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Personal Bankruptcy in Newfoundland
Bankruptcy is not something most people want to consider, yet it may be the necessary step you need to take to regain control of your financial future.
Filing For Bankruptcy
People, companies, partnerships and executors of wills or administrators of estates who are “insolvent” and owe at least $1,000 are eligible to file for bankruptcy.
You may notice that the words “insolvent” and “insolvency” are commonly used when discussing bankruptcy, but many people are unclear as to what these words mean. “Insolvency” or being “insolvent” means that one of the following two things applies to you:
- You can no longer pay your debts as payments come due – or you borrow from one creditor to allow yourself to pay another
- The value of your property is less than the total amount of your debts
How To Do It
A bankruptcy has to be filed with a Licensed Insolvency Trustee. The Trustee in Bankruptcy makes an assessment of your financial situation, which you sign under oath before it is shared with your creditors.
Call Sean today to discuss how he can help you take control of your financial future!
What Happens When You Do
While you have creditor protection during a bankruptcy, your debts do not go away until you get discharged at the end of your bankruptcy.
Some of the things you will have to do to get discharged include:
- Provide the trustee with a monthly report of your income and expenses with proof-of-income.
- Provide the trustee with the information required to file your income tax return for the year of your bankruptcy and, if not yet completed, the year before your bankruptcy
- Income tax refunds for the tax years mentioned above, and HST refunds during the bankruptcy will go to your trustee.
- Let your trustee know of any changes in living situation, income, assets etc.
*While the information provided is meant to inform the reader about consumer proposals and bankruptcies generally, it is not comprehensive and does not replace speaking with a Licensed Insolvency Trustee. Discussion with a Licensed Insolvency Trustee is always recommended if you are experiencing financial difficulty.
Connect with Sean today for your Free Consultation to see if Bankruptcy may be the solution for you.
Is Personal Bankruptcy Right for You?
Still Have Questions? Sean Has Answers.
Yes, these include:
- Student loans that are less than seven (7) years old
- Fines and penalties imposed by the court
- Debts arising from recognizance or bail bond
- Debts arising from fraud, embezzlement or obtaining property by false pretenses
- Employment insurance overpayments
- Alimony
- Spousal support
- Child support
In many cases yes, people who file for bankruptcy can keep their house. There are a number of factors at play including the amount of equity in your home, your ability to fit the payment into your budget and whether you are up to date on your payments. It is best to contact your trustee to find out how your home might be affected.
If your vehicle is financed and you are up to date on your payments and continue to make your payments after filing for bankruptcy then you can usually keep the vehicle. This is not the trustee’s decision; it is up to the lender that you financed with. Contact Sean to find out how this works.
If you file for bankruptcy there is a common misconception that you lose everything – this is not true. In Newfoundland and Labrador the Judgment Enforcement Act provides for certain exemptions, i.e.: things you are allowed to keep. These include:
- Equity in your principal residence up to $10,000
- One motor vehicle to a value of $2,000
- Household furniture to a value of $4,000
- Registered Retirement Savings Plans (RRSPs)
- Pensions
- Registered Retirement Income Funds (RIFs)
- Deferred Profit Sharing Plans (DPSPs)
- Tools of the trade to a value of $10,000
If you are wondering how these exemptions might affect you and your belongings you should contact Sean to discuss your situation.
If your student loans are more than seven (7) years old then yes, they can be included in a bankruptcy. If you have student loans you should contact your trustee to discuss because this can be a complicated issue that depends on what Canada Student Loans has as your end of study date but is also subject to case law based on court decisions.
The cost of bankruptcy varies as it depends on what your household income is and also what equity you have in assets that you own. This is something that Sean will discuss with you during your free initial consultation.
For a first time bankrupt, i.e.: someone who has never been bankrupt before, bankruptcy is usually either 9 months or 21 months depending on their income. For a second time bankrupt, i.e.: someone who was bankrupt once before, bankruptcy is usually either 24 months or 36 months depending on their income. Sean can walk you through how income affects a bankruptcy and what you can expect based on your own personal situation.
Before you file for bankruptcy you will provide your trustee with a list of all your creditors. The trustee then sends notification of the bankruptcy to each creditor within five (5) days of you filing.
In most cases the only people that find out are your creditors, the Office of the Superintendent of Bankruptcy, your trustee and the Canada Revenue Agency.
A Licensed Insolvency Trustee has undergone extensive training and screening before obtaining their license from the federal government. For more information, click here.
Yes, with certain exceptions, creditors are not allowed to contact you for payment, take court action against you, or garnish your wages during a bankruptcy.
To learn more, visit our Resources Page.