Are you having trouble keeping up with your bill payments? If so, you’re not alone. Thousands of Canadians struggle to stay on top of their bills as their debt continues to mount. And with high-interest debt, it can be nearly impossible to eliminate all outstanding debt owed.
Click here to learn how you can deal with rising interest rates in Canada.
In Manitoba, the average non-mortgage consumer debt load is $18,312, which is slightly under the national average of $22,125. Yet while Manitobans may have the smallest amount of consumer debt compared to other provinces and territories, delinquencies climbed by more than 10% in 2016, while bankruptcies increased 7%. In fact, Manitoba has experienced the largest increase in bankruptcy across the country over the past year.
Some residents of Manitoba who are unable to pay their bills on time and in full may choose to seek the route of bankruptcy in order to eliminate their debt and get a fresh start. While this may be the last resort, it can be a source of relief at the same time. Nobody plans to have the kind of financial hardships that eventually lead to bankruptcy, but it’s a fact for approximately 100,000 Canadians each year who turn to bankruptcy as a means to get out of debt.
Unsure about how bankruptcy works or if it’s right for you? Read on to arm yourself with the information needed to make an informed decision.
What is Bankruptcy?
Simply put, personal bankruptcy involves giving up or “assigning” everything you own to an “Insolvency Trustee” in exchange for becoming completely absolved from all debt.
For more information about licensed insolvency trustees and what they do, read this.
Bankruptcy is governed by the federal Bankruptcy & Insolvency Act, which is designed to allow debtors to be relieved of their debts while treating creditors fairly. However, what you’re allowed to keep when you file for bankruptcy in Manitoba is governed by provincial law. In Manitoba, you may be allowed to keep some of the following:
- Furniture and appliances, but not exceeding $4,500 in value;
- Necessary clothing;
- Food necessary for a period of 6 months;
- One vehicle not exceeding $3,000 in value if used for transportation to employment or for business;
- Tools used for business, but not exceeding $7,500 in value;
- Necessary health aids (ie. eyeglasses, walkers, wheelchairs, etc).
- $2,500 in personal residence equity.
Exemption specifics can vary from one consumer to another and will depend on various situations. As such, it’s important to discuss any specifics about what can be retained with a bankruptcy trustee prior to declaring bankruptcy in Manitoba.
Read this if you’d like to know more about what causes bankruptcy.
At the end of the day, Manitoba bankruptcy prevents any legal action and helps put a stop to creditor and collection agency calls.
Do You Think You Need to File For Bankruptcy?
Filing for bankruptcy is a decision that should not be made in haste. Instead, all other options should be exhausted first before resorting to personal bankruptcy. That said, you should take some time to assess your particular situation to see if bankruptcy is something you should consider.
There are certain tell-tale signs that may point you in the direction of bankruptcy as a means to resolve your debt issues:
- You’ve lost your job and are no longer able to pay your debts
- You’re making debt payments, but it’s too much to handle
- Your debt payments are not making much of a dent in your outstanding balances
- You use credit to pay for everyday necessities because your debt is so high
- Your debt load is causing an undue amount of stress
- You’ve maxed out on your borrowing limit
If any or all of these apply to you, bankruptcy may be an option to consider.
What to Expect When You File For Bankruptcy
To file for personal bankruptcy in Canada, there are certain requirements you must meet:
- Live or do business in Canada over the last year;
- Be insolvent, which means you owe at least $1,000 and are unable to meet your debt payment deadlines.
If you meet these eligibility requirements and have determined that bankruptcy is the right path to take, it’s important to understand the process. If you choose personal bankruptcy in Manitoba, a licensed Bankruptcy Trustee is required for filing.
You’ll need to complete an application form which will be used by the trustee to prepare the documents that will be filed with the Office of the Superintendent of Bankruptcy of Canada (OSB). Your bankruptcy trustee will inform your creditors that you’re filing for personal bankruptcy Manitoba.
Does filing for bankruptcy affect your spouse? Check this out for more information.
Once you’ve filed, you’ll need to meet with the Trustee on a regular basis and submit information regarding all income and expenses. If your income is more than a specified amount, you may be required to pay “surplus income” payments.
If all goes well, you should be discharged from all your debts after 9 to 21 months.
It should be noted that in addition to losing certain possessions, your ability to obtain credit will be impacted by filing for bankruptcy. While you’ll be able to eliminate your debt, it will stay on your credit report for about seven years, which means you likely won’t be able to secure a loan for a while.
Want to know if you’ll lose your RRSPs during a bankruptcy? Find out here.
Whether it’s a car loan, mortgage, or any other type of consumer loan, be prepared to be unable to take out any additional credit until your credit report is cleared.
Recently filed for bankruptcy? Look here to find out how you can rebuild your credit.
Personal bankruptcy in Manitoba is a means for consumers to eliminate mounting debt and get back on track when it comes to their finances. But bankruptcy is not an option that should be chosen lightly.
Taking this path can have certain consequences in terms of credit strength, so it’s important to speak with a financial advisor or bankruptcy trustee first in order to explore other alternatives. If bankruptcy is determined to be the right choice, you’d be well-advised to learn everything you can about the process and how it can affect you and Loans Canada can help.