Consumer insolvencies 'staggering compared to past years'

An insolvency trustee is warning Edmontonians to control their spending after seeing consumer insolvencies jump by nearly 200 per cent over last year.

"'We've noticed the numbers have been increasing steadily," said Zaki Alam, senior vice president with MNP, an insolvency and restructuring firm. "The numbers are quite staggering compared to past years."

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People who are insolvent are not yet bankrupt, but cannot pay their debts.

Alam encouraged them to see a licensed insolvency trustee.

"Consumer insolvency is a process of getting protection from your creditors so it gives you a chance to do a plan, finish it and move on from your debts and then you can start rebuilding your credit rating," Alam said.

While the number of insolvencies filed across Canada has only risen by three per cent, the frequency is much higher in oil-producing provinces where residents are struggling with cuts to overtime and hours, layoffs and lower pay rates, he said.

The danger, he said, is when expenditures are not adjusted and people increasingly turn to credit to supplement their income.

A consultation with an insolvency trustee, which is free, involves a review of assets, debt, income and family size to come up with a proposal to ultimately eliminate debt.

Increasingly, Albertans are making consumer proposals in a desperate bid to avoid bankruptcy. Proposals are legally binding and allow insolvent individuals to avoid filing for bankruptcy by extending the time they have to pay off debt.

But if a person has built up too much debt, they might not qualify.

"The sooner they can come in to see us, then we can give them the appropriate unbiased advice," he said.