Nova Scotia Bankruptcy
Those who have been paying attention to the world economy over the past few years are unlikely to be surprised by the fact that consumer debt is again rising in Canada. Throughout the country, residents have shown an increasing willingness to take out new car loans and installment loans for large purchases such as furniture and appliances. Although the average increase in these loans did not reach record levels in 2012, the fact that the average debt represented by these loans grew by nearly 9 percent is still a cause for concern.
Certain provinces and territories have more reasons to be worried than others. After all, an increase in consumer debt levels makes it more likely that people will not remain current in paying their bills and fall behind on their minimum payments. In turn, this can snowball into a larger number of bankruptcies and consumer proposals.
In recent years, average debt levels in Nova Scotia have become a significant cause for concern. During 2011, for example, Nova Scotia had the greatest number of consumer proposals and bankruptcies per 10,000 people in Canada. Apparently, many provincial residents felt that their only option for getting out of financial trouble was to file bankruptcy. Nova Scotia residents who are in over their heads in debt, however, should always ask themselves if bankruptcy is really their best option. Understanding bankruptcy in the province can help you make an informed decision.
The Basics of a Nova Scotia Bankruptcy
While Nova Scotia is allowed to set its own bankruptcy exemption limits, the federal government establishes most regulations for bankruptcy in the province. Simply put, bankruptcy is the option of last resort for regaining control of your finances after you get in over your head in debt. It allows you a clean start in your finances and eliminates most debts that are not secured by an asset such as a house. If you owe at least $1,000 in unsecured debt, you are eligible to file for bankruptcy.
Residents file for bankruptcy through a licensed bankruptcy trustee. This trustee establishes a trust made up of a debtor’s assets from which a debtor’s various creditors are paid. As a result, creditors recover some of what they have loaned to a person who files for bankruptcy as long as the debtor still owns some tangible property. There are exemptions when it comes to what debtors must hand over to their trustee, which means that all people who file for bankruptcy get to keep something. After a period typically lasting nine months, the trustee recommends discharge, and, if approved, the bankruptcy is made official. At that point, all debts covered by the bankruptcy proceedings are erased.
Understanding the Pros and Cons of a Nova Scotia Bankruptcy
When it comes to bankruptcy, Nova Scotia residents should not choose this debt solution until they understand its pros and cons. Advantages to filing for bankruptcy in Nova Scotia include:
• legally prohibiting debt collectors from harassing you
• forgiveness of student loans if you file at least seven years after your status as a student ends
• financial counselling to help you avoid bankruptcy in the future.
On the other hand, there are many negatives to bankruptcy such as:
• being legally unable to hold certain corporate board positions during the bankruptcy process
• having your credit ruined for seven years, making it all but impossible to get new loans
• exemption amounts that force you to give up much of what you own; major exemptions in Nova Scotia include $6,500 for a motor vehicle required for business ($3,000 if only for personal use), $1,000 for vocational tools, and necessary food and clothing
Bankruptcy or Debt Settlement
Since bankruptcy is the option of last resort, you should consider other debt solutions first. Fill out the debt relief form for more information on debt settlement and other programs and find out how they may be a better option for you than bankruptcy.