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if they repo my car can they garnishee my wages

Tuesday, July 5th, 2011

Question: I am 2 payments behind and trying to make arrangements but they are threatening to repossess the vehicle and then garnishee my wages… What can i do and can they do this? I told them i will get caught up within 6 weeks but they don’t care.

Answer: If you are behind on your payments on a car loan or lease, the lender does have the legal ability to repossess the vehicle, and sell it to recover the amount owing. If there remains a balance owing after they have sold the vehicle, they can take you to court and sue you, and potentially garnishee your wages.

While legally they can repossess the car and garnishee your wages, practically that is generally a last resort. The car lender doesn’t want to go through all of the hassle of seizing your car, selling it, and then suing you. They just want their money. You have the following choices:

First, talk to the lender, and make payment arrangements. Obviously they want all of their money now, and they will use the threat of seizing your vehicle to make you pay, but they don’t really want to take your car. They are making threats because you haven’t paid, so offer to make a payment when you get your next paycheque, and propose a plan where you will get caught up over the next month or two. If you have the ability to make extra payments and get caught up, they will probably allow you to do so.

Second, if the lender refuses to take your money, or if you don’t have the ability to get caught up, you will probably lose your vehicle, so you could consider voluntarily surrendering it to them.

If they do take the vehicle and pursue you for the shortfall, you have a few choices:

Pay them, or work out payment arrangements
File a consumer proposal or
File bankruptcy in Ontario

Filing a proposal or bankruptcy immediately stops a garnishment, but obviously it’s better if you can work out a plan with them first to avoid having to file.

Tags: car, garnishee
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Consumer proposal in Ontario

Tuesday, April 19th, 2011

Question: I had a consultation today and I was advised that I should be paying 100% of my debts over 5 yrs due to a past bankruptcy. My total unsecured debts are $72,000 weekly take home income is $1475.00 only assets are 2 vehicles worth about the same or less than owing and $260,000 home with a $250,000 mtge, Does this sound right? all I have read about consumer proposals points to a lower payback.

Answer: Yes, that sounds correct. A single person in Ontario in 2011 is allowed to earn $1,926 per month. If you earn more than that you are required to pay half of the amount you are over (it’s called surplus income). If your take home pay is $1,475 per week, that’s $5,900 per month, so you would be $3,974 over the limit, requiring you to pay about $1,987 per month.

Since this is your second bankruptcy you will be bankrupt for a minimum of two years, and since you have surplus income your bankruptcy is extended for an additional year, so you would be required to pay $1,987 for 36 months, or about $71,532.

Since that is the total amount you owe, there is no chance that the creditors would accept less than that in a proposal (they would not accept a proposal if they would get more in a bankruptcy). You can read a more detailed explanation in this article on how much would my consumer proposal cost.

Tags: consumer proposal
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consumer proposal – owning a car

Friday, March 25th, 2011

Question: If I own a car that is paid for and enter into a consumer proposal, do I get to keep my car or is it regarded as an asset?

Answer: In a consumer proposal, you keep all of your assets. That’s one of the big advantages of a consumer proposal, and one of the reasons residents of Ontario choose proposals over a bankruptcy.

If your car is financed (through a loan or a lease) you have two choices when you file a proposal or bankruptcy: keep the car, and keep making the loan payments, or surrender the car to the lender, and anything owing after they sell the car is included in the proposal or bankruptcy.

Tags: car
Posted in bankruptcy, car, consumer proposal | Comments Off

$1600 up front to file a consumer proposal

Wednesday, March 23rd, 2011

Question: is ontario debt assisstance on the up and up? they require $1600 to do a consumer proposal.

Answer: In Ontario, only a licensed trustee is able to file a consumer proposal. A list of all trustees in Ontario that are licensed by the federal government to act as an administrator of a consumer proposal can be found on the government’s web site. You can do a search on the website to determine if the company you are dealing with is licensed.

It is very unusual for a licensed trustee to require $1,600 up front; most trustees get paid from the monthly cost of the proposal. Since the creditors are given 45 days to accept or reject your proposal, in most cases you only make payments for 45 days before you know whether or not the proposal was accepted. You therefore risk a lot less dealing with a licensed trustee.

For a list of Ontario trustees licensed by the federal government, please see our trustee and consumer proposal administrator listing.

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Who is eligible for a consumer proposal?

Tuesday, March 22nd, 2011

Question: My niece is on a work permit. I had joint loans with her and now I have filed for bankruptcy. Is she eligible for consumer proposal? She is employed.

Answer: Yes, if she owes more than $1,000 and is unable to pay her debts, she is eligible to file a consumer proposal. You do not need to be a Canadian citizen to file a consumer proposal.

Tags: consumer proposal
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consumer proposal and wife just left

Wednesday, February 16th, 2011

Question: My wife and i are half way through a consumer proposal. Came home and there was a note she has left to live with another man. The kids are here with me in the family home. She says she will pay half the bills including large mortgage for now. I cant imagine that would last too long. Can she be forced to keep paying our proposal and also joint car loan? Would bankruptcy be on option If she stops paying. Both my wife and I have good salaries and are professionally employed.

