Although the recent economic downturn exacerbated the problem of debtors being unable to pay their debts, the truth of the matter is that there are always people in Canada who find themselves in over their heads when it comes to what they owe their creditors. From mortgages to student loans to credit cards, some residents find themselves in a situation they never anticipated—they cannot keep up with their bills.
Average consumer debt levels in Alberta are the highest in the country with Calgary and Edmonton leading the way. Non-mortgage consumer debt in Alberta hit $29,117 in Q1 of 2019, an increase of 3.4% from 2018. Because of these high-debt loads, bankruptcies in the province is up 13.5% over 2018 with Alberta the only other province to see a significant increase in the rate of bankruptcies.
When residents of Alberta are having trouble fulfilling their obligations to their creditors, there are many ways they can address the problem. Debt consolidation loans, debt settlement, credit counselling, and consumer proposals are all viable options for reducing the amount of principal you owe, as well as your average interest rate, thereby making it easy for you to meet your monthly debt payments. Sometimes, however, Albertans still have financial difficulties even after attempting all of the aforementioned debt solutions. In such cases, filing for bankruptcy in Alberta becomes a viable answer to one’s debt problems.
Is Bankruptcy your only Option?
Personal Bankruptcy Information for Alberta
Personal Bankruptcy is unique among other Canadian debt solutions in that it effectively wipes your record clean of most debts and enables you to restart your finances from a position of strength when it comes to what you owe. Once a bankruptcy is discharged, you no longer owe your creditors anything, with a few exceptions. To put it most simply, your debts to creditors who have extended you unsecured loans will be eliminated, though you will likely be responsible to pay secured debts such as a mortgage.
You may file for bankruptcy in Alberta if you have unsecured debt totaling at least $1,000, though it is advisable that you owe much more before you consider bankruptcy. Alberta residents file for bankruptcy consideration via a licensed bankruptcy trustee. That trustee then administers your property in a trust, paying various creditors at least some of what you owe until the court grants a discharge. You will effectively turn over your belongings and funds, with some exceptions, to the trustee so that your creditors do not totally lose out on your bankruptcy filing.
Insolvency & Bankruptcy Statistics in Alberta
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Bankruptcy rates actually fell in Alberta in 2018 compared to the previous year. During 2018, the number of filings for personal bankruptcy totaled a little over 400 per month on average. That is a 1.7% drop from the previous year. This indicates that Albertans are finding more success with other debt solutions such as debt settlement programs that are available to the public.
Alberta Bankruptcy Pros and Cons
Before filing for bankruptcy, you should be aware of the major pros and cons associated with this debt solution. The most obvious advantage is that most of your debts are eliminated in bankruptcy. Alberta residents also enjoy peace after a bankruptcy is discharged because debt collectors can no longer hound you for debts written off in the bankruptcy process.
On the other hand, a significant drawback to personal bankruptcy is that it negatively impacts your credit for around 7 years (and in some cases up to 14!). In fact, you will find it difficult to get new loans and other extensions of credit during those seven years if you file for bankruptcy. A bankruptcy will also leave you with very few personal belongings. For example, a bankruptcy only allows you to keep clothing and other basic items beyond the bare essentials if such things are necessary for employment. You will also have to surrender your car if it is worth more than $5,000. Other exemptions apply. Finally, a bankruptcy does not eliminate all of your debt. You will still have to pay alimony, your mortgage and student loans if it has been less than seven years since you attended classes.
Is There a Better Option?
Many people file for bankruptcy too hastily and miss out on other debt solutions that are not nearly as destructive to their credit. Fill out the debt relief form for more information about the options you have available to you.Understand All Your Options