Consumer Proposal?
a sole practitioner
>Could anybody tell me if a Consumer Proposal would be a good decision.
>Currently my husband and I have a total of about $50,000 Cdn in debt
>in credit cards, overdraft, property taxes, and line of credit. (plus
>a mortgage of $100,000). All the debt was accumulated a few years
>ago during my self-employment. I haven't checked our credit rating
>but it is probably mediocre.
>No real assets...both cars value $1500., furniture is old, no toys.
>We both have decent jobs. I make about $30,000/yr, and he makes
>$70,000. Both are very secure employment.
What's your problem?
Earnings of $100,000 a year . . . not likely any creditor is willing to accept any losses, especially when you are
making payments.
>Problem is that we don't live the 'high life', make only a bit more
>than the minimum payment, and don't even use the cards any more.
Don't understand where all your money is going at $100,000 per year?
Try a budget to see where the money is going and where you might be able to cut.
Perhaps Credit Counselling would be advisable.
>Last time we had a vacation was 11 yrs ago.
Join the crowd(s).
>We just never have ANY money for ourselves. It all goes to interest,
>and debt.
and life expenses, don'tt forget.
I wouldn't whine at $100,000 a year!
That's life in Canada when you go into debt, no matter what the reason
>I've read about consumer proposals, but not sure about the
>ramifications.
A precursor to bankruptcy. Not as bad on credit rating but not good either.
>I definitely am not interested in bankruptcy...I feel its my
>obligation to pay as much as I can afford.
>Based on what we are paying per month (a lot), it will take several
>years to get financially comfortable again. This is for Ontario, if it
>matters.
That's life . . .
Students have tens of thousands of debt also and usually earn much less.
cloaked
for free. Trustees can inform you about "Consumer" and "Trustee"s
proposals. Bankruptcy is considered "Division 3" of the Bankruptcy and
Insolvency Act of Canada. A "Trustee"s proposal (Insolvency) is
"Division 1".
Given what you make, and what you owe, I doubt that you would consider
either Bankruptcy or Insolvency.
A consumer's proposal does not have much "teeth" when it comes to
creditors. If you file one and your creditors reject it, you are back
at square one.
A Trustee's proposal is a double edged sword. If you do this and it is
rejected by your creditors, then you are automatically bankrupt.
If I were you, I would seek out the FREE advice from a Bankruptcy
Trustee. These individuals can outline your options, and often can
point you in the direction of resources to help you out of a jam
BEFORE the crap hits the fan.
Having said that, welcome to the wonderful world of debit. If you have
racked up that much debit, then you either are, or were, living above
your means. And, as you are likely about to find out, your creditors
do not give a damn about what lifestyle you are or are not living. The
creditors simply want their money. As a result, any action you take
which interferes with the profit of a creditor makes (ie forgiveness
of debit, reduction in interest rates, etc...) WILL adversely affect
your credit rating. And likely for a LONG time.
The problem with a consumer proposal - as I see it - is (and PLEASE
check this) I do not believe there is ANY legal requirement that
credit account information affected by a CONSUMER proposal must be
removed from your Credit Report. If you have a Bankruptcy, then it
stays on your record for six years from the date of discharge (for a
first bankruptcy). For a Division 1 insolvency, the account
information stays either six years from the date of FILING of the
insolvency, OR 3 years after the insolvency is completed - whichever
is SHORTER. But AFAIK, "bad" credit information from a consumer
proposal stays FOREVER - just like a foreclosure on your
property/mortgage.
So, as you can see, each option has ramifications. The only one who
can tell you ALL the details is a Bankruptcy Trustee in your area
(province). RUN, do NOT walk, to him or her. It is the best FREE
advice you will ever get.
hth
On 28 Jan 2004 09:24:25 -0800, font...@cogeco.ca (Anna Roberts)
wrote:
>Could anybody tell me if a Consumer Proposal would be a good decision.
>Currently my husband and I have a total of about $50,000 Cdn in debt
>in credit cards, overdraft, property taxes, and line of credit. (plus
>a mortgage of $100,000). All the debt was accumulated a few years
>ago during my self-employment. I haven't checked our credit rating
>but it is probably mediocre.
>No real assets...both cars value $1500., furniture is old, no toys.
>
>We both have decent jobs. I make about $30,000/yr, and he makes
>$70,000. Both are very secure employment.
>
>Problem is that we don't live the 'high life', make only a bit more
>than the minimum payment, and don't even use the cards any more.
>Last time we had a vacation was 11 yrs ago.
>We just never have ANY money for ourselves. It all goes to interest,
>and debt.
>
>I've read about consumer proposals, but not sure about the
>ramifications.
cardg...@gmail.com
Secondly, I believe the person when she says she doesn't know where there money goes. I think the first step is to take the next 90 days, write down everything they spend their money on. They will then see where their money goes. Then, they can make a budget adjusting what needs to be, such as essentials vs. nice to have.
Then, take that budget and go see a trustee in bankruptcy for a free consultation in order to determine what is the best option for you. Doing the above will be well worth it and will put the person finally on the path of fixing the problem, rather than guessing at it. IMO anyway. http://goo.gl/UnYEb