Nova Scotia Bankruptcy FAQs:NS Bankruptcy FAQs.

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Nova Scotia Bankruptcy FAQs: NS Bankruptcy FAQs.

FAQs

FAQs about NS Bankruptcy and NS Consumer Proposals.

How do I know if I am in financial trouble?

Is bankruptcy my only option?

How do I file personal bankruptcy?

What About my Student Loans?

Will my spouse be affected?

How much does it cost to declare bankruptcy?

If I go bankrupt, will I lose everything?

Will my creditors stop harassing me?

What happens if someone co-signed a loan for me?

What happens to my wages during a bankruptcy?

Will I still owe income taxes after I declare bankruptcy?

What debts are erased in a bankruptcy?

How long will I be in bankruptcy?

Who will find out that I have declared bankruptcy?

What happens during the bankruptcy?

Can a bankruptcy help alleviate the terrible stress I am under?

What if I have the cash flow to make a proposal?

Will I end up with a better credit rating if I use a credit counsellor?

Will I ever get credit again?

How do I prepare for my initial consultation with the Trustee?


How do I know if I am in financial trouble?

questionsThere are certain “warning signs” that may indicate you are in financial trouble, such as:

• Receiving frequent calls or letters from creditors or collection agencies;

• Having no savings;

• Spending all your money before payday;

• Stalling one creditor to pay another;

• Buying things impulsively;

• Using your credit cards or other loans to pay for everyday expenses;

• Failing to budget or make a financial plan;

• Having your consolidation loan applications rejected;

• Having trouble making the minimum payments on your credit cards;

• Not knowing what your real monthly expenses are.


Is bankruptcy my only option?

OptionsIf you are in financial trouble, you may believe that bankruptcy is your only option. In many cases there are options other than bankruptcy, including:

• Proposals;

• Credit counselling;

• Third party settlements with creditors;

• and refinancing.


How do I file personal bankruptcy?

PowerPoint Presentation: The steps in filing a personal bankruptcy.

In Canada you can only file bankruptcy through a trustee in bankruptcy. Trustees are regulated by the Superintendent of Bankruptcy and are highly trained professionals with stringent codes of ethics.


What About my Student Loans?

You can discharge your student loan debts in bankruptcy if you have been out of school (as a full or part time student) for 7 years from the date of bankruptcy filing.


How much does it cost to declare bankruptcy?

In a bankruptcy, the costs are set by the government. In most cases the cost will be less than $200 a month for each of nine months. Payment terms can be arranged.


If I go bankrupt, will I lose everything?

ExemptionsNo, you will not lose everything. The Nova Scotia government has bankruptcy and proposal exemption laws which allow you to keep equity in certain assets.

Equity is the excess that the value of an asset has over any charges or encumbrances against that asset.

For example, if you have household goods worth $10,000 and there is a $6,000 secured debt against them then the equity in the household goods is $4,000. In Nova Scotia the exemption for household goods is $5,000 so in this example you are entitled to the equity of $4,000 and the unsecured creditors cannot take this.


Will my creditors stop harassing me?

Yes, they will! By law, all actions against a bankrupt must cease once the documents are filed. That means most lawsuits and wage garnishments against you will stop. This does not apply to secured creditors such as banks holding, for example, a lien on a car.


Will my spouse be affected?

Your spouse, whether common law or married will not be affected by your bankruptcy if he or she is not responsible for any of your debt (did not sign an agreement or contract for any of your debt). If they have a supplemental credit card they are probably responsible for that debt. Your spouse's credit rating will not be affected by your bankruptcy and any assets in the spouse's name will not be part of the bankruptcy.

If your spouse is responsible for any of your debt or has his own debt then the spouse may have to file bankruptcy too.


What happens if someone co-signed a loan for me?

cosignerAnyone who has co-signed a loan for you will still be responsible to make loan payments after you go bankrupt.


What happens to my wages during a bankruptcy?

You will still continue to receive your wages.


Will I still owe income taxes after I declare bankruptcy?

Tax arrears and most debt is erased in a bankruptcy.


What debts are erased in a bankruptcy?

All debt is erased, upon the debtor being discharged from bankruptcy, except for the following:

• Fines imposed by a Court;

• Money owing for things stolen;

• Things obtained by misrepresentation;

• Alimony or maintenance payments;

• Award of damages by a court for intentionally inflicting bodily harm or sexual assault;

• Student loans if bankruptcy is filed prior to or within seven years after the finish of studies.


How long will I be in bankruptcy?

In most cases a bankrupt will be discharged from bankruptcy in 9 months; in rare cases a bankruptcy will last for 36 months (for 2nd time bankruptcy with excess income.)

A first time debtor without additional income (monthly payments of under $100) will receive their automatic discharge within 9 months, or 21 months for those debtors with additional income; however the court may deem the debtor should be bankrupt for longer than 21 months.

Second time debtors who do not have additional income will receive their automatic discharge within 24 months or 36 months if they have additional income.

In some rare cases, some debtors may not be eligible for an automatic discharge. Information on how the calculations are made is at this link.


Who will find out that I have declared bankruptcy?

Unless you are a prominent person, in most cases only your creditors will know you have filed for bankruptcy. Most bankruptcies are not published in the newspapers. Newspaper announcements are reserved for corporate and very large personal bankruptcies. Once you declare bankruptcy, the Trustee will notify all your creditors of your bankruptcy. The Superintendent of Bankruptcy will notify the credit bureaus. The credit bureaus will keep a record of your bankruptcy until 6 years after your discharge.


What happens during the bankruptcy?

The bankrupt must keep the trustee informed as to where the bankrupt is living and also must respond to the trustee's requests and assist him as required and provide whatever information is requested. The bankrupt must also provide the trustee with reports as to earnings and living expenses and any change in the bankrupt's family situation. The trustee will provide the bankrupt with appropriate forms to be filled in that will provide the trustee with the necessary information.  A meeting of creditors is not required unless requested by the Superintendent of Bankruptcy or creditors with an aggregate of at least 25% of the proven claims.  These meetings are usually held at the office of the trustee.


What if I have the cash flow to make a proposal?

PowerPoint Presentation: Steps in a Consumer Proposal.

If a person has the ability to make a proposal (i.e. his or her income exceeds living expenses), then he or she should consider making a proposal.

If any person files for bankruptcy when he or she has the ability to make a proposal, it is the Trustee's duty to oppose the bankrupt's discharge.  In this case, the bankrupt may be in bankruptcy up to an additional 12 months beyond the usual 9 months.  The bankrupt will be required to make payments in each of these months.


Will I end up with a better credit rating if I use a credit counsellor?

Credit Counselling

No! So long as you're on any kind of payment plan the credit bureau will record that fact. Using credit counsellors will not give you a better credit rating faster. In fact, you will likely take longer to re-establish a good rating and pay much more if you use a credit counsellor rather than a trustee.

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