What Happens When I File for Bankruptcy in Nova Scotia?

Navigating Bankruptcy in Nova Scotia: A Comprehensive Guide

What happens when I file for bankruptcy in Nova Scotia? A question that may cause sleepless nights to some individuals facing financial difficulties. This article endeavours to provide a detailed guide on this process, aiming to alleviate uncertainties and misconceptions.

1. Understanding Bankruptcy

Bankruptcy is a federally regulated legal procedure, providing relief to individuals who can no longer meet their financial obligations. This process involves surrendering certain assets to a licensed insolvency trustee (LIT), who then sells them to pay off your debts.

1.1 Insolvency vs Bankruptcy

While the terms are often used interchangeably, insolvency and bankruptcy differ. An organization or individual is insolvent when they cannot meet their financial liabilities or their assets are insufficient to cover their debts. Bankruptcy, on the other hand, is a legal declaration that one cannot pay their debts. It involves a formal process, either initiated by the debtor or the creditors.

2. Consequences of Employer Bankruptcy

In the unfortunate event that your employer becomes insolvent or bankrupt, it is important to understand your rights and the steps you can take.

2.1 If Your Employer is Insolvent

Should your employer become insolvent, ensure you document all outstanding payments owed to you. This includes regular wages, vacation pay, and any other monies. Keeping all pay slips and employment records will aid in proving your claim. To initiate recovery of your owed wages, you may need to file a complaint with the Labour Standards Division.

2.2 If Your Employer is Bankrupt

When a company declares bankruptcy, a stay of proceedings is ordered. This temporarily stops all attempts to collect debts from the company. As an affected employee, you can file a claim for your owed wages through the Wage Earner Protection Program (WEPP). Be aware that there are time limits for filing a claim, so it is advisable to act promptly.

3. Benefits of Filing for Bankruptcy

While the idea of bankruptcy might seem daunting, it comes with certain advantages that can alleviate your financial burden. Upon filing for bankruptcy, you can expect:

  • Cessation of collection calls from creditors.
  • Halting of wage garnishment and other legal actions.
  • Absolution of your debts.

4. The Role of a Licensed Insolvency Trustee

A Licensed Insolvency Trustee (LIT) is a government-sanctioned professional who administers the bankruptcy process. Consulting with a LIT does not necessarily mean you are declaring bankruptcy. They will assess your financial situation and explore all possible debt relief options with you.

5. Declaring Bankruptcy in Nova Scotia

If you decide to declare bankruptcy, the LIT will guide you through the entire process. This involves signing legal documents which the LIT files with the Office of the Superintendent of Bankruptcy. Bankruptcy commences immediately upon filing these documents. The LIT then informs your creditors of your bankruptcy.

6. Responsibilities During Bankruptcy

While bankruptcy may relieve your financial stress, it also comes with certain responsibilities. The Bankruptcy and Insolvency Act outlines your duties during bankruptcy, which include:

  • Submitting monthly income and expense statements.
  • Attending two credit counselling sessions.
  • Making required contributions to your creditors.
  • Providing income tax information for any incomplete previous years.

7. Bankruptcy Discharge

Upon fulfilling all your duties, you can receive an automatic discharge from bankruptcy, provided it is not your third bankruptcy. This discharge releases you from your debts and ends your bankruptcy.

8. Frequently Asked Questions

How do I find out if my employer is bankrupt?

You can request your employer to provide the Bankruptcy Trustee’s contact. The Trustee will provide information about the money owed to you.

Can I get EI Benefits, or help finding another job?

Your local Employment and Social Development Canada (ESDC) Office can assist you with this.

9. Conclusion

Bankruptcy is a complex process, laden with legal obligations and ramifications. If you’re contemplating bankruptcy in Nova Scotia, seeking guidance from a Licensed Insolvency Trustee is crucial. They can provide professional advice tailored to your specific situation.

10. Get in Touch

If you have more queries or require professional advice, feel free to contact us. We’re here to help you regain control of your financial future.

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