bankruptcy alternatives « Ontario Personal Bankruptcy Blog

Archive for the ‘bankruptcy alternatives’ Category

I don’t want to go Bankrupt in Ontario; What are my options?

Tuesday, February 16th, 2010

Question: Hello, I have about 40,000.00 in credit card debts, I don’t want to claim bankruptcy. Do I have any options??? Thanks.

Answer: Yes, you have a few options.

First, you could attempt to continue to service your debts on your own. If your income improves, you may be able to pay your debts. If you still have reasonably good credit a debt consolidation loan is another possible option. If you can consolidate and lower the interest rate, you may be able to repay your debts on your own.

A debt management plan through a not for profit credit counsellor is a possible option, if you can afford to repay the debts in full, but need a break on the interest charged. If you can raise a lump sum of money, say $20,000, the creditors may accept a lump sum debt settlement, particularly if you are already six months or more in arrears with them.

If those options don’t work, the next option is a consumer proposal. In a consumer proposal you offer to pay a portion of the amount owing over a three to five year period, and the creditors agree to write off the rest. If you have a job, but can’t repay the debts in full, a consumer proposal is an excellent solution.

To find out which option is best for you, you should arrange a no charge initial consultation with an Ontario bankruptcy trustee and proposal administrator, and they will explain the options in detail, and help you make a decision.

Posted in bankruptcy alternatives, consumer proposal | No Comments »

Running on a treadmill

Monday, January 4th, 2010

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.

Posted in bankruptcy alternatives | No Comments »

Bankruptcy Vs. Proposal

Thursday, June 18th, 2009

Question: Hi, I have already gone through bankruptcy before approximately 15 years ago. Now I’m in a terrible situation with my finances where I can’t make ends meet.

Here is my situation: In the past 6 years, I have been married, had a child, divorced, and now have shared custody of my child. I have been living with a woman for over a year now and she is expecting.

I owe approximately 50K in debt on credit cards and 2 seperate lines of credit.

I make 60K a year.

The woman I am living with has been separated from her ex for over one year. He is claiming bankruptcy, which will force her into bankruptcy as well as she is currently not working and is co-owner of their home and vehicles (her ex and the house is in a western province)

with the arrival of a newborn just before Christmas we are very scared about our finances and our future.

Please help! any advice would be greatly appreciated.

Answer: You have severe financial problems and your situation is urgent, but it is not hopeless. You have a number of options.

One option would be to file bankruptcy in Ontario again. However, a second bankruptcy is more costly and cumbersome than a first bankruptcy. It will last for at least one year (instead of the minimum of nine months in a first bankruptcy), and you are required to appear in bankruptcy Court to receive your discharge.

A better option would probably be to file a consumer proposal, where you make a deal with your creditors and avoid a second bankruptcy.

Whether a bankruptcy or a proposal is the correct option will depend on a number of factors. You earn $60,000 per year, so you have good income, which is generally the most important factor in filing a consumer proposal.

Our debt options calculator can help you assess your different options. Then, contact a licensed trustee in Ontario to arrange for a detailed, no obligation, no cost review of all of your options, and then you can make an informed decision.

Posted in bankruptcy Ontario, bankruptcy alternatives, consumer proposal | No Comments »

Is bankruptcy the best way to go?

Tuesday, February 10th, 2009

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.

Posted in bankruptcy Ontario, bankruptcy alternatives, bankruptcy trustee | No Comments »

HELP !Can’t go bankrupt on my car?

Monday, December 8th, 2008

Question: Hi my girlfriend owes every dime she gets in her paycheques, against my advice last year she signed up for a car lease with a high interest lender, charging 20.4% and unwilling to let her out of the lease. Her parents co-signed for the car and therefore if she goes bankrupt, her parents are held liable correct?

Her credit is so bad, wells fargo wouldn’t even look at her for a debt consolidation loan.

She needs serious help, and she doesn’t know where to go from here. Any ideas or solutions?

Answer: Yes, you are correct: if she goes bankrupt and surrenders the car, the co-signer, her parents, would be liable for the shortfall.

She has a number of options, including trying to repay the debts on her own, credit counselling, a consumer proposal, or personal bankruptcy. Here is an article that discusses all of the alternatives to bankruptcy.

All bankruptcy trustees offer a free initial consultation, so if she wants to deal with her debts and get a fresh start, she should contact a trustee for a free initial consultation today.

Posted in bankruptcy Ontario, bankruptcy alternatives | No Comments »