Homeowners Are Calling Insolvency Trustees for the First...

For a full decade, insolvency trustees barely heard from homeowners. They didn’t need to call. Home prices climbed, equity ballooned, and whenever credit card debt got uncomfortable, homeowners refinanced — rolled the unsecured mess into the mortgage and walked away clean. That era ended. The phones are ringing again.

In 2025, 140,457 Canadians filed consumer insolvencies — a 2.3% increase over 2024 and above the 2019 pre-pandemic peak. The headline number matters. What matters more is who is calling: homeowners, for the first time in a generation.

The Decade of Silence Is Over

Scott Terrio, a Licensed Insolvency Trustee at Hoyes Michalos, put it bluntly: “Insolvency trustees didn’t really speak to homeowners for a decade. What we’re seeing in the last 12 months is homeowners calling us again.”

The numbers confirm it. The Hoyes Michalos Homeowner Bankruptcy Index — which tracks what share of insolvency filings come from homeowners — sat at 1–2% during the housing boom. In early 2026, it climbed to approximately 7%. That is not a blip. That is a structural reversal.

And these are not small files. Homeowners who file insolvency carry $90,000 in unsecured debt on average. Renters carry $60,000. The 50% gap tells you exactly what happened: homeowners had access to cheap credit for longer, accumulated more of it, and now have no refinancing escape hatch to clear the balance.

How the Safety Valve Broke

Between 2015 and 2022, homeowners had a built-in debt management tool that renters never did: rising home equity.

Here is how it worked. You buy a house for $500,000. Three years later it appraises at $650,000. You have $40,000 in credit card debt. You refinance, roll the cards into the mortgage at 2.5% instead of 20%, and your monthly payment barely changes. Problem solved. No trustee needed.

That cycle repeated for a decade. Homeowners refinanced their way out of trouble over and over. Trustees never saw them because they never needed to come in.

Three things killed the safety valve simultaneously:

• Equity stalled or declined. Markets in the GTA, Vancouver, and Ottawa have seen price corrections of 10–20% from peak. The appraisal no longer bails you out.
• Rates doubled. Refinancing at 5.5% instead of 2.5% does not reduce your payment — it increases it. Rolling $40,000 in cards into a mortgage at today’s rates costs more, not less.
• Stress test tightened. Even if your equity supports a refinance, qualifying at 7%+ on the stress test blocks many applications.

The net effect: homeowners who spent a decade self-rescuing through equity now have the same options as everyone else. Which means the phone rings at Hoyes Michalos.

The Hidden Debt Behind the Mortgage

Mortgage delinquency rates in Canada remain historically low. Politicians and bank executives cite this number constantly. Terrio has a different view: “A lot of people talk about mortgage delinquency rates, but frankly they mean very little. Canadians will do almost anything before they miss a mortgage payment.”

That “almost anything” includes:

• Maxing out credit cards to cover groceries and gas
• Drawing down HELOCs to make mortgage payments
• Borrowing from family
• Stopping RRSP contributions
• Skipping insurance premiums

The mortgage stays current. Everything else deteriorates. By the time a homeowner calls a trustee, unsecured debt has been growing for two or three years behind the scenes. That is why the average homeowner filing carries $90,000 — they protected the mortgage at the expense of everything else.

Real Households, Real Numbers

Priya and Raj in Oshawa. Combined income of $128,000. They bought their home in 2021 with a $480,000 mortgage at 1.89%. Renewal is coming in September 2026 at an estimated 4.1%. Monthly mortgage payment jumps from $1,980 to $2,580 — an increase of $600. On top of that, they carry $72,000 in credit card and line-of-credit debt accumulated over four years. Minimum payments total $1,440/month. Combined housing and debt payments will consume 78% of gross income after renewal. The budget does not work.

Claire in Barrie. Single income, $67,000/year. Condo purchased in 2020 for $385,000 with a $365,000 mortgage at 2.14%. She refinanced once in 2022 to roll in $18,000 in credit cards. Since then, the cards have climbed back to $31,000. Her condo has lost approximately $40,000 in value since peak. No equity left to tap. Renewal in early 2027 will increase her payment by roughly $480/month. She called a trustee in February 2026.

Marcus and Tina in Hamilton. Dual income totalling $105,000. Mortgage of $410,000 renewed in January 2026 from 2.49% to 4.89%. Payment rose by $740/month. They carried $54,000 in unsecured debt into the renewal. Within six weeks, they were using the Visa to buy groceries. Marcus called Hoyes Michalos in March.

These are not outlier stories. This is the pattern Terrio describes: homeowners who managed for years using equity and cheap credit, now unable to cover the gap.

The Grocery Bill You Cannot Refinance

“We’ve had generational inflation,” Terrio says. “If your grocery bill used to be $700 a month and now it’s $1,200, you’ve got a problem — and it’s not going away.”

