With just over 40,000 residents the Yukon may not be home to a lot of people, but that doesn’t mean those living there are exempt from struggling financially. For example, in 2021, according to the Office of the Superintendent of Bankruptcy, the average debt load of those living in the Yukon that filed for bankruptcy was over $56,000.
Some residents of the Yukon are having a hard time even paying the minimum payments on their debt right now. If you are one of them, it might help to look into a debt solution such as debt consolidation, debt settlement, credit counselling, a consumer proposal, or bankruptcy.
Bankruptcy: Yukon Residents and Its Impact on Their Finances
Bankruptcy is the debt solution of last resort reserved for those who do not have any reasonable chance of paying what they owe to their creditors even if their principal and interest rates are reduced. Although those who file for bankruptcy in the Yukon often have tens of thousands of dollars in secured and unsecured debt, you do not need to owe very much money to qualify for bankruptcy. If you owe as little as $1,000 to your creditors and you cannot afford your debt payments, you can qualify for bankruptcy.
To file for a Yukon bankruptcy you must first contact a licensed bankruptcy trustee. Once you file for bankruptcy, the trustee establishes a trust in your name from which your creditors are paid part of what you owe them based on your current net worth. Essentially, your property is deposited into this trust, and the bankruptcy administers the payment of your creditors. After nine months, the bankruptcy is discharged if you have held up your end of the agreement, and all of your debts are cancelled.
The Advantages and Disadvantages of a Yukon Bankruptcy
When it comes to filing for bankruptcy, Yukon residents should understand its key advantages and disadvantages. The chief advantage is the erasure of your debt and the relatively clean financial start that you gain with bankruptcy. Furthermore, you will be required to go through basic financial training classes to make sure you do not get in over your head in debt again.
On the other hand, there are some key disadvantages. Unlike other debt solutions such as debt settlement, for example, you will have to surrender some of your property. Like the other Canadian provinces and territories, there are exemptions for what you must hand over to your trustee, but what you will give up remains substantial. The following are exempt when you file for bankruptcy in Yukon:
• twelve months worth of food, fuel, and other essentials
• ordinary and necessary clothing
• $500 worth of household furnishings
• $600 worth of tools for one’s profession
• $3,000 of your household equity
• the balances of all registered retirement savings plans minus the twelve months of contributions before bankruptcy
Finally, as noted, you get a relatively clean start to your finances in bankruptcy. That qualifier is necessary because when you file for bankruptcy, your credit is actually harmed for seven years. During that period you will only be able to get loans at exceptionally high-interest rates if you can qualify for them at all.
Bankruptcy may be the only debt solution for some people, but it pays to learn about your other options before you file. Fill out the debt relief application to learn about other debt programs that may keep you from having to file for bankruptcy.