Canadians judge bankruptcy harshly – until it happens to someone they know

Shawn Stack, a licensed insolvency practitioner, desired to know the way Canadians view debt – particularly how they view bankruptcy. For this reason, he commissioned Angus Reid to conduct the “2026 Debt & Moral Perception in Canada” study. As we delve into the study’s findings, we see a transparent pattern: Canadians are inclined to judge bankruptcy harshly – until someone they know personally goes through it.

The harsh public opinion on bankruptcy

In the recent online study, over 1,500 Canadians were asked to agree or disagree with statements about bankruptcy and financial responsibility. With so many individuals fighting high costs of living and 44% of Canadians agreeing that filing for bankruptcy is a legitimate solution to repay debt, one might assume that respondents were more empathetic.

The results showed a really different prevailing attitude. 41% said bankruptcy was on account of poor personal decisions and 41% agreed that declaring bankruptcy breaks financial guarantees. Over a 3rd of respondents also agreed that folks who declare bankruptcy are untrustworthy (37%) and may face consequences before their debts are discharged (40%).

More than half (51%) of respondents said individuals who have declared bankruptcy must have limited access to credit going forward. Given that more people view bankruptcy as a legitimate financial decision than those that view it as a loophole, these results are surprising.

What the Empathy Gap Reveals: Abstract vs. Personal Judgment

The query about abstract attitudes provides completely different answers than the query about people you realize. Looking back at abstract attitudes, 41% of respondents viewed bankruptcy as an ethical failure, an indication of unreliability, and a broken promise.

However, when asked in the event that they would view a detailed friend or member of the family otherwise after bankruptcy, only 23% said they’d. That’s an almost 20 point gap based solely on empathy and understanding of what someone goes through.

Generational differences

The attitudes of the generations are even clearer, with About half of Boomers (47%) say bankruptcy is a loophole and a broken financial promise (51%). Also telling is that 52% of Boomers would support financial consequences before allowing debt to be paid off through bankruptcy.

On the opposite hand, only 21% and 33% of Generation Z (ages 14 to 29) see bankruptcy as a loophole and a broken financial promise, respectively.

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These financial attitudes are the results of growing up in very different economies. Generation Z is reaching maturity at a time of high overall costs and low stability. Of course, this environment encourages borrowing.

As Stack says, “The generation gap alone shows that history is changing. But empathy alone is not politics. Until we separate the legal process of bankruptcy from the moral judgment that comes with it, we will continue to punish people for doing exactly what the law allows them to do.”

Divide genders

Even if the gender gap isn’t as large because the generation gap, it continues to be noticeable. Men were more more likely to view bankruptcy as a private failure (45%). in comparison with women (37%). Men were also more more likely to agree that folks should experience consequences before eliminating their debt through bankruptcy (43% in comparison with 37% of ladies).

However, there was little difference in attitudes when asked whether or not they would view a detailed friend or member of the family otherwise after that person filed for bankruptcy. Only 24% of men and 22% of ladies said they’d.

The final result

The public perception of bankruptcy changes when people take into consideration someone they know. They are inclined to be more empathetic and understanding, probably because they see the day by day financial pressures that their friends or family face.

What’s striking is how quickly this empathy disappears when bankruptcy is viewed within the abstract. The results suggest that bankruptcy should be viewed as a financial recovery tool relatively than an ethical judgment.

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About Jessica Gibson

Jessica Gibson is a private finance author with over a decade of experience in online publishing. She enjoys helping readers make informed decisions about bank cards, insurance, and debt management.