Filing Bankruptcy in New Brunswick
How to File Personal Bankruptcy
in New Brunswick, NB
Are you struggling with overwhelming debt in New Brunswick? The rising consumer debt levels in the province indicate that you are not alone in this financial challenge. If you find yourself in a situation where you owe more than you can reasonably afford to pay each month, it may be time to consider filing for bankruptcy. In this comprehensive guide, we will explore the process of filing for personal bankruptcy in New Brunswick, its advantages and disadvantages, and provide you with essential information to make an informed decision about your financial future.
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Understanding Bankruptcy in New Brunswick
The Average Consumer Debt in New Brunswick
According to recent reports, the average consumer debt carried by Canadians has been steadily increasing. However, in New Brunswick, the average consumer debt of $41,327 remains below the national average. Despite this, the rate of delinquency in the province has been on the rise, indicating that many residents are at risk of falling into unmanageable debt.
Eligibility and Requirements for Bankruptcy in New Brunswick
In New Brunswick, individuals who owe at least $1,000 in unsecured debts and cannot afford their monthly payments are eligible to file for bankruptcy. It is important to note that bankruptcy should be considered as a last resort after exploring other debt relief options.
Advantages of Filing for Bankruptcy in New Brunswick
Filing for bankruptcy offers several advantages for individuals facing overwhelming debt:
Protection from Creditors: Once you file for bankruptcy, your unsecured creditors are legally prevented from attempting to collect the debts you owe. This means an end to collection calls, wage garnishments, and lawsuits.
Debt Discharge: Upon being discharged from bankruptcy, typically within 9 months for a first-time bankruptcy, all your unsecured debts will be erased. This provides you with a fresh start and the opportunity to rebuild your financial life.
Financial Counseling: As part of the bankruptcy process, you will receive financial counseling to help you develop better money management skills. This guidance will assist you in avoiding future financial pitfalls and maintaining a healthy financial life.
Retaining Certain Assets: While bankruptcy requires surrendering some of your assets, there are exemptions in place that allow you to retain essential items such as furniture, appliances, tools, and a motor vehicle needed for work.
Disadvantages of Filing for Bankruptcy in New Brunswick
While bankruptcy offers significant debt relief, it is essential to consider its potential disadvantages:
Credit Impact: Filing for bankruptcy will have a negative impact on your credit rating. Your credit report will reflect an R9 rating, the lowest possible rating, for 6 years after discharge. However, if you are already struggling with missed payments and delinquencies, your credit may already be impacted.
Asset Surrender: Unlike other debt relief options such as debt settlement or consumer proposals, bankruptcy requires surrendering a significant portion of your assets. These assets will be distributed among your creditors to partially recover their losses.
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The Bankruptcy Process in New Brunswick
Step 1: Consultation with a Licensed Insolvency Trustee
When considering bankruptcy, it is crucial to consult with a Licensed Insolvency Trustee (LIT) in New Brunswick. LITs are federally-regulated professionals who can provide expert advice on debt relief options. During your initial consultation, the LIT will assess your financial situation and guide you through the bankruptcy process.
Step 2: Filing for Bankruptcy
If bankruptcy is determined to be the most suitable option, your LIT will assist you in completing the necessary paperwork to file for bankruptcy. This includes providing details of your debts, assets, income, and expenses. Once the paperwork is complete, your LIT will submit it to the Office of the Superintendent of Bankruptcy Canada.
Step 3: Bankruptcy Administration and Duties
Upon filing for bankruptcy, you will have specific duties and responsibilities to fulfill:
Monthly Surplus Income Payments: If your income exceeds the government-set threshold, you will be required to make monthly surplus income payments. These payments are calculated based on your income and family size.
Attend Credit Counseling Sessions: As part of the bankruptcy process, you will be required to attend credit counseling sessions to improve your financial literacy and develop better money management skills.
Asset Surrender: Any non-exempt assets must be surrendered to the LIT, who will distribute them among your creditors.
Step 4: Discharge from Bankruptcy
Once you have completed all your duties and obligations, including the required waiting period, you will be eligible for discharge from bankruptcy. The discharge officially releases you from your debts, allowing you to start afresh.
Alternatives to Bankruptcy in New Brunswick
While bankruptcy can provide significant debt relief for individuals in dire financial situations, it is crucial to explore alternative options before resorting to bankruptcy. Some alternatives to consider include:
Consumer Proposal: A consumer proposal is a legally binding agreement between you and your creditors to repay a portion of your debts over a set period, typically up to 5 years. This option allows you to avoid bankruptcy while still achieving debt relief.
Informal Debt Settlement: Informal debt settlement involves negotiating with your creditors to reduce the amount you owe or extend the repayment terms. This option can help you avoid bankruptcy and potentially reduce the impact on your credit rating.
Debt Consolidation: Debt consolidation involves combining multiple debts into a single loan or credit facility, often at a lower interest rate. This option simplifies your payments and can help you manage your debt more effectively.
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Conclusion: Taking Control of Your Financial Future
Bankruptcy can be a viable solution for individuals overwhelmed by debt in New Brunswick. It offers protection from creditors, erases unsecured debts, and provides an opportunity for financial counseling. However, it is essential to consider the potential credit impact and asset surrender associated with bankruptcy. Exploring alternative debt relief options is also advisable before making a decision. Consult with a Licensed Insolvency Trustee to assess your financial situation and determine the best course of action. Remember, taking control of your financial future is possible, and there is support available to guide you on your journey to financial freedom.
For more information on bankruptcy and debt relief options in New Brunswick, contact a Licensed Insolvency Trustee today.