If you can’t pay your bills and financial concerns are consuming your thoughts, consider filing for personal bankruptcy in New Brunswick. While the thought of declaring Bankruptcy can ignite feelings of humiliation and fear, sometimes it’s the best, or only, way to get out of debt.
If you’re struggling with debt, contact a Licensed Insolvency Trustee (LIT) today to discuss if Personal Bankruptcy in New Brunswick is right for you.
What is Personal Bankruptcy?
Personal Bankruptcy is a legal process that frees you from most unsecured debts. In exchange, you’ll work with a Licensed Insolvency Trustee who will sell your assets to raise money to repay your creditors. LIT’s are the only professionals in Canada legally permitted to administer a Bankruptcy proceeding.
While filing for Bankruptcy is not an option anyone wants to choose, its purpose is not to punish. Instead, Bankruptcy is designed to provide a second chance to honest Canadians who are financially struggling.
Who Should File For Personal Bankruptcy in New Brunswick?
If your debt is keeping you up at night, impacting your relationships, and creating stress in your life, then filing for bankruptcy is something you should consider.
People generally file for Bankruptcy when they’re out of other options. They can no longer pay their bills and owe at least $1,000.
If you’re questioning whether personal Bankruptcy is right for you, contact a LIT. Licensed Trustees can assess your financial situation and determine if Bankruptcy is the right choice or if you’re eligible for other debt solutions.
Who’s Filing For Personal Bankruptcy in New Brunswick?
While the idea of filing for personal Bankruptcy can feel isolating, know that you’re not alone.
The total number of insolvencies filed by consumers is on the rise in New Brunswick. From March 2023 to March 2024, there was a 12% increase in total consumer insolvencies. First-quarter statistics reveal a total of 876 insolvencies, with 210 personal Bankruptcies and 666 Consumer Proposals.
While Proposals increased by 22%, consumer Bankruptcies declined by nearly 12%, from 984 in 2023 to 869 in 2024.
The rising trend of insolvencies in New Brunswick mirrors the rise across the country. From January 2023 to January 2024, the total number of insolvencies increased by 23%.
Will I Lose Everything if I File For Personal Bankruptcy?
A major concern when filing for personal Bankruptcy is losing assets. Everything you’ve worked so hard for being taken away! However, while your LIT will sell some of your assets to repay your creditors, there are items exempted by provincial and federal laws.
In New Brunswick, the following items are exempt when you file for personal Bankruptcy:
- Unsecured furniture and household appliances up to $5,000
- Vehicle up to $6,500 if it’s needed work or medical reasons
- Three-month supply of food and fuel for you and your dependents
- Clothing
- Tools of trade up to $6,500
- Medical aids
- With some pension plans (RRSP, RDSP, RRIF) there’s a clawback period for any contributions made to RRSP and RDSP in the 12 months before Bankruptcy.
When it comes to whether you get to keep your home it depends on how much equity you’ve built and if you’re up to date on your mortgage payments. You can speak to your LIT to clarify what you can keep in Bankruptcy.
What Debts Are Included in Bankruptcy?
Bankruptcy can eliminate many of your unsecured debts, including:
- Credit cards
- Installment loans
- Lines of credit
- Medical bills
- Payday loans
- Personal loans
- Tax debt
What Debts Are Not Included in Bankruptcy?
Debts that are not eliminated when you file for personal Bankruptcy in New Brunswick include:
- Alimony
- Child and spousal support
- Court awarded restitution payments
- Debt arising from fraud
- Secured debts (e.g., mortgage, car loan)
- Most Gambling debts
- Student loans (if you haven’t been out of school for 7 years)
What Will Happen to My Credit Score if I File for Personal Bankruptcy?
When you declare Bankruptcy, you’re assigned the lowest possible credit score. This information will stay on your credit report for up to seven years if it’s your first bankruptcy and 14 years for subsequent bankruptcies. Having a bankruptcy on your credit report can make it difficult to obtain credit.
Pros and Cons of Filing For Personal Bankruptcy
All financial decisions come with pros and cons. Before filing for personal bankruptcy in New Brunswick you should discuss the benefits and challenges of this debt solution with your LIT, including:
Pros:
- Discharged from most unsecured debts
- Wage garnishment, lawsuits, and collection calls will halt
- You can keep some assets
- You get a fresh financial start
Cons:
- Filing for Bankruptcy will destroy your credit
- You will lose some of your assets
- Secured debts are not included in Bankruptcy
- Difficult to borrow money until credit is re-established
Bankruptcy may provide a sense of relief. With a fresh start, you can build a credit score again over time.
Alternatives to Personal Bankruptcy in New Brunswick
When you speak to a LIT they can assess your finances and tell you what debt relief options are available. You may think Bankruptcy is your only option, however your LIT may recommend alternative debt solutions, including:
Consumer Proposal
Like Bankruptcy, a Consumer Proposal is a legal process that can only be administered by a LIT. In a Proposal, you work with your LIT to develop an offer to your creditors to pay a percentage of your debt, increase the time you have to pay, or both.
Unlike Bankruptcy, you don’t have to surrender your assets to eliminate debt.
Debt consolidation
Debt consolidation involves combining multiple debts and paying them off with one large loan. This process can streamline the debt repayment process. Rather than trying to juggle multiple debts with different payment deadlines and interest rates, you only need to focus on one.
Credit counselling
A credit counsellor can provide financial education and tools to help improve your money management. You can work with a counsellor to develop a monthly budget to repay your debt or they can teach you skills to properly manage your credit.
Speak to a Professional LIT in New Brunswick
Dealing with debt can feel extremely stressful and isolating but struggling alone will simply add to your discontent. If your financial situation is out of control and you need help determining your next step, a professional LIT can help. For a free, no-obligation consultation, call us at 1-888-371-8900 or reach us online.
