Filing Bankruptcy Nova Scotia 101: A Complete Guide
If you’re facing overwhelming debt and have exhausted other solutions, bankruptcy in Nova Scotia can offer you a fresh financial start. Filing for bankruptcy immediately stops creditor actions — such as wage garnishments, lawsuits, and collection calls — while allowing you to revamp your financial situation. While it negatively impacts your credit score, bankruptcy can eliminate most unsecured debts and help you begin rebuilding your financial future.
Understanding Bankruptcy In Nova Scotia
Bankruptcy is a federally regulated legal process designed to help individuals manage unmanageable consumer debt. In Nova Scotia, once you file for bankruptcy, you’re protected against aggressive collection efforts and legal claims, giving you time to reset your financial life.
Most unsecured debts, like credit card balances and payday loans, can be discharged through bankruptcy. However, certain debts are not typically covered.
Learn more: Bankruptcy
What Debts Are Not Discharged In Bankruptcy?
Bankruptcy does not cover the following types of debt:
- Mortgages
- Home equity loans
- Secured personal loans and lines of credit
- Car loans
- Federal student loans (if less than 7 years since leaving school)
- Legal fines and penalties
Essentially, most secured debts are not covered under bankruptcy in Nova Scotia.
| Warning: Before filing, it’s essential to understand the full scope of bankruptcy and decide whether it’s right for you. As mentioned, while bankruptcy can help you alleviate your overwhelming debt, it can also mean a significant hit to your credit and the loss of valuable assets. Be sure to speak with a Licensed Insolvency Trustee (LIT) for personalized guidance before proceeding. |
Who Is Eligible To File For Bankruptcy In Nova Scotia?
Bankruptcy isn’t available to everyone, as there are specific eligibility requirements to meet. To qualify in Nova Scotia, you must:
- Be a Canadian resident
- Owe at least $1,000 in unsecured debt
- Have outstanding debts that exceed the value of your assets
- Be unable to meet your debt obligations when they’re due
If you meet these criteria, bankruptcy may be a viable option to reset your finances and protect yourself from creditor actions.
How Does The Bankruptcy Process In Nova Scotia Work?
If you’re considering bankruptcy in Nova Scotia, here’s what you can expect throughout the process:
1. Consult A Licensed Insolvency Trustee
The process begins with a Licensed Insolvency Trustee, who will guide you through the legal process and ensure everything is handled properly for both you and your creditors.
2. Financial Evaluation
Your trustee will review your financial situation — including your income, debts, and assets — to determine if bankruptcy is the most appropriate solution for you. You must show that your debts exceed your assets and that you’re unable to keep up with payments.
3. Filing The Paperwork
If bankruptcy is recommended, your trustee will help you complete and file the necessary documents, which include the following:
- Assignment Of Assets: Authorizes the trustee to sell certain assets to repay creditors.
- Statement Of Affairs: A detailed summary of your financial situation.
Once filed, your bankruptcy is registered with the Office of the Superintendent of Bankruptcy (OSB), and your creditors are formally notified.
4. Legal Protection Begins (Stay Of Proceedings)
Immediately after filing for bankruptcy, a legal stay of proceedings takes effect. This stops all collection efforts immediately, including phone calls, lawsuits, and wage garnishments.
5. Fulfill Bankruptcy Obligations
To be discharged from bankruptcy, you’ll need to do the following:
- Surrender non-exempt assets
- Attend two financial counselling sessions
- Submit income and expense reports
- Make required payments
6. Discharge
If this is your first bankruptcy and you meet all requirements, you may be discharged after 9 months. If surplus income applies, discharge may take up to 21 months. Once discharged, your eligible debts are erased, giving you a clean slate to start rebuilding your financial future.
Where To File For Bankruptcy In Nova Scotia
Bankruptcy in Nova Scotia must be filed through a Licensed Insolvency Trustee, which is a federally regulated professional authorized to manage the process. If you’re considering bankruptcy, here are a few LITs available in Nova Scotia to help:
| Allan Marshall Associates Inc. | – Lacewood Square Center, 362 Lacewood Drive, Unit 207, Halifax, NS B3S 1M7 – 530 Portland St, Evergreen Place, Ste. 208, Dartmouth, NS B2Y 4V6 | Learn More |
| Golding & Associates | – 168 Hobsons Lake Drive, Ste 301, Halifax, NS B3S 0G4 – 2 Ralston Avenue, Suite 100, Dartmouth NS B3B 1H7 | Learn More |
| Harris & Partners | – 805-202 Brownlow Avenue, Dartmouth, NS B3B 1T5 | Learn More |
Is Filing For Bankruptcy Online In Nova Scotia Possible?
