Household debt levels across Canada continue to rise, and it’s hard to know exactly when they will decline. In March 2013, the Canadian government reported that the average level of household debt in Canada was about $165 per $100 of after-tax disposable income. This level continues to rise due to many factors, including lower interest rates, higher housing prices and even rising incomes.
Economists traditionally view debt that is secured by a tangible asset such as a home as “better” debt than unsecured consumer debts such as credit cards and installment loans. Growth in unsecured debt levels can be particularly alarming to statisticians because, more than anything else, such growth indicates people are having difficulty paying their bills on time. In February of 2013, Manitoba reported one of the largest increases in consumer debt, a year-over-year increase of 8 percent from 2012.
Though the average consumer debt in Manitoba remains a few thousand dollars less than the Canadian average, the rate of increase means that more and more people are having difficulty paying their creditors. When Manitoba consumers cannot pay what they owe to their creditors, they have several debt solutions that can help them. The solution of last resort is bankruptcy.
Manitoba Bankruptcy Information
Bankruptcy in Manitoba is designed for those who will be unable to pay off their debt even if they get a debt reduction through debt settlement or consumer bankruptcy. Any Canadian who owes at least $1,000 in unsecured debt can file for bankruptcy. Manitoba residents who file for bankruptcy owe much more than the $1,000 minimum in most cases.
With a few exceptions, bankruptcy eliminates all your unsecured debts. For example, a bankruptcy will not get you out of paying child support or alimony. Also, bankruptcy does not erase the claims of creditors who have lent you money against a tangible asset as collateral. For example, a bankruptcy will not eliminate your mortgage debt in most cases.
You file for bankruptcy through a licensed bankruptcy trustee who administers your property in a trust from which creditors receive at least some of what they are owed. Typically, this trust exists for nine months, after which the trustee recommends a discharge. Applicable debts are then eliminated, and you no longer have to pay them.
Why Should I Choose a Manitoba Bankruptcy?
Although many residents have found debt relief through bankruptcy, Manitobans should know that this debt solution is not necessarily right for them. To decide whether or not you should file for bankruptcy, keep these advantages and disadvantages in mind:
• The greatest disadvantage of a bankruptcy in Manitoba is that it typically impacts your credit negatively for up to seven years. It will be difficult to get new credit while the bankruptcy remains on your credit report.
• On the other hand, bankruptcies end the calls from debt collectors, and they give you a “fresh financial start.” Although you will likely have to surrender some of your property to pay your creditors and may even have your wages garnished for a short period, there are property exemptions. Your creditors cannot take everything. In a bankruptcy in the province of Manitoba, debtors can keep up to $4,500 in personal furnishings; $7,500 in professional equipment and tools; $2,500 in personal residence equity, essential food and clothing; and more.
• Those who file for bankruptcy must go through financial counselling, which helps prevent you from getting into significant financial trouble again.
• Debt collectors cannot harass you after a bankruptcy has been discharged.
• Before the bankruptcy is discharged, the bankrupt individual cannot serve on the board of directors of a corporation or hold a trust account. He or she must also disclose the status of bankruptcy when starting a new trade or business.
Find Out More Today
Bankruptcy is among the most complex debt solutions, and while it may be right for you, there are also ways to avoid it and preserve your credit. Fill out the debt relief form for information on how other debt relief options can help you avoid bankruptcy.
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