Question: I’m emailing for a family relative. She is on disability, receives approx $900 monthly and owes approx $6000 in credit card debt. She is staying with family but has applied for housing and is waiting to get into apt. She is 52yrs old, has OCD and Rheumatoid Arthritis which has prevented her from working. Is Bankruptcy the way to go or is there a way to have her credit card dealt with by lower interest? Any advice appreciated.
Answer: She has a few options.
First, she could open a new bank account at a new bank, to prevent her existing creditors from taking money automatically from her account, and then she could simply stop paying her credit cards. They will call and send letter, but if she has no assets to seize and no wages to garnishee, there is virtually no way for the creditors to get anything from her.
Her second option would be to talk to a credit counsellor about making a debt management plan. Credit counselling is a plan where she repays her debts in full, but at a reduced or zero rate of interest. However, if she is living on $900 per month this may be difficult.
A consumer proposal is another option, but again, on $900 per month that may be very difficult to afford.
If she wants to stress relief of dealing with her debts, a personal bankruptcy is an option. However, there is a cost to filing bankruptcy. She will be required to make a monthly payment to her trustee, and she will lose her tax refunds and GST credits while bankrupt. A trustee can provide more information. Ultimately she must decide if she wants to incur the cost of a bankruptcy to get stress relief from her creditors.