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Debt basics and bankruptcy in Nova Scotia

Is there anything I can do to avoid debt?

Budget planning is the most effective way to prevent debt. Making a budget will help you control your spending and meet your goals.

You should put money aside each month for fixed expenses that are due over the course of the year. That way you will have the funds available when you receive a bill that must be paid in short order (e.g., car registration and repairs, clothing, insurance, etc.).

How can I determine how much debt I have?

The easiest way is to make an expense budget. There are on-line tools available that will allow you to see if you can pay your everyday expenses and debts without using a credit card.

What are the warning signs of a debt problem?

There are many warning signs:

  • A financial institution refusing to honour cheques you have written. In this case, you can make an agreement with your creditors and ask that they delay cashing your cheques

  • Trouble paying for everyday expenses such as electricity, phone, cable, rent, etc.

  • Having to use a credit card to pay for necessities

  • Paying only the minimum balance on credit cards or using one credit card to pay the balance on another

These warning signs often lead to marital discord. If any of these warning signs describe you — take strategic action now. Our trained professionals will help you make the right choices for your situation.

What is bankruptcy?

Bankruptcy is a legal process regulated the Bankruptcy and Insolvency Act which allows an honest debtor to be relieved of most debts and given an opportunity for a new start. It also ensures that creditors are treated fairly and equally in the process. You must consult a Licensed Insolvency Trustee to administer the process.
More about bankruptcy ...

Is there a typical profile of people who declare bankruptcy?

There is no typical profile that applies to all bankruptees. People of any age or social status may face bankruptcy as a result of difficult personal situations such as illness, job loss, or marital problems.

When can I file for bankruptcy?

Basically, you must owe $1,000, be unable to pay your debts as they become due, or have insufficient assets which could be sold to pay off your creditors.

Will I lose everything if I go bankrupt?

Provincial law protects certain assets from seizure by a Trustee. In Nova Scotia that includes household furnishings, a vehicle and tools of your trade. (Value limits will be explained). However, you must be prepared to surrender your non-exempt assets for the benefit of your creditors.
More about the assets you can keep in bankruptcy ...

What about my house?

If you have pledged an asset to a creditor under a security agreement, such as a mortgage, that creditor will retain the right to expect payment or the asset will be repossessed. If there is equity in the home, the unsecured creditors are entitled to receive it and the property may have to be sold. However, if there is no equity, you may make arrangements with the mortgage holder to continue your payments.
More about your house and mortgage ...

Will my job be affected?

An employer cannot fire you simply because you have filed for bankruptcy. In most cases the employer will not be aware of your actions. However, if there is a wage garnishee in place, your employer will be notified to cease deductions immediately.

How long does the bankruptcy process take?

As soon as the initial documents are filed with the government office, you are "in bankruptcy" and must abide by the duties that will be explained to you. Most first time bankrupts qualify to be automatically discharged in nine months. No court appearance would be necessary and you will receive a certificate confirming your release from your former obligations to your unsecured creditors.

Does is cost anything to go bankrupt?

There are fees that must be recovered and these will be explained in detail at your first meeting. Generally speaking, the monthly fee payment will be less than you are currently obligated to pay to your creditors.

What if I have a student loan?

Any student filing for bankruptcy within seven years of ceasing to be a full or part-time student will not have their debt released by their discharge from bankruptcy. An option is open to make an application to the Court after the expiration of the seven-year period to have the debt discharged.
More about bankruptcy and student loans ...

Will I still have to file an income tax return?

The Trustee is required to file an income tax return for the pre-bankruptcy period of time (January 1 to the date of the bankruptcy), as well as for the preceding year if the return has not been filed by the bankrupt. The Trustee also files a return for the post-bankruptcy period (date of the bankruptcy to December 31) if there is a benefit to the creditors. Such refunds are an asset of the bankruptcy estate.
More about income tax and bankruptcy ...

How long does it take to become debt-free?

Bankruptcy is usually a nine month process during which time the debtor must perform duties as required by the Act, such as keeping the appointed Trustee advised of their financial situation and place of residence. Where an individual is a first time bankrupt, all duties have been performed, and no opposition has been filed, they are deemed to be automatically discharged upon the expiration of nine months and a Certificate is issued by the Trustee.

However, where the bankrupt has "surplus income" as determined by the "Standards" issued by the Office of the Superintendent of Bankruptcy, the bankrupt will be required to pay a specified amount over an additional 12 months for the benefit of the creditors before receiving a discharge.

In the case of a second bankruptcy, if all duties have been performed and no opposition has been filed, the discharge will be deemed automatic upon the expiration of 24 months. If there is surplus income the bankrupt will be required to pay a specified amount over an additional 12 months before receiving a discharge.

If duties are not performed or an opposition has been filed, there must be an application to Court for a discharge hearing.

Types of discharge orders which may be issued by the Court include:


ABSOLUTE- discharge becomes effective immediately.


CONDITIONAL - discharge becomes effective when terms are complied with (such as payment of a sum to the estate or the performance of an act).


SUSPENDED - discharge is postponed for a specified time period.


REFUSAL - discharge is refused where the conduct of the debtor is particularly reprehensible or the debtor is incapable of rehabilitation.

A Certificate or Order of Discharge releases the bankrupt of most debts. However, some debts are not released, such as an award for damages in respect of an assault, alimony, spousal or child support, debt arising out of fraud, any court fine, debts or obligations for student loans when the bankruptcy occurs within seven years after the bankrupt has ceased to be a student.

How can I improve my credit score quickly?

Hold a steady job, make a budget and stick to it, pay in cash as soon as possible, and save money to build up your assets. This will help improve your credit score. Taking out new loans from your financial institution and making your payments consistently will also show that you have recovered from your financial troubles. Learn more about credit.

debt help and bankruptcyThese answers to frequently asked questions are provided as general information only. Each individual's situation is unique. Call us at 902-310-6060 for a free, no obligation, confidential consultation.

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© 2017 Grant Thornton Limited, Licensed Insolvency Trustees. All rights reserved.

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