Is Canada in a household debt crisis? A new report says no, but the strain is concentrated

Two sets of numbers released in recent weeks seem to point in opposite directions. Households are spending a smaller share of their income on debt payments than they were at the start of 2023, yet consumer insolvencies are at a level Canada has not seen since 2009. Both can be true, and a C.D. Howe Institute report published on Oct. 14 explains why: household debt in Canada is a real problem, but it is not spread evenly.

Debt payments are easing, on average

Statistics Canada’s debt service ratio measures what share of household disposable income goes to the principal and interest on credit market debt. In the second quarter of 2026 it fell to 14.52%, which is 0.16 percentage points lower than in the first quarter. Its high point was 15.16%, reached in early 2023.¹

The reason was simple arithmetic: total debt payments grew 1.0% in the quarter while household income grew 2.1%. Statistics Canada also reported that household net worth passed $19 trillion, helped by rising equity markets. It added that the top fifth of households by wealth hold 69.0% of all financial assets, so those gains are not shared equally.¹

Why the average hides the pressure

The C.D. Howe authors, Mawakina Bafale and Peter MacKenzie, found that the national picture is steadier than the headlines suggest. They also found that it conceals sharp differences. In 2025, the highest-income households saved 34% of their disposable income, while the lowest-income group spent far more than it earned, with a net saving rate of -119%.² As Bafale put it, “national averages can mask the financial strain some Canadians are facing.”²

Age matters too. As of late 2025, Canadians aged 18 to 24 put the odds of missing a debt payment in the following quarter at nearly one in two. For ages 25 to 54 the figure was 27%, and for those 55 and older it was 0.7%.² The report adds that Toronto and Vancouver homeowners with heavy mortgage debt, who borrowed when rates were low, are now renewing at substantially higher rates.² For a look at who files for insolvency, see what the OSB’s debtor profile shows.

What the long record shows

The OSB’s historical series, which our Canadian insolvency statistics tracker draws on, lets us set today’s filings against earlier cycles. Here are consumer filings in selected years:³

Two things stand out. The 2025 total of 140,457 is the highest since 2009, but it is still below that year’s 151,712. And the mix has flipped. In 2009, consumer bankruptcies outnumbered proposals by more than three to one. In 2025, proposals outnumbered bankruptcies by more than three to one, and bankruptcies were about a quarter of their 2009 level.³ The data do not say why, so we should not read too much into the comparison. What they do show is that most people entering formal insolvency today are choosing a proposal, not a bankruptcy.

It is also worth remembering that the 12 months to August 2026 reached 146,135 consumer filings, as we reported in our look at August’s OSB data. For the yearly totals back to 2013, see how many Canadians file each year.

The next stretch is less certain

The easing in debt payments may not last. RBC Economics says the second-quarter drop was helped by one-time income boosts, including a one-time HST rebate and Indigenous settlements, which it expects to unwind in the third quarter. It also expects debt payments to start growing faster than income heading into 2027, as loans renew and new borrowing is priced at higher rates.⁴ That is a forecast, not a certainty.

The C.D. Howe authors also note a gap in the data. Published insolvency statistics cannot tell apart households that cannot meet payments from income and those whose debts exceed their assets. They recommend that the OSB publish both.²

What this means for you

A national ratio tells you little about your own budget. If you are carrying unsecured debt, such as credit cards or lines of credit, and your payments are already hard to manage, it helps to look at your options before a renewal or a rate change makes things tighter. Harris & Partners has an overview of debt relief options for credit card debt.

Each route has trade-offs. A repayment plan, a consolidation loan, a consumer proposal and bankruptcy affect your credit and your assets differently. A Licensed Insolvency Trustee can explain how each would apply to you, and the OSB notes that trustees typically do not charge for a first consultation.⁵ Our guide to consumer proposals sets out how that option works in practice.