Canada’s one of the richest provinces is British Columbia. The province’s per capita income is higher than the national average. It is a known statistic that BC residents are paying their debts off way quicker than the rest of the country, probably because of higher average income in the province.
At the late part of 2012, statistics show that Canada’s average consumer debt was rising faster than the average income of consumers. Things, however, got a little much better in 2013 as residents in BC were able to reduce their consumer debt by around $1,500 at the average starting from the last quarter of 2012.
While that is good news, BC homeowners still have the greatest levels of consumer financial obligation in Canada. Many are having trouble managing their consumer debt and are looking for a way to pay off their financial institutions quickly and conserve loan at the very same time.
While there are several methods to do this, including financial obligation settlement, financial obligation combination, credit counselling services and the consumer proposition, some Canadians find that the only way to leave financial obligation is to apply for bankruptcy in BC.
The Basics of a BC Bankruptcy
Bankruptcy in Canada is created to assist people who have no reasonable chance of paying off unsecured debts such as credit cards and installment loans. The Bankruptcy and Insolvency Act of 1985, which is periodically modified and upgraded, governs bankruptcy in British Columbia and the rest of the nation.
According to this law, an individual who owes at least $1,000 to his/her creditors is qualified to apply for personal bankruptcy. BC residents who end up declaring insolvency, nevertheless, usually owe a lot more.
You declare a personal bankruptcy in British Columbia through a certified personal bankruptcy trustee, who administers your personal property through a trust in order to settle financial obligations with lenders. Essentially, the trustee’s job is to make certain that your financial institutions get as much of what you owe them as possible.
This implies that while a bankruptcy eliminates your financial obligations, you will often have to surrender a minimum of some residential or commercial property while doing so. Earnings from the sale of your property are dispersed to your creditors, and sometimes even the property itself is turned over.
Nevertheless, when you declare bankruptcy in BC, there are residential or commercial property exemptions that permit you to keep at least a few of what you owe. The insolvency procedure usually lasts no greater than nine months. If you follow the personal bankruptcy agreement during that period, your trustee will advise a discharge that erases your unsecured financial obligations.
Advantages and disadvantages of the BC Bankruptcy
For many people, personal bankruptcy appears like the ideal service. If there is no other way to leave financial obligations, bankruptcy releases you from your obligations and allows you to start over financially without losing whatever. Personal bankruptcy also allows you to get financial counselling to assist you avoid comparable issues in the future.
Moreover, debt collectors are lawfully required to stop contacting you when you declare bankruptcy.
On the other hand, there are numerous reasons that you should stop briefly before you file for insolvency.
BC locals see their credit suffer for 7 years (and in many cases approximately 14) after a personal bankruptcy is released, making it hard to get new loans and the most cost-effective lease, home mortgage, and interest charges. A personal bankruptcy will likewise force you to surrender a lot of your residential or commercial property. Unless other arrangements are made, you will need to surrender:
- Automobile equity in excess of $5,000.
- House equity in excess of $12,000 in Vancouver and Victoria, and $9,000 elsewhere in British Columbia.
- The value of household items such as furniture minus $4,000.
- Equity in tools of your trade worth over $10,000.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.