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Impact of Bankruptcy Reform on Consumer Insolvency Choice


  • Jason Allen
  • Kiana Basiri


We examine the impact of the 2009 amendments to the Canadian Bankruptcy and Insolvency Act on consumer insolvency decisions. The amendments were successful in steering debtors out of Division I debt restructuring and into the more cost-effective Division II debt restructuring. Although total insolvencies remained flat after the amendments, they led to a significant substitution out of bankruptcies and into debt restructuring. The extent of substitution greatly depends on regional and individual circumstances. For example, generous asset exemptions under bankruptcy at the provincial level discourage debt restructuring, whereas home ownership encourages it. Our results show, therefore, that the impact of national bankruptcy policies can have sizably different impacts at the regional level.

Suggested Citation

  • Jason Allen & Kiana Basiri, 2018. "Impact of Bankruptcy Reform on Consumer Insolvency Choice," Canadian Public Policy, University of Toronto Press, vol. 44(2), pages 100-111, June.
  • Handle: RePEc:cpp:issued:v:44:y:2018:i:2:p:100-111
    DOI: 10.3138/cpp.2017-055

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