The Canadian Press

The number of Canadians who filed for bankruptcy was up by more than a quarter last year, but both business and personal bankruptcies fell for the third straight month in December.

Overall, bankruptcies were up by 25.9%, and consumer bankruptcies rose by 28.4% from the last month of 2008, when Canada and most other developed countries were in the midst of a major global recession.

December also showed improvements from the preceding months of 2009, although the Office of the Superintendent of Bankruptcies cautioned that filings have historically tended to decrease in the latter part of most years.

Consumer bankruptcies dropped 8.7% in December, following a 3.8% decline in November.

Proposals, an alternative to bankruptcy that allows for a renegotiation of payments, also fell by 16.6% in December, according to statistics compiled by the federal superintendent of bankruptcy.

“The continuation of the downward trend in consumer bankruptcy filings appears to be an increasingly positive sign that Canadian households are getting a better grasp on their finances, especially when paired with the decline in consumer proposals,” said Royal Bank economist David Onyett-Jeffries.

Onyett-Jeffries explained that recent changes to the Bankruptcy and Insolvency Act encourages consumers to restructure debt as an alternative to declaring bankruptcy.

In sharp contrast to individuals, Canadian firms appeared to have fared remarkably well during the downturn.

Business bankruptcies fell 7.7% in December and for 2009 as a whole, they were down 12.1%.

Overall, consumer and business bankruptcies rose to 121,801 in 2009.

There were also 36,640 proposed bankruptcies, 38.5% more than in the year before.

Bankruptcies include 116,381 filed by consumers, a 28.4% increase over 2008, and 5,430 filed by businesses, a 12.1% decrease.

Total bankruptcies included $8 billion in assets declared at filing, against $17.7 billion in liabilities.

There were 26,235 bankruptcies filed in the fourth quarter of 2009, 0.8% fewer than in the fourth quarter of 2008.