Whether it is out of necessity or not, relying too much on consumer loans and credit cards can put you in a situation where you can no longer afford to make the minimum payments on all your debt. At that point, you have to get help from one of the many different debt solutions available to Canadians, including debt settlement, the consumer proposal, or bankruptcy.
Sometimes bankruptcy is the only viable solution, and Nunavut residents do take advantage of it, albeit less frequently than the rest of the country. Though bankruptcies are less frequent in Nunavut they still make a mark. In 2021, the Office of the Superintendent of Bankruptcy reported that the average debt load for those that declared bankruptcy was over $72,000.
Deciding whether or not bankruptcy is the right answer for you if you are buried in debt is the most important issue. To make this decision, you must have a basic understanding of what it means to file for bankruptcy in Nunavut.
Understanding the Nunavut Bankruptcy Process
Residents are eligible to file for bankruptcy if they owe at least $1,000 in unsecured debt. Residents must be able to demonstrate that they cannot afford to make their debt payments, and they file for bankruptcy through a licensed bankruptcy trustee.
When you file for bankruptcy, the trustee sets up a trust that includes your assets. Creditors have some protections in the bankruptcy process, and they are entitled to recover at least some of what they have borrowed. The trustee pays your creditors from the trust, and at the end of nine months (typically), your bankruptcy is discharged if you have followed the procedure. At that point in the bankruptcy, Nunavut residents have their unsecured debts erased, effectively giving them a new start to their financial life.
Advantages and Disadvantages to a Nunavut Bankruptcy
Filing for bankruptcy in Nunavut effectively makes you toxic to creditors for a period of roughly seven years following their bankruptcy discharge. You will find it nearly impossible to get new low-interest loans and credit cards during this time.
You should also know that while bankruptcy protects some of your assets, it does not protect all of them, and those it does protect are relatively small. For example, the protection for your residence is only $3,000, and you will have to hand over any equity in your home that is above that amount.
On the other hand, if you are in a desperate financial situation, there are some key advantages to filing for bankruptcy. Debt collectors will be prohibited from calling you, and you will receive free financial counselling to help you manage your finances better in the future.
Learn More Today
Please do not decide that bankruptcy is your only choice for getting out of debt before you consider options that are less harmful to your credit. It’s helpful to understand these options, and by filling out the quick debt relief form you can access some great information to get started.