WATERLOO REGION — The number of people declaring personal bankruptcy skyrocketed in Waterloo Region and Guelph last year as high debt loads collided with lower incomes.

The nearly 46-per-cent increase in consumer bankruptcies in the Kitchener census metropolitan area, which includes most of Waterloo Region, and the nearly 50 per cent increase in Guelph were the highest in Ontario after Sudbury.

A total of 1,974 people in Waterloo Region declared bankruptcy in 2009, up from 1,353 in 2008, which represents an increase of 45.9 per cent. In Guelph, 509 people declared bankruptcy last year, an increase of 49.7 per cent from 340 in 2008, the Office of the Superintendent of Bankruptcy Canada reported on Wednesday.

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“It is certainly a big number,” said Douglas Hoyes, a bankruptcy trustee with Hoyes, Michalos & Associates Inc., which has offices in Kitchener.

The bankruptcy increases in this area were much higher than the national average of 31 per cent or the Ontario-wide rate of 32.7 per cent. In Ontario, only Sudbury had a higher bankruptcy-rate increase, at 51.8 per cent.

Hoyes said job losses, even from a few years ago, may be showing up in the bankruptcy figures. People who lost their jobs may have managed on their severance payments or pensions for a time, or found jobs at lower pay. But with reduced incomes, their debts eventually caught up to them.

“Someone doesn’t just get laid off on Monday and go bankrupt on Tuesday. The time lag is often a year or more,” he added.

Heather Cudmore, credit counselling manager at Mosaic Family Counselling Services in Kitchener, said “more and more people are living close to the line and have no flexibility.”

Cudmore said an average client she sees might have more than $30,000 in unsecured debt, not including mortgage and car payments. Despite news reports of an improving economy, the average person isn’t seeing that, she added. “What he sees are the higher utility bills, but very rarely is he getting an increase in his wage.”

Hoyes said the biggest worry looming on the horizon is that as interest rates go up, even by a tiny amount, people who currently are struggling but managing to get by will get into trouble as well.

“The interest rates are a ticking time bomb,” he said.

The government has changed the rules to make bankruptcy more difficult, so Hoyes expects more people will try to file what are known as “consumer proposals,” where they try to work a deal with the creditors to pay back a certain percentage of the debt over a longer period of time.

In the Kitchener census metropolitan area, 762 consumer proposals were filed in 2009, an increase of 24.5 per cent over the 612 consumer proposals that were filed in 2008. In Guelph, 225 consumer proposals were filed last year, an increase of 43.3 per cent over the 157 that were filed in 2008.

The economy should improve this year, but “if the interest rates pick up and unemployment rates stay high, then we could see bankruptcy rates stay high,” Hoyes added.

There were 72 business bankruptcies in the Kitchener census metropolitan area last year, one less than in 2008.