Orientation guide for newcomers to New Brunswick - Government of ...

BankruptcyA person may declare bankruptcy when heor she can no longer make his or her debtpayments. When a person goes bankrupt,a trustee is appointed to sell all of his or herassests to pay off any outstanding debts.After a certain period, up to nine months inthe first instance, and when all remainingdebts are cancelled or cleared, a person maystart to build a credit rating again, but thisis difficult. A first bankruptcy remains on aperson’s credit report for seven years afterit has been discharged (resolved); a secondbankruptcy, in addition to the first, remainson a person’s record for 14 years. Some bankswill not lend to persons with more than onebankruptcy. For more information, contactThe Office of the Superintendentof Bankruptcy:• 1-902-426-2900InvestingInvesting is a way to make your savings grow.In these difficult economic times, however,you must be very careful: be aware of thefinancial risks involved.Savings bonds• savings bonds are issued by the federalgovernment;• you buy bonds for a specific amountof money;• after a specific period, of time you getyour money back plus interest;• this is a safe investment, but the rateof return is low.Guaranteed incomecertificates (GIC)• you invest a certain amount of moneyfor a certain length of time; and after thattime has ended, you get your money plusguaranteed interest.Mutual funds• banks or private companies may investyour money in mutual funds;• you may invest in stocks; that is, buy asmall share of ownership in a company,or bonds, which is loaning your moneyto governments and businesses;• mutual funds usually earn higher interestthan savings bonds and GICs, but youare taking a higher risk of losing money,especially in today’s economic climate;• invest in a wide variety of funds so that,if one fails, you will not lose your entireinvestment; and• make sure that you deal with someonewho is licensed to deal with mutual funds.Registered retirement savings plan(RRSP or RSP)• RSPs are registered with the Governmentof Canada and are meant to be a way tosave money for retirement;• every year you may put a certain amountof money into your RSP. The Canada RevenueAgency places a limit on the amount;• when you complete your income tax return,you may subtract the amount of moneyyou put in RSPs from your income. This way,you pay less in tax. The bank will mail you astatement of what you have put into yourretirement savings plan;• the money you put into your plan will growuntil you are ready to take it out;• when you take the money out of the RSP,you must pay tax on it;• RSPs save you money because, when youare working, you pay more tax than whenyou are retired. When you withdraw moneyfrom the RSP after retiring, you will not bemaking as much money, so in the end, lessincome goes to taxes;62Orientation guide for newcomers to New Brunswick