Airdrie is the only municipality in central and southern Alberta where insolvencies increased in 2010.
Bankruptcies and proposals - when a person or company offers creditors a settlement - in Airdrie increased from 153 in 2009 to 201 in 2010, defying the downward trend in the rest of Alberta and Canada.
“The economy in 2009 was not good after the crash in late 2008 so in 2009, we saw insolvencies rise,” said Donna Carson, senior vice president with Meyers Norris Penny.
“However, in most areas in Alberta, we saw them decrease in 2010 as the market started to balance out again.”
Carson also oversees Calgary, Red Deer, Drumheller and Stettler. Airdrie is the only municipality under her control where insolvencies increased.
In Airdrie in 2010, 18 per cent of insolvencies were proposals, compared to 11 per cent in 2009. Proposals are becoming a more popular option because it allows businesses to retain their assets without being forced to declare bankruptcy. Proposals are available to individuals whose total debt is less than $250,000.
“Proposals are a more viable option now that creditors are more open to looking at them,” said Carson.
Carson said she doesn’t know why total insolvencies in Airdrie have increased over the past year.
“There is nothing unusual about the causes of filing for bankruptcy,” she said.
“We are seeing loss of jobs, cutbacks in hours at work and failed businesses as causes, which is not surprising given the economy. There also hasn’t been a huge increase in population so I am not sure why insolvencies jumped for the city of Airdrie rather than going down.”
Carson said another common cause of insolvencies in Airdrie is house foreclosures, although statistics for foreclosures are not yet available.
Alberta saw an increase in consumer proposals (30.1 per cent) and a decrease in bankruptcies (18.4 per cent) in 2010. Total insolvencies went down by 9.8 per cent to 11,334. In 2009, Alberta filed 12,562 cases of insolvencies, which was the highest recorded in the history of Alberta.
Across the country, consumer debt levels are historically high. The total number of insolvencies in Canada decreased by 11 per cent in 2010. Bankruptcies decreased by 20.4 per cent, whereas proposals increased by 19.8 per cent.
“While the economy is recovering somewhat, consumers and businesses have been building up debt for a number of years, making it hard to catch up on debt that is several years old,” said Carson.
“We are not out of the woodwork yet. The phones have been very busy in 2011.”
Today, seniors are the fastest growing category of personal bankrupts in Canada. In fact, one in every nine individuals who file for bankruptcy in Canada is a senior citizen.
Carson said seniors are living on a fixed income and often can’t make ends meet.
“They don’t have the option of taking a second job so they live on credit,” she said.
Carson said the best advice she has for someone in financial trouble is not to ignore it.
“Do not avoid whatever your circumstances may be,” she said. “Call us and get some advice. We can’t control the economy but we can give you advice and tell you what options are out there. You are not alone. Lots of people go through this and the longer you wait to deal with it, the less options are available to you.”
For more information, call 403-912-6235.
