Bankruptcy Alternatives in Nova Scotia
If you’re having trouble managing your debts, you may be considering whether filing for bankruptcy is the right course of action. Although there are many benefits associated with filing for personal bankruptcy, it’s never a decision that should be taken lightly. Instead, you’ll want to look at all of the bankruptcy alternatives in Nova Scotia first. By learning more about all of the debt resolution options available, you can assess your situation and determine which one is best suited to your needs.
Remember – you don’t have to resolve your debt problems alone. Being in debt can take a toll on your mental and physical well-being, so don’t hesitate to reach out for help. Accessing professional guidance from trained counsellors and licensed insolvency trustees (LITs) will ensure you have the information and support you need as you move towards a new financial future. To start planning your debt-free life now, take a look at the bankruptcy alternatives in Nova Scotia:
1. Informal Debt Settlement
Most people are advised to contact their creditors as soon as they begin experiencing financial problems. By explaining your situation, you can notify your creditors that you’re unlikely to be able to keep up with repayments and discuss possible alternative arrangements. This type of negotiation is known as an informal debt settlement as the debtor (you) liaises directly with the creditor, without an independent third-party acting as a go-between.
In many instances, creditors will agree to reduce the interest rate or debts or suspend interest altogether. While this may only be a temporary measure, it can help you to overcome short-term financial problems. Alternatively, creditors may be willing to accept a one-off payment in full and final settlement of the debt. While you’ll need access to enough funds to make this payment, this can be a way to clear your debts without paying the full amount that’s outstanding.
2. Debt Consolidation
If you have multiple debts, consolidating them into one outstanding debt can be a sensible move. Many people have credit cards, loans and store cards, for example, so it’s not uncommon for people to be paying more than 10-15 creditors every month. Not only does this make it difficult to track your finances, but the varying interest rates could also be making your debts soar.
When you take out a debt consolidation loan, the idea is to use the funds to pay off your existing debts. By paying these off in full, you settle the debts and no longer have to worry about them. Of course, you will still have the debt consolidation loan itself to pay back. However, choosing a debt consolidation loan with a lower interest rate than your individual debts means you can technically reduce the amount you’ll need to pay in the long-term.
Furthermore, debt consolidation means you’ll be paying back just one creditor each month, rather than numerous companies or agencies. This generally means that your monthly repayment is lower than it was, which frees up more of your income. In addition to this, managing one repayment every month is far simpler and more straightforward than attempting to pay back multiple creditors.
Before taking out a debt consolidation loan, however, it’s important to find out whether your existing debts can be paid off early without incurring any penalties. Although you can usually pay off credit cards without any sanctions, repaying a loan early may mean you are charged an early settlement fee. If so, you’ll need to factor this cost into your calculations to determine whether debt consolidation is still a wise financial move for you.
3. Orderly Payment of Debt
Although an orderly payment of debt is a voluntary procedure, it allows the courts to manage your debt repayments on your behalf. Only above in certain jurisdictions, residents of Nova Scotia can use this method of debt resolution to simplify their finances.
Once an order has been made, the interest on your debts is reduced to 5%, which means the total amount you end up paying back could be significantly reduced. Although you’ll still need to pay your debts back in full, you’ll make one payment to the court each month, rather than paying your creditors directly.
4. Consumer Proposal
Like bankruptcy, a consumer proposal is a form of insolvency. This means it is managed by a licensed insolvency trustee and governed by the Bankruptcies and Insolvency Act. Although there are many rules and regulations regarding how a consumer proposal is made, debtors rarely have to concern themselves with the technicalities. As you’ll be working alongside a licensed insolvency trustee, they will be contacting your creditors and the court on your behalf. What’s more, your LIT will ensure that the terms of your consumer proposal meet the relevant criteria and that any subsequent agreements are made in accordance with the appropriate laws and regulations.
Individuals with total debts of less than $250,000 (excluding a mortgage on your home) can be eligible to file a personal consumer proposal. Once filed, your creditors are no longer able to pursue you for non-payment, nor can they add interest to your outstanding debts. In addition to this, any wage garnishments must cease immediately, so filing a consumer proposal could have an immediate, positive impact on your finances.
Consumer proposals can run for a maximum period of five years, so it may take some time until your debts are fully resolved. However, your LIT will attempt to negotiate a reduction in the amounts owed when filing a consumer proposal. In many cases, debtors are able to reduce their debts by 70% of more, so there’s plenty of scope for becoming debt-free more quickly than you might expect.
Although a consumer proposal is a serious form of debt resolution, it can be a viable way of avoiding bankruptcy. As more people file consumer proposals in Nova Scotia each year, it’s clearly becoming one of the most popular alternatives to bankruptcy in the region. Despite this, it’s always important to seek personalised, independent advice before you make any major financial decisions.
Talk to Us About Bankruptcy Alternatives in Nova Scotia
If you’re considering filing for bankruptcy in Nova Scotia or you simply want to find out more about the debt resolution options that are available to you, we’re happy to help. Our helpline is open 24 hours a day, 7 days a week, so you can talk to us at a time that’s convenient for you. To learn more now or to speak to a licensed insolvency trustee about your situation, call Bankruptcy Canada on (877) 879-4770.