Increase in bankrupcies: New pressures on the rental housing stock?

According to Canadian Insolvency Statistics — First quarter of 2024(1), the number of insolvency files submitted under the Bankruptcy and Insolvency Act is increasing in Québec
in each quarter:

In the event of financial problems a distinction must be made between bankruptcy and a proposal. According to the official definitions:
“Bankruptcy: The legal situation of a natural person (a consumer) or a legal person (a company) who has made a disposal of his or her assets or against whom a bankruptcy order has been issued.”
“Proposal: An offer to settle a debt made to creditors under terms that are different from the existing terms. This is a formal agreement under the Bankruptcy and Insolvency Act.”

An increase in bankruptcies will have an impact on the availability of housing. In fact, it is very likely that among the 3491 bankruptcies, some own their house or condo. The sale of this property will lead to a return to the rental market of these former owners.

However, they may encounter difficulties in renting themselves. In addition to the financial aspect, it will therefore be important for them to do a complete pre-rental investigation. The addition of an endorser will also be evaluated.
The landlord may require an assessment of the endorser's creditworthiness because the landlord must ensure the ability to pay the deposit if the tenant does not pay.

Take the time to speak with your tenant-proposer and do a full investigation on him. To make the best decision for yourself, you need to be aware of all the behavioural aspects as well.

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