Bankruptcy watchdog issues debt warning

Canada's bankruptcy watchdog added his voice Fridayto warnings that Canadians should watch their personal debt loads.

James Callon, the superintendent of bankruptcy, said it's important for Canadians to be aware of the risks and possible consequences of taking on a large amount of debt.

"Significant events, such as a change in employment or income, a change in family status or a serious illness, can cause a huge drain on finances," he said in a commentary on the agency's website.

"The combination of a large amount of debt and the sudden occurrence of a major life event could lead to the harsh realities of insolvency."

Callon issued the warningeven as he released data showing a 9.6 per cent dropin total insolvencies filed by eitherbusinessesor consumers in the 12 monthsending in October, compared with the same period a year earlier,when Canada was ina recession.

Business bankruptcies totalled 5,349 over the 12 months ending in October, down 22.5 per cent from the same period a year earlier.

Consumer bankruptciesfellnine per cent to 135,962 during those same months. But that total is still 22 per cent higherthan total consumer insolvencies two years earlier, before the recession.

Canadian household debt has grown to an all-time high, spurred on in part by the impact of historically low borrowing costs.

Mark Carney, thegovernor of the Bank of Canada, and several economists have voiced concerns that when interest rates begin rising again, some Canadian households will be caught with debt burdens they can't handle.