The Iran war energy shock is compounding this pressure with $200–400/month in added costs. The inflation pressure on Canadian households is not temporary:

• Groceries: up 25% since 2021, running at 4.8% in January 2026
• Insurance premiums: up 8–12% in 2025 alone in most provinces
• Property taxes: rising 4–7% annually in major municipalities
• Childcare, utilities, transportation: all above general CPI

None of these costs respond to refinancing. You cannot roll your grocery bill into a mortgage. You cannot amortize car insurance over 25 years. These are recurring, permanent budget items that have grown by $400–$700/month for an average household — and they are not reversing.

When you stack these costs on top of a mortgage payment that just jumped $600–$1,000 at renewal, the credit cards become the bridge. And bridges eventually collapse.

Five Years of Elevated Filings

Terrio’s forecast is sobering: “The next insolvency wave is going to be long and gradual. You could end up with five years of elevated filings instead of a short spike.”

The reasoning is structural. Mortgages originated between 2020 and 2022 at ultra-low rates are renewing in waves through 2027. TD Economics confirmed in March 2026 that the mortgage renewal “hill” is real, and while the worst concentration is close to passing, new mortgages taken at higher home prices will push debt service ratios higher through the second half of 2026.

This is not a crisis that spikes and recovers. It is a slow grind where each quarter brings another cohort of renewals, another round of payment shock, and another wave of calls to trustees.

Homeowner vs Renter: Two Different Insolvency Profiles

Homeowners wait longer because they had options that renters never did. By the time those options run out, the debt is larger and the situation is more complex. But the solution still works.

What Homeowners Can Do Right Now

Most homeowners are in Stage 3 or 4 of the debt spiral by the time they pick up the phone. If you own a home and carry unsecured debt while facing a mortgage renewal at a higher rate, your window for action is open — but it narrows every month you wait.

Step 1: Know your renewal number. Use the Mortgage Shock Calculator to see exactly what your payment becomes at current rates. Do not guess. The difference between “I think it’ll go up a bit” and “$740/month more” is the difference between planning and panic.

Step 2: Add up unsecured debt payments. Total every credit card minimum, LOC payment, and personal loan obligation. If that number plus your new mortgage payment exceeds 40% of gross income, your debt-to-income ratio is in the danger zone.

Step 3: Understand what a consumer proposal does for homeowners. A consumer proposal under the Bankruptcy and Insolvency Act eliminates unsecured debt — credit cards, personal loans, lines of credit, CRA balances — while leaving your mortgage completely untouched. You keep the house. You keep the equity. You eliminate the debt that is strangling your cash flow.

For Priya and Raj in Oshawa, a consumer proposal on their $72,000 in unsecured debt could reduce payments from $1,440/month to approximately $300/month. That frees over $1,100/month — more than enough to absorb the mortgage renewal increase.

Step 4: Talk to a Licensed Insolvency Trustee before renewal day. Free consultations exist for exactly this moment. A trustee can model your post-renewal budget and tell you whether the numbers work, whether a proposal makes sense, or whether you need a different strategy. Waiting until the payment has already jumped costs you months of interest and options.

The Consumer Proposal Advantage for Homeowners

Here is the part most homeowners do not realize: a consumer proposal is specifically designed for people with assets they want to protect.

Bankruptcy can put home equity at risk depending on your province and the amount of equity. A consumer proposal does not. Under Part III of the Bankruptcy and Insolvency Act, your creditors receive a better outcome than they would in bankruptcy — and in exchange, you keep everything. The house, the car, the RRSP, the pension.

For a homeowner carrying $90,000 in unsecured debt (the average in 2026), a proposal might settle at $36,000–$45,000 paid over 60 months. That is $600–$750/month instead of the $1,800–$2,250 in minimums the original debt generates. The mortgage stays. The credit cards go. The budget works again.

If you are comparing options, Consumer Proposal vs Bankruptcy breaks down the differences for homeowners specifically.

Bottom Line

For ten years, owning a home was the escape hatch from debt. Equity went up, you refinanced, the credit cards disappeared into the mortgage, and no one ever called a trustee. That decade is over.

The Hoyes Michalos Homeowner Bankruptcy Index has climbed from 1–2% to 7%. Homeowners are filing with $90,000 in unsecured debt. Mortgages originated at 1.89% are renewing at 4.1% or higher. And the grocery bill that used to be $700 is $1,200 and climbing.

If you own a home and you are juggling credit card debt on top of a mortgage that is about to renew higher, stop waiting for equity to bail you out. It is not coming.

Run the Consumer Proposal Calculator. Take the debt relief quiz. Find a Licensed Insolvency Trustee near you. The consultation is free, the proposal protects your home, and the math gets worse every month you delay.

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Sources:

• Canadian Mortgage Trends, “How the mortgage renewal wave is powering a new insolvency trend” (March 12, 2026), featuring Scott Terrio, Hoyes Michalos
• CAIRP, Q4 2025 Canadian Insolvency Statistics (February 2026)
• TD Economics, Mortgage Renewal Impact Analysis (March 4, 2026)
• Office of the Superintendent of Bankruptcy, 2025 Annual Data
• Statistics Canada, Consumer Price Index (February 2026)