While you can’t file for bankruptcy entirely on your own online, you can work remotely with an LIT to complete the process. Most trustees allow digital submission of documents, and electronic signatures are often accepted, which can make the experience convenient and accessible.
Why You Should Work With A Professional
Bankruptcy is a legal process with strict requirements, so it’s highly recommended to consult a trustee or lawyer. They’ll guide you through your options, ensure all paperwork is properly filed, and help protect your rights.
| Pro Tip: If cost is a concern, some legal firms offer pro bono services, providing free legal advice to eligible individuals facing financial hardship. |
How Much Does It Cost To File For Bankruptcy In Nova Scotia?
The cost of bankruptcy can vary based on several factors, like your income, household size, and the value of your assets. In Nova Scotia, the minimum cost to file is typically around $1,800, which can be paid upfront or in monthly installments over 9 months. This amount covers administrative fees, government charges, and your trustee’s services.
To understand your exact costs, it’s best to speak directly with a trustee who can assess your financial situation.
Learn more: How Much Does It Cost To File For Bankruptcy In Canada?
How Does Surplus Income Affect Bankruptcy Costs?
If your monthly income exceeds a specific government-set threshold, you may be required to make surplus income payments. These additional payments increase the overall cost of bankruptcy and can also extend the duration of the process.
The more your income surpasses the limit, the higher your monthly payments will be.
What Are The Bankruptcy Laws In Nova Scotia?
While the main bankruptcy and insolvency law is federal under the Bankruptcy and Insolvency Act (BIA), a handful of provincial statutes in Nova Scotia affect how bankruptcy processes operate in the province:
- Nova Scotia Limitation Of Actions Act: This law imposes a time limit of two years during which a collection agency is legally allowed to pursue repayment. After that period expires, debt collectors may no longer take legal action to collect the debt.
- Nova Scotia Personal Property Security Act: This law requires creditors to register any claims they have on personal property used as collateral, like vehicles or equipment. During bankruptcy, the LIT checks this registry to confirm whether any assets are tied to secured debts before selling them to repay creditors.
- Nova Scotia Judicature Act: This act sets out various rules regarding how a debtor’s property is handled in bankruptcy, including what personal property may be exempt from seizure by creditors.
Bankruptcy Exemptions In Nova Scotia: What You Can Keep
When filing for bankruptcy in Nova Scotia, you won’t necessarily lose everything. The province provides a list of exempt assets that cannot be seized to repay creditors.
Here’s what you’re allowed to keep:
- Clothing for you and your family
- Food
- Up to $5,000 in household furniture and appliances
- One motor vehicle up to $6,500 in value
- Medical and health aids
- Up to $7,500 in tools of the trade
- Grain, seeds, and livestock
Learn more: What Will Happen To My Leased Car If I File For Bankruptcy?
| How Does Equity Work In Bankruptcy? Exemptions apply to the equity in an asset, and not its full value. For example, if your car is worth $7,000 and you owe $5,000 on it, your equity is $2,000. That means it falls within the exemption limit and won’t be seized. |
How Bankruptcy Affects Your Credit In Nova Scotia
Filing for bankruptcy in Nova Scotia has a significant impact on your credit. Once the process begins, credit bureaus are notified, and a bankruptcy is noted on your credit report.
- For a first-time bankruptcy, this record typically stays on your report for 6 or 7 years in Nova Scotia.
- If you file for bankruptcy a second time, it can remain for up to 14 years.
During this period, accessing new credit can be challenging. Even if you’re approved, lenders may offer higher interest rates and lower credit limits due to the increased financial risk.
Bottom Line
If you’re overwhelmed by debt and struggling to keep up with payments, filing for bankruptcy in Nova Scotia may offer a fresh financial start. It can eliminate most unsecured debts and stop creditor actions, but it will affect your credit for years and may involve surrendering certain assets. That’s why it’s essential to speak with an LIT who will walk you through your options, explain the process, and help you decide whether bankruptcy is the right path for your situation.
