Have you been laid off in Alberta and are now struggling with your finances? You’re not alone. Covid layoff affected 15.3% of those living in Alberta during the peak of the pandemic in 2020, causing debt escalation. If you’re currently unemployed and struggling to keep up with your debt repayments, there is support available to get you back on track.
If your debts feel too much to manage on your own and you need some help, talking to a Licensed Insolvency Trustee (LIT) can take some weight off your shoulders. With their support, you can discuss your financial situation and your possible options, to put together a path towards financial wellbeing.
Can I file for Bankruptcy when unemployed?
Filing for Bankruptcy while you’re unemployed can help to relieve the stress and anxiety that comes with debt. However, it’s important to note that filing for Bankruptcy isn’t your only option.
Even if you’ve been laid off in Alberta, your income will still be used to calculate the payment you make during Bankruptcy and how long you will be declared bankrupt. The payment you make is decided by the Bankruptcy and Insolvency Act. It’s important to note that if you’re currently unemployed, creditors will find it harder to take action against you. Creditors are not allowed to garnishee your pension income or unemployment benefits.
Being unemployed doesn’t make you ‘judgement proof’ (a person who doesn’t have enough assets for creditors to seize when a court order requires debt repayment). If you choose to declare Bankruptcy, this will immediately stop creditors from being able to take action against you.
Filing for Bankruptcy after being laid off can help to reduce the stress and anxiety that comes with creditors contacting you for debt repayments. It’s important to discuss your options with an LIT before you come to a decision. While Bankruptcy may seem like your only option and the best way out of debt, it does come with its consequences. You may lose some of your assets (such as your car if it’s worth over a certain amount) and your credit score will be negatively affected.
Contact a Licensed Insolvency Trustee for a free initial consultation. They can help put a plan together to straighten out your debt and give you financial peace of mind. If you choose to declare Bankruptcy in Alberta, your LIT will file on your behalf and your creditors will be notified. All collection activities will be stopped.
Am I eligible for Bankruptcy?
Considering filing for Bankruptcy? You will need to make sure you meet the following eligibility criteria:
- You must be over 18 years old
- You must be a permanent resident in Canada
- You must have more than $1,000 of unsecured debt (meaning the debt you owe isn’t secured to a valuable asset you own, like your car or your home)
- You must be unable to pay back the debt you owe
Even if you’re eligible to file for Bankruptcy, this doesn’t necessarily mean that Bankruptcy is the best option for you. With the help of an LIT, you can evaluate your options and decide on the right route for you to manage your debts.
How long does Bankruptcy last?
How long Bankruptcy lasts will depend on your individual circumstances and whether you have declared Bankruptcy in the past, or if this is your first time.
If it’s the first time you’ve declared Bankruptcy, your Bankruptcy will last nine months as long as you fulfill all the duties assigned to you by your Licensed Insolvency Trustee.
These two tables compare how long your Bankruptcy should last depending on your circumstances:
|First Bankruptcy||When you will be discharged|
|Not required to make surplus income payments (your surplus income is less than $200 per month)||Nine months after filing for Bankruptcy|
|Surplus income greater than $200 per month||21 months after filing for Bankruptcy|
|Second Bankruptcy||When you will be discharged|
|Not required to make surplus income payments (your surplus income is less than $200 per month)||24 months after filing for Bankruptcy|
|Surplus income greater than $200 per month||36 months after filing for Bankruptcy|
Alternatives to Bankruptcy
If you’re not sure whether declaring Bankruptcy is the right option for you and your finances, here are some alternatives to Bankruptcy to consider:
Liquidate your assets
A straightforward way to pay off your debts without declaring Bankruptcy is by liquidating some of your personal assets. Selling valuable items can help you to pay off what you owe.
LITs also offer credit counselling services. They can help you put together a monthly budget and assess your spending habits to help you tackle your debt payments. Credit counselling covers money management skills, from budgeting to how to manage credit responsibly.
A Consumer Proposal is put together with the help of your Trustee, and works as a legal agreement between you and your creditors. If accepted, your creditors will forgive part of your debt and you’ll pay off the remaining balance.
If you decide to file a Consumer Proposal, you’ll pay back a percentage of your debts at a lower interest rate for a period of time to help you spread the cost of your repayments. The Consumer Proposal involves you making a monthly payment (to help consolidate your debt) each month for up to five years. Filing a Consumer Proposal to your creditors can only be done by an LIT.
Ready to improve your financial wellbeing?
Here at Allan Marshall & Associates, we pride ourselves on our professional and supportive Licensed Licensed Insolvency Trustees. With their help, you will have a plan of action to help you manage and pay off your debts, so you can move towards the fresh start you deserve. Contact one of our Licensed Insolvency Trustees today to make a step towards a brighter future. We Can Help! ™