Answer: On the assumption that you have filed a joint consumer proposal (meaning one proposal covering both of your debts), the legal answer to your question is this: if the proposal payments fall three months in arrears, the proposal is annulled. Whether you each make the payment, or just you or just her make all of the payments, the result is the same.

Whether or not filing bankruptcy is an option will depend on your new circumstances. Presumably you filed a proposal, instead of going bankrupt, due to your high combined incomes, or due to equity in your house or other assets. Your family income is now lower, so bankruptcy may make sense.

Without know the facts of your situation it’s impossible to give a specific answer. You should book a meeting with your consumer proposal administrator and ask them to walk you through your options.

Tags: consumer proposal
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Garnashee: How to Stop if Car Repossessed

Tuesday, February 15th, 2011

Question: I went bankrupt in 2009 now I messed up again I bought a SUV and the financial interest is very high, my wife was working at the time but now she got injured and it is just a matter of time before WSIB kicks in. But it has been really hard to keep up with only one income. We got behind our bills, I know I make $3,000 but I pay $1,200 in rent, 250 in utilities, telephone and cable around 100 insurance 200 a SUV payment of almost $500 a month, which leaves us with about 700 a month now that my wife is unable to work due to an injury. So my question is this, we are behind in our vehicle payment and they are going to come and get it because we cannot get caught up at this time, this will leave us with no vehicle for me to go to work, and in time they will ganashee my wages, what can I do, we needed a vehicle and because of my bankruptcy i pay high in finance charges and my wife was working so it was not a problem. We have no other dept….now we need to try to find a really cheap car for me to go to work, but in time they will garnashee my wages what can I do I know I can’t go bankrupt again but I won’t be able to survive if they do that.

Please help us figure out what to do

thanks

Answer: You have four choices to stop a wage garnishment.

First, you could talk to the finance company and see if they will allow you to defer one or two payments, with the promise that you’ll get caught up once your income recovers. They may agree to defer one or two payments to the end of your term.

Second, if they don’t agree to that, you can attempt to delay them from repossessing your vehicle by making partial payments each month, in whatever amount you can afford. You may be able to delay long enough to get caught up, since the finance company doesn’t really want your vehicle.

Third, if they do repossess your vehicle, they will not immediately start garnisheeing your wages. They will first contact you to attempt to work out a payment plan. At that point you may be able to make payment arrangements with them.

If all else fails and they do start a garnishment of your wages, you could either let the garnishment continue until finished, or you could file a second bankruptcy, or a consumer proposal.

Tags: garnishee, garnishment
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Ontario Student Loan harassment even though Consumer Proposal was accepted

Thursday, February 3rd, 2011

Question: I have graduated from college April 2001, I’ve made a consumer proposal on Oct 25 2010 in which I’ve included the Ontario Student Loan as per my trustee, the proposal was approved but Ontario Student Loan are demanding payments from me stating that it does not matter that I’ve graduated over 7 years ago that I am responsible for repayment of the loan because Government Student Loans are guaranteed loans. Is that true, is my trustee wrong?

Answer: No, your trustee is not wrong. If the proposal is accepted, student loans are included in the proposal, provided you have “ceased to be a student” for more than 7 years prior to filing the proposal. Obviously it’s more than 7 years between 2001 and 2010, so your student loan is included in your proposal.

There are a number of student loan lenders that have very poor systems. There are numerous cases where, even though they voted to accept the proposal, they still send out collection letters, because “the left hand doesn’t know what the right hand is doing”.

Ask your consumer proposal administrator to send another letter to the lender, and that should be enough to put a stop to it.

Tags: student loan
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In proposal now wondering if bankruptcy is an option

Wednesday, February 2nd, 2011

Question: My wife and I are in the second year of a consumer proposal. She has recently lost her her job and acquired further debt over 40,000. Debt is in her name can she file bankruptcy in Ontario while still in proposal?

Answer: Yes. It is not uncommon to have a change in circumstances while you are in a proposal, and it is possible to file bankruptcy while in a proposal.

Your wife will have to explain to the trustee how she managed to acquire $40,000 worth of debt while in a proposal, since while you are in a proposal she would have already have surrendered all of her credit cards and bank loans. (It’s possible that the debt arose as a result of the repossession of a car or house that she had intended to pay for, so there might be a realistic explanation, but it’s a question the trustee will ask).

If she had not acquired new debt, another option is to ask the creditors to amend the original proposal so she can make lower payments. There is no guarantee the creditors would agree, in which case she would do the bankruptcy.

Tags: lost job, proposal
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on consumer proposal but loss job, is it okay to file for employment insurance?

Monday, January 31st, 2011

Question: if someone is on a consumer proposal, and suddenly loss his job, can he file for employment insurance? how is it going to affect his income tax return?

Answer: Yes, you can file for employment insurance while in a consumer proposal. A consumer proposal does not affect your income tax return.

The bigger issue may be whether or not you can continue to make the payments on your proposal if you aren’t working. That’s something you should discuss with your proposal administrator.

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