Question: Hi, I’m seeking information for my Mom who is considering bankruptcy. She lost her job a year ago and her severance has run out as of January first. She has been pounding the pavement on trying to find a new job and has had no luck. Her and my Dad are divorced and no child payments are required due to the age of my brother and I. She has remortgaged her house 3 times, and has numerous credit card debt, retail cards, a car loan, debt consolidation loans etc. In total I’m unsure of her entire balances but I know she is having trouble making ends meet even with my brother and I helping out as much as we can. She is currently in process of applying for EI and that won’t be enough to cover any of her debts. What kind of options does she have?
Answer: She has a number of options. Ultimately the correct decision will depend on her future expected income.
If she can’t find a job and her only income is from Unemployment Insurance, and if you and your brother can’t contribute a lot of money, it may be necessary for her to sell the house and find a place to rent to reduce her expenses.
She could try remortgaging the house again, but that’s probably not a practical solution if she has minimal income.
She could also file a consumer proposal or bankruptcy. However, most people who file a consumer proposal or bankruptcy are doing it to prevent their wages from being garnisheed; in her case, until she is working again, that may not be necessary. Again, the correct solution will depend on her future income expectation.
She should contact an Ontario bankruptcy trustee for a no charge initial consultation. Before that meeting she should prepare a list of all of her debts (and gather up all of her credit card statements and other creditor information) so that the trustee has full information to explain all of her options.