023, according to Hoyes, Michalos & Associates.
Debtors are also switching between an average of 3.5 credit cards each, which is 13.3% higher year-over-year.
Payday loans are the most in demand These high-interest loans are intended to be short-term and cover expenses until a borrower’s next paycheque. Again, the average debtor owes an average of 4.9 loans.
Strained homeownership
Homeowners are also under pressure and constitute a minimal but growing share of insolvency filings. In 2025, homeowners accounted for 8% of all insolvencies — a 5% increase from 2024.
The average insolvent homeowner is holding $111,995 in unsecured debt.
Unsecured debt among insolvent homeowners rose by 12.6% year-over-year, furthering the weight of higher mortgage payments. Of course, higher mortgage renewal rates is a contributing factor as well.
This is also signalled by power-of-sale listings in provinces like Ontario due to a rise in mortgage arrears.
Credit to cope
“Canadians are using credit as a coping strategy,” said Ted Michalos, licensed insolvency trustee and co-founder of Hoyes, Michalos & Associates.
“That strategy works for a while, but it’s a delaying tactic, not a solution. By the time people file, they’re not dealing with one problem — they’re dealing with 10.”
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