When filing for bankruptcy in New Brunswick, the Enforcement of Money Judgments Act (EMJA) protects specific assets from seizure. Under Section 85 of this Act, furniture, a work vehicle, and tools of your trade are fully exempt to the extent that they are necessary to meet the reasonable needs of you and your dependants, rather than being subject to rigid, fixed dollar limits.
Understanding Asset Protection in New Brunswick
Facing overwhelming debt is incredibly stressful, but the Canadian insolvency system is built on the principle of rehabilitation, not punishment. When you file for bankruptcy in New Brunswick, your Licensed Insolvency Trustee (LIT) does not simply take the keys to your home and empty your house. Specific provincial laws protect the basic necessities of life.
In New Brunswick, these rules are laid out in the Enforcement of Money Judgments Act (EMJA). 📖 Instead of enforcing rigid, fixed monetary caps, this legislation protects your essential assets based on a flexible assessment of your household’s actual needs. The goal is to ensure you can continue to feed your family, travel to your job, and earn a living while your debts-like credit cards, payday loans, and tax arrears to the CRA-are legally discharged.
It is critical to distinguish between exempt assets and secured debts. If you have a car loan or a mortgage, filing for bankruptcy does not wipe out that specific debt if you want to keep the asset. You must continue making your secured loan payments, and the bankruptcy exemptions only apply to the equity you have built up in the property.
Step-by-Step Process in New Brunswick
Step 1: Finding a Local Licensed Insolvency Trustee
To begin, you must contact a federally regulated LIT. Whether you reside in Moncton, Fredericton, or Saint John, trustees offer a free initial consultation. They will review your financial situation and explain exactly how the Enforcement of Money Judgments Act (EMJA) applies to your specific car, furniture, and retirement accounts.
Step 2: Calculating Your Equity
Your trustee will help you evaluate your assets based on provincial rules. 📊 Under Section 85 of the EMJA, household furniture is exempt from seizure to the extent necessary to meet the reasonable needs of you and your dependants. This flexible standard means almost everyone gets to keep their beds, couches, and essential appliances. Food and fuel for a three-month period, as well as all personal clothing, are also fully protected.
Step 3: Addressing Vehicles and Tools
Transportation and work equipment are heavily scrutinized. Instead of applying fixed dollar thresholds, New Brunswick exempts one motor vehicle and any tools of your trade to the extent that they are necessary to meet the reasonable needs of you and your dependants (such as travelling to work or earning a living). Specific protections also exist for farm animals and seeds.
Step 4: Managing Non-Exempt Assets
If you have assets that exceed these limits, or assets that are not exempt at all (like a second vehicle, an ATV, or a cottage), you have options. 💰 Your trustee will typically allow you to “buy back” the equity over the course of your bankruptcy, or you can opt for a Consumer Proposal to keep all your assets safely.
How Much Does it Cost in New Brunswick?
The cost of going bankrupt in New Brunswick depends directly on your income level and the assets you wish to keep. You should anticipate these general costs:
- Base Contribution Fees: A standard first-time bankruptcy with low income requires a payment of about $200 CAD per month for 9 months.
- Surplus Income: If your net earnings exceed the federal limits set by the government, you must pay 50% of every dollar over that limit into your bankruptcy estate.
- Equity Buy-Outs: If you own non-exempt property or assets that exceed what is deemed necessary for your reasonable needs, you can choose to buy back the realizable equity from the trustee to avoid losing the asset.
| Asset Category | Exemption Limit (New Brunswick) | Key Requirement |
|---|---|---|
| Motor Vehicle | Fully Exempt (No fixed limit) | To the extent necessary for reasonable needs of the debtor and dependants |
| Household Furniture | Fully Exempt (No fixed limit) | To the extent necessary for reasonable needs |
| Tools of Trade | Fully Exempt (No fixed limit) | Necessary to meet reasonable professional needs |
| Food and Fuel | 3 Months’ Supply | No specific dollar maximum |
How Long Does the Process Take?
In New Brunswick, most first-time bankruptcies are completed very quickly. If you do not have surplus income and fulfill your duties (like attending two financial counselling sessions), you will receive an automatic discharge in 9 months. If you have surplus income, the term is extended to 21 months.
Frequently Asked Questions (FAQ)
Is my principal residence protected in New Brunswick?
No. New Brunswick does not have an exemption for home equity in a bankruptcy. If you own a home with significant equity, the trustee will likely need to realize that equity, making a Consumer Proposal a much safer alternative.
Are my RRSPs completely safe?
Mostly. Under federal law, Registered Retirement Savings Plans are exempt from seizure. However, any contributions you made to the RRSP in the 12 months prior to filing for bankruptcy will be seized for your creditors.
Can I keep my dog or cat?
Yes. In New Brunswick, the Enforcement of Money Judgments Act (EMJA) explicitly lists household pets as exempt property, meaning your trustee will never seize a family pet.
What happens to my tax refund?
When you file for bankruptcy, you lose any tax refunds for the year you filed, as well as any prior years you have not yet received. The CRA will send these funds directly to your trustee.
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