Canadians in financial distress are carrying a record amount of debt as they pile on credit from multiple sources, according to an annual insolvency study.

The average insolvent debtor owed $67,496 in unsecured debt in 2025, according to the latest

“Joe Debtor” report by Hoyes, Michalos Associates Inc. — the highest level recorded since tracking began in 2011.

Debt loads were up more than than 11 per cent in 2025, climbing almost 37 per cent over the past three years.

“This isn’t about one bad financial decision or a sudden crisis,” said Doug Hoyes, an insolvency trustee and co-founder of Hoyes, Michalos & Associates.

“Canadians are layering borrowing on top of borrowing, leading to

insolvencies with unprecedented debt levels.” The study found that debtors are filing for insolvency later in the cycle and with higher balances from more accounts, suggesting they are struggling to buy time.

Insolvent Canadians in 2025 had the highest number of creditors since 2013, 10.5 on average. They were carrying 3.5 credit cards and a record 4.9 payday loans. Across every major debt category, balances were higher.

“Canadians are using credit as a coping strategy,” said Ted Michalos, the firm’s other co-founder. “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.”

Credit cards balances rose 20.2 per cent in 2025 and now account for 36 per cent of total unsecured debt, the highest share in a decade.

Consumer insolvencies, which include bankruptcies and credit proposals, rose 2.3 per cent in 2025 from the year before, and according to the

Canadian Association of Insolvency and Restructuring Professionals

, that’s the highest annual volume since the financial crisis in 2009.

Higher interest rates, the rising cost of living and more debt have put pressure on Canadians’ finances over the past few years, especially homeowners who have faced a spike in

mortgage rates after renewing from the rock-bottom rates of the pandemic. Though homeowners account for a small share of insolvency filings, their numbers are growing,  said Hoyes, Michalos Associates.

Homeowner insolvencies climbed three percentage points in 2025, and their financial position deteriorated, with almost one in four filing with negative home equity, said the trustees.

On average insolvent homeowners carried $111,995 in unsecured debt, up 12.6 per cent.

“For years, home equity has acted as a pressure valve,” said Hoyes. “That buffer is eroding. When homeowners lose the ability to refinance or consolidate, unsecured debt starts to pile up quickly, and insolvency risk rises.”

Hoyes and Michalos expect insolvency filings to rise this year, as the next wave of mortgage renewals hits household budgets.

TFSA vs. RRSP: A wealth-building series from the Financial Post

It’s one of the most important — and sometimes confusing — savings decisions Canadians face, and the right answer depends on far more than a simple rule of thumb. The Financial Post series called

TFSA vs. RRSP , breaks down the key questions in deciding between the two accounts, including mistakes to avoid and how to get the most bang for your buck.

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For the first time since the financial crisis, mortgage arrears in Ontario are overtaking the national average, said Robert Kavcic, senior economist at BMO Capital Markets.

Higher interest rates on renewal and tougher market conditions are setting the stage for financial distress as this region reels in a hangover from the high prices and high debt of the pandemic boom.

Other regions like Atlantic Canada and Alberta are seeing little change and the national rate is only now back to levels seen before the pandemic, said Kavcic.

“Looking ahead, this rate is probably climbing higher still in 2026 as we reach peak mortgage renewals,” he said. “But, look for the increases to be focused (geographically and among borrower type), while the broader market is well protected by sound lending practices.”

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Canadians have the option of contributing to a registered retirement savings plan (RRSP) and tax-free savings account (TFSA) to build long-term savings and benefit from tax-sheltered growth. But how do you ensure you are using them to their full potential? The Financial Post asked financial advisers to share their best tips for getting the most out of the two accounts.

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McLister on mortgages

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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