Assessing the economic state of Canadian residents is not always easy, especially when the data is mixed. In certain provinces, the data is more mixed than in others, making such assessment particularly difficult. One such province is Prince Edward Island.
Economists point to several positive signs for the economic state of PEI residents. For example, there has been a trend over the past several years that shows people who live in PEI are reducing their annual household spending. In 2011, for example, the average amount PEI households spent on necessities and non-essential items dropped about $500 from the previous year. This is encouraging, as the average household spending level in Canada as a whole actually increased.
On the other hand, some negative indicators show that more and more residents of PEI may be looking for help in paying off their consumer debt. Those who are in really desperate shape may even consider filing for bankruptcy. PEI had the third highest increase in its average consumer debt total in the country in 2012, and although the average consumer debt in PEI remains less than the country’s average, the increase is a cause for concern.
PEI residents may increase their consumer spending for many different reasons, and some of them reach a point at which they can no longer make the minimum payments on their consumer debt. If you find yourself in this category and are considering a debt solution such as bankruptcy, you should understand what the process involves before you enter bankruptcy proceedings.
PEI Bankruptcy — The Basic Facts
Canadian law has established the bankruptcy process for individuals who, for whatever reason, cannot pay their monthly bills. Bankruptcy in PEI is the last option for those who are in over their heads in debt, and most people do not file for it until they have tried other debt solutions such as a debt settlement program. In any case, bankruptcy is not just for those who owe hundreds of thousands of dollars to their creditors. Residents can enter bankruptcy proceedings when they owe at least $1,000 in unsecured debt, although at that level of debt alternative programs are almost always a better option.
You will file for bankruptcy through a licensed bankruptcy trustee. Your trustee will assess your situation to see whether you actually qualify for bankruptcy protection. If you meet the criteria, the trustee will set up a trust into which your property, minus certain exemptions, is deposited. Your creditors will be paid from this trust and receive at least some of what you owe if, of course, the worth of your property exceeds the exemption levels. As with the other provinces in Canada, PEI establishes its own exemption levels for bankruptcy, which are listed below.
Filing for bankruptcy in PEI should not be done before considering the negative ramifications for your financial situation. Creditors will be generally unwilling to lend you money for seven years following your bankruptcy. PEI residents who have had a bankruptcy discharged, however, may sometimes find creditors who will loan them money at high interest rates.
In your situation, on the other hand, the positives of bankruptcy may outweigh the aforementioned negatives. When your bankruptcy is discharged, nearly all your debt will be eliminated, though some debts such as alimony payments will remain. You will also go through a financial counselling course, which will help you better manage your money. This is one of the best parts of bankruptcy, and many people have found it extremely helpful in teaching them how to lay a better financial foundation for the future.
PEI Bankruptcy Exemptions
When you file for bankruptcy in PEI, you will be allowed to keep the following:
• one motor vehicle worth $3,000 or less
• necessary clothing for you and your family
• food and household items worth $2,000 or less
• the vast majority of your retirement account funds
*Note that the exemption for contributions to registered retirement savings plans is in effect for all provinces. You will have to hand over the past twelve months’ worth of contributions to the bankruptcy trustee, but you will keep the rest of your funds that are currently saved in your retirement account.
Find Out More Today
Bankruptcy has its positives, but you are better off in the long run finding other ways to solve your debt problems. Fill out the Canada debt relief help form for more information on other debt relief options before resorting to bankruptcy.