would bankruptcy be my only option

September 11th, 2009 by Questions

If your creditors refuse a Consumer Propsoal is Credit Counselling a viable alternative? Or would bankruptcy be the only option?

Posted from: Ontario

Questions

One Response to “would bankruptcy be my only option”



September 14, 2009 at 8:27 am, A licensed trustee said:

Let’s think this through… if you offer your creditors a consumer proposal (offer to repay a portion of your debt) and they reject your offer, in most cases they offer alternate terms.

For example, you may offer to repay 40% of your debt in a consumer proposal and the creditors might reject that offer and counter with 60%. You can accept that offer or counter again.

Since credit counseling requires repayment of 100% of teh debt (usually with no new interest charges), if you can’t negotiate terms on a consumer proposal then yes, credit counseling is viable, if you can afford to reapy the debt. Of course, if you can afford to repay the debt in full you shouldn’t have filed a consumer proposal in the first place…

The sequence people consider their options is usually as follows:
1) can I consolidate my debts by getting a loan or line of credit from a bank?
2) can I repay my debts in full in credit counseling?
3) can I only afford to rpay a portion of my debts?
4) if you can’t afford to repay even a portion of your debts, then should you be filing bankruptcy?

Start at the top and work your way south – if you can afford option 1 then you shouldn’t be thinking about option 4.

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