Bankruptcy New Brunswick

If you are struggling with overwhelming debt and are considering a fresh financial start, bankruptcy in New Brunswick could be a viable solution. The process can help you eliminate most types of unsecured debt, including credit cards and personal loans, offering relief and helping you move toward a brighter financial future.

In this article, we’ll explore what bankruptcy is, how it works in New Brunswick, and how it could help you regain control of your finances and work towards a debt-free life.

What is bankruptcy?

Bankruptcy is a legal process designed to help people who are overwhelmed by debt and unable to repay their creditors. It provides a structured path to eliminate most unsecured debts and can offer a financial fresh start. 

Declaring bankruptcy doesn’t mean you’ve failed—it simply means you’re choosing to take control of your financial situation through a legal and regulated process. The bankruptcy process is overseen by the Office of the Superintendent of Bankruptcy (OSB), which ensures that all parties follow the rules and that you are treated fairly.

When you file for bankruptcy, you will work with an OSB-appointed Licensed Insolvency Trustee (LIT), who administers your case and deals with your creditors on your behalf.

While bankruptcy may not be the right solution for everyone, it can provide immediate relief from creditor calls, wage garnishments, and mounting interest. It’s one of several debt relief options available to people looking for a way out of unmanageable debt.

How do you declare bankruptcy in New Brunswick?

If you owe money you can’t afford to repay, declaring bankruptcy in New Brunswick might be the best way to find lasting relief. The process is structured, regulated, and designed to help you reset your financial life when you can’t afford to manage your debts on your own.

Get free debt advice

Before anything else, it’s important to seek free debt advice from a qualified professional. A Licensed Insolvency Trustee (LIT) can assess your financial situation to determine whether bankruptcy is the best solution or if another option would be more suitable.

You can connect with New Brunswick insolvency trustees by booking a free initial consultation. They’ll explain your rights, responsibilities, and alternatives to bankruptcy, and will ultimately advise you on whether it’s the best choice for your situation.

OSB will appoint a bankruptcy trustee

Only a licensed bankruptcy trustee – another term for a Licensed Insolvency Trustee – can administer a bankruptcy in Canada. If you decide to proceed with bankruptcy, the OSB will appoint a trustee to your case. 

Trustees are insolvency professionals. They will guide you through the process and take care of all duties related to your bankruptcy proceedings. 

Filing for bankruptcy

Your trustee will help you complete the necessary paperwork and submit your bankruptcy filing. You’ll also need to provide financial records related to your income, expenses, assets, and debts.

Complying with bankruptcy terms

Once filed, you must fulfill certain duties—such as attending credit counselling sessions, reporting income, and disclosing any changes in your financial or business status. The trustee will also review transactions from the year prior to ensure there are no irregularities.

Discharge from bankruptcy

Your discharge from bankruptcy—typically 9 months from the date of filing for a first-time bankruptcy—marks the official elimination of most debts and completion of the process.

Working towards a debt-free life

After discharge, you’re no longer legally required to repay most unsecured debts. You can finally stop worrying about debt collectors and start building a debt-free future, hopefully with improved financial habits and a fresh outlook.

Which debts can be included in bankruptcy?

Filing for bankruptcy in New Brunswick allows you to eliminate many types of unsecured debts, giving you a path to financial recovery when other alternatives aren’t suitable. 

Most unsecured debts can be included in a bankruptcy filing. Below are some common examples:

• Credit card debt
  
• Payday loans
  
• Personal loans
  
• Lines of credit
  
• Medical bills
  
• Utility arrears
  
• Income tax debt
  
• Student loans (in some instances)
  

However, not all debts are dischargeable via bankruptcy. You’ll still be responsible for:

• Secured debts like mortgages and car loans, unless you are asked to surrender the asset
  
• Court-ordered fines and penalties
  
• Child support and alimony
  
• Student loans (in some instances)
  

If you’re unsure whether your specific loan or obligation qualifies, a Licensed Insolvency Trustee can explain your options and help you explore other alternatives if bankruptcy isn’t the right fit.

How does bankruptcy impact my credit?

Filing for bankruptcy in New Brunswick will significantly affect your credit report and is considered one of the most serious credit events. Once you declare bankruptcy, a note will be added to your credit file, which can lower your credit score and remain visible for several years. 

For a first bankruptcy, this typically stays on your report for six years after discharge; if it’s your second time, it may remain for up to 14 years.

