The average Canadian household debt is not much less than the average household debt held by Americans. Since household debt includes secured debts, the increase in itself is not necessarily a cause for concern. After all, financial planners agree that a secured debt such as a mortgage is considered good debt as long as you can afford the mortgage payment each month.
However, household debt figures also include high-interest unsecured debts such as credit cards and installment loans. Growth in this debt can be troublesome because it often indicates that households are finding it difficult to pay for necessities with their income. Although New Brunswick residents continue to carry a lower average consumer debt than the country as a whole, the average increases every year.
Such a large increase has put many residents in a position where they are having difficulty making payments on their debt. For example, according to the Office of the Superintendent of Bankruptcy, the average debt load of those New Brunswickers that opted to do a consumer proposal in 2021 was over $93,000. If you find yourself in this situation, there are solutions to help you improve your financial outlook and reduce your debt. One of these solutions is the consumer proposal.
The New Brunswick Consumer Proposal
The consumer proposal was introduced in Canada as a last-ditch effort to settle with one’s creditors before bankruptcy. A consumer proposal is a binding legal agreement that a debtor makes with his or her creditors to pay off debt. Debtors work with a bankruptcy trustee to get creditors to consider debts paid in full for less than what is actually owed. The creditor then pays the bankruptcy trustee in installments or one lump sum payment to meet his or her end of the consumer proposal. New Brunswick bankruptcy trustees then forward the funds to the creditors.
Should I Pursue a Consumer Proposal in New Brunswick?
Understanding whether you should pursue a New Brunswick consumer proposal can be difficult, and knowing the advantages and disadvantages of this debt repayment option can help you make your decision.
First, a consumer proposal makes paying off your debt more convenient. The proposal effectively consolidates your debt so that you are only making one payment to all of your creditors. On the other hand, a good debt settlement plan offers the same convenience without harming your credit as badly. A consumer proposal stays on your credit report for seven years, and it is as harmful (or almost as harmful) to your future credit prospects as claiming bankruptcy.
Second, a consumer proposal can be a good choice for you if you have a large amount of debt. In general, other debt solutions will be better for you if you owe less than $10,000. You should also know that if you owe more than $250,000 ($500,000 for married couples), you will not qualify for a consumer proposal. New Brunswick residents should know that even if they qualify, a debt settlement plan can often get the same or better interest rate and principal reductions.
Finally, a consumer proposal will secure your assets and keep the bill collectors away. Debt settlements generally achieve the same goals, however, as long as you stick to the settlement plan.
Insolvency & Consumer Proposal Statistics in New Brunswick
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Annual Consumer Insolvency Rates in New Brunswick
(Per 1,000 Population Aged 18 Years and Older)
| New Brunswick | ||||||||
|---|---|---|---|---|---|---|---|---|
| ’15 | ’16 | ’17 | ’18 | ’19 | ’20 | ’21 | ’22 | |
| Insolvency | 7.2 | 7.4 | 7.2 | 7.4 | 8.0 | 5.5. | 4.6 | 4.9 |
| Bankruptcy | 4.7 | 4.8 | 4.1 | 3.7 | 3.9 | 2.4 | 1.9 | 1.6 |
| Proposal | 2.5 | 2.6 | 3.2 | 3.7 | 4.1 | 3.1 | 2.7 | 3.3 |
| Campbellton – Miramichi | ||||||||
| Insolvency | 7.0 | 7.3 | 6.7 | 7.6 | 8.4 | 6.0 | 5.2 | 5.3 |
| Bankruptcy | 4.8 | 4.9 | 3.8 | 4.0 | 4.2 | 2.5 | 2.2 | 1.9 |
| Proposal | 2.2 | 2.3 | 2.9 | 3.6 | 4.2 | 3.5 | 3.0 | 3.5 |
| Moncton – Richibucto | ||||||||
| Insolvency | 7.6 | 8.2 | 7.6 | 7.1 | 8.3 | 5.4 | 4.3 | 4.6 |
| Bankruptcy | 4.9 | 5.2 | 4.2 | 3.5 | 3.8 | 2.4 | 1.7 | 1.4 |
| Proposal | 2.6 | 3.0 | 3.4 | 3.6 | 4.6 | 3.0 | 2.6 | 3.2 |
| Saint John – St. Stephen | ||||||||
| Insolvency | 7.6 | 7.7 | 7.7 | 7.4 | 7.2 | 5.8 | 4.7 | 4.8 |
| Bankruptcy | 4.7 | 4.8 | 4.1 | 3.5 | 3.7 | 2.6 | 1.9 | 1.7 |
| Proposal | 2.9 | 2.9 | 3.6 | 4.0 | 3.5 | 3.2 | 2.8 | 3.1 |
| Fredericton – Oromocto | ||||||||
| Insolvency | 6.9 | 6.5 | 6.9 | 7.4 | 7.9 | 4.3 | 3.9 | 4.4 |
| Bankruptcy | 4.4 | 4.5 | 4.1 | 3.9 | 3.8 | 2.1 | 1.7 | 1.3 |
| Proposal | 2.6 | 2.0 | 2.8 | 3.5 | 4.1 | 2.3 | 2.2 | 3.1 |
| Edmundston – Woodstock | ||||||||
| Insolvency | 6.4 | 6.1 | 7.1 | 7.8 | 8.1 | 6.4 | 5.1 | 5.0 |
| Bankruptcy | 4.4 | 4.2 | 4.3 | 4.2 | 4.0 | 2.7 | 2.2 | 1.7 |
| Proposal | 2.0 | 2.0 | 2.9 | 3.6 | 4.1 | 3.7 | 2.9 | 3.3 |
Source: https://www.ic.gc.ca/
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