Considering Consumer Proposal...wondering about ramifications. I am 17,000.00 in credit card debt. I have been paying all the minimums and adding extra money to the card with the highest interest rate. I make my payments, not always on time. But I have never had a collection agent call. I work full-time and I am a single woman, on a single income, I make about 33,000.00 a year and I rent and have only myself to rely on. I will be losing a little income freelance income in the fall, this has put me into a bit of a corner, financially. I have no savings to speak of, and no RRSP, no car, no house.

I feel confident in my ability to make payments of 180.00-200.00  a month towards a consumer proposal, but I'm wondering how this effects my relationship with my bank. I never bounce cheques and have had a good relationship with them, they are one of the lenders, My visa is with them...will I have a hard time keeping my chequing account with them? I really don't want to start with a new bank. I feel backed into a corner because of  the interest rates on my cards, I want to pay back my debt. But realistically I have to start to put money in savings, because I could be in real serious trouble otherwise. And with the way my payments are going now, there is nothing left for savings..at the end of the month.

I guess my question is how much control do you have over your own money once the consumer proposal is approved?

Are you allowed to put money into savings? Or is this frowned upon?

What is a luxuary? I take transit, and do not own a car, but if I need to buy a winter coat is this a luxuary? How do they view this...not certain yet what to do? Any help is appreciated.

Thank-you.

Thank-you so much JEC, I really appreciate it.

So, if I am understanding you, my bank can arbitrarily take what is owed them out of my account, despite the conditions of the consumer proposal, or are you referring to the waiting period?

 I don't understand how they could arbitrarily take the money out of my account if there is a legally binding proposal. My Visa account is with my bank, it's not a loan or credit line?

Thanks again,

Hi Melalone,

I had the same concerns about my bank account (at Bank of Montreal), since one of the debts covered in my proposal was a BoM MasterCard.

My trustee reassured me that the right to "set-off" was in reality only a "momentary" right that occurred sometime between when the proposal was filed and finalized, or some such moment in time, and that the legalities of this right were poorly understood by some financial institutions. Credit unions, he said, were the ones most likely to take advantage of the rule or even break it, while major banks were less likely to. My husband and I (we both have proposals) do all our business and personal banking at BoM, so we didn't like the idea of switching. Our trustee said there would be no problem.

There was indeed no problem. We've never needed to change banks. However, as our trustee said, certain other financial institutions are known for taking money out of accounts inappropriately. Your trustee may be able to advise.  The Office of the Superintendant of Bankruptcy is in the process of trying to regulate financial institutions that bend such rules.

I'm not sure why Randal says your trustee won't like to have you as a client. Trustees tend to like honest, articulate people like yourself. It sounds as if a consumer proposal might be a good plan for you. Let us know how it goes!

Best wishes,
~Wendy

Here is a personal example of what happened to me. Part of my Proposal, which was accepted, included a TD Visa, and a LOC from Alterna bank (formerly known as the Civil Service Co-op)

Upon the advice of both the credit councellor and my Trustee, I switched banks to the Bank of Montreal. I had never dealt with that bank at all, and it's right on my street..nice and handy.

At the 6-week point.....my TD account still showed the $2.23 in chequing....no RRSPs....and no Visa balance.....that was wiped out.......just an empty line. My cheq/sav accounts still seem to be in good standing, almost as if I would use it...and I guess I could.

The Alterna bank....which is a bank and no longer a Credit Union..as far as I know....well, it wiped out everything......it took my $2 in chequing, it took my $15 share that I purchased to join the Co-op way back in 1971 and my banking page is as blank as a white sheet of paper.

Randal and Treefrog, are you saying that Alterna should not have taken my money..when they wrote-off the Line of Credit (which didn't have a big balance, but I had to include it in my Proposal)?. I can see that they'd take the money out of my Chequing, but am surprised that they cashed in my share value without my signature. It's not much money...but was it a legal thing that they had the right to do?  Should I ask my Trustee about it, or would he care?

When I had been talking to someone at Alterna (she phone me due to not paying on the LOC...and I informed her of the Proposal) she assured me at the time that my savings and chequing accounts would remain valid, they would simply write-off the LOC. That is why I was surprised to see the whole page gone.

I'm not taking a chance that TD would go into my chequing and take their 'loss' out of my account. Once my Proposal is finished, I'm assuming that I can resume banking with the TD, but would certainly verify that they would have no right to my money at that point in time.

JEC

I'm not in Toronto, Melalone, so I cannot help to find you a good Trustee. What I do know is that you can shop around for one. They do not charge for the initial consulation. You can make appointments with several trustees and then go visit with them and decide from there. It is time-consuming, I know, but could save you hard feelings down the road.

I don't know if you can phone the Better Business Bureau to see if anyone has complained about any particular Trustees.
Perhaps get in contact with the Office of the Superintendant of Bankruptcy...and have them recommend a Trustee based on your needs.

Or simply phone several trustee offices and talk to the receptionist...sometimes you can get a feel for the 'mood' of the office from that person.

Good Luck!