During this period, you may find it difficult to qualify for credit products such as credit cards, loans, or even rental agreements without a cosigner or additional security. 

It’s important to remember that the impact is temporary and that you can begin rebuilding your credit soon after discharge by using secured credit options and practicing good money management.

While it will affect your current financial situation, bankruptcy can be the first step toward a fresh start. It relieves overwhelming debt and gives you a chance to reset your finances with a clean slate.

Which assets will be affected if I file for bankruptcy?

When you file for bankruptcy in New Brunswick, certain assets may be affected depending on their value and your personal circumstances. However, bankruptcy laws allow you to keep some essential items through exemptions set by provincial legislation.

Home equity

If you own a home and have built up equity in the property, that value may be considered a non-exempt asset. Depending on how much equity you have, you may need to pay that amount into your bankruptcy. In some cases, selling the home may be required unless you can make arrangements to retain it.

Vehicle

You’re typically allowed to keep one motor vehicle up to a certain value under New Brunswick exemption rules. If your car’s value exceeds the allowable amount, the trustee may require you to pay the difference or sell the vehicle. However, if you need the vehicle for work or medical reasons, there may be some flexibility.

Valuable goods

Luxury or expensive appliances, high-end electronics, collectibles, or recreational equipment could be considered non-essential assets. If they exceed provincial exemption limits, they may need to be surrendered to help repay creditors. However, essential household goods, clothing, and tools of the trade are usually protected.

New Brunswick bankruptcy exemptions

When filing for bankruptcy in New Brunswick, certain assets are considered exempt, meaning you can retain them to support a basic standard of living during and after the bankruptcy process. 

Primary residence: Equity in your home may be exempt up to a certain limit, allowing you to keep your home if the equity does not exceed the prescribed threshold.

Primary vehicle: If you own a motor vehicle needed for work or essential transportation, you may be allowed to keep it, provided its value falls within the exemption limit.

Household goods: Essential items such as furniture, appliances, and clothing are typically exempt up to a specified value, ensuring you can maintain a basic standard of living.

Tools of the trade: If you use specific tools or equipment for your profession, these may be exempt up to a certain value, allowing you to continue working and earning income.

Medical and health aids: Necessary medical or health aids for you and your family are fully exempt, ensuring access to essential healthcare needs.​

Registered retirement savings plans (RRSPs): RRSPs are generally exempt, except for contributions made in the 12 months prior to filing for bankruptcy.

It’s important to consult with a Licensed Insolvency Trustee to understand how these exemptions apply to your specific situation and to ensure you retain all eligible exempt assets during the bankruptcy process.​

Are there other ways to deal with my debt problems?

If you’re struggling with overwhelming debt, bankruptcy isn’t your only option. There are several other debt relief solutions that may better suit your needs, depending on your financial situation, goals, and ability to make payments.

Consumer proposal

A consumer proposal is a formal, legally binding agreement made with the help of a Licensed Insolvency Trustee. It allows you to settle your unsecured debts by making payments based on your unique situation, often over a period of up to five years. 

This option lets you avoid bankruptcy while reducing the total amount you owe and protecting your assets from creditors.

Credit counselling

With credit counselling, you’ll work with a certified credit counsellor to review your finances, create a monthly budget, and potentially set up a debt management plan. 

These plans allow you to combine your unsecured debts into one monthly payment with reduced or frozen interest rates. This can make it easier to stay on track and get out of debt faster.

Debt consolidation

Debt consolidation involves combining multiple unsecured debts into a single loan or credit product with a lower interest rate. This can simplify your repayment process and reduce the total interest you’ll pay over time. 

Qualifying often depends on your credit score and income stability, and not all debts are eligible.

Where can I get advice on dealing with my debts?

If you’re facing financial problems and feeling overwhelmed by what you owe, you’re not alone. Many Canadians struggle with debt at some point in their lives—but help is available. The best first step is speaking with your local Licensed Insolvency Trustee, the only professionals federally regulated to provide debt relief options like bankruptcy or consumer proposals.

Whether you live in Nova Scotia, New Brunswick, or elsewhere in the country, a Farber trustee can review your situation and help you understand all your options. During your free consultation, they’ll explain solutions tailored to your needs and guide you through each step toward financial recovery.

Getting expert help early can prevent your debt from growing and give you peace of mind. If you’re struggling with debt in New Brunswick, contact Farber today and take the first step toward a fresh start.