We have already put a stop to the use of any credit card as of this week (3rd week of December 2011) but we have still been making the monthly minimum payments on all credit card and line of credit accounts.  We don’t want to default on any one of our obligations as we have yet to file our 2010 tax returns (prerequisite for filing a consumer proposal – C/P) and we don’t want to be facing the collection departments/collection agencies prior to filing for C/P.

We have racked up $3,000 on the one credit card we have been paying down completely each billing cycle because of:

1.   Membership (related to employment) dues (required a credit card payment)
2.   Purchase of a set of winter tires (should have used debit but this was made back in November)
3.   Friends purchased several gadgets through our employee purchase discount/plan (required a credit card payment)
4.   Car mats (couldn’t switch to debit payment as order was in queue)
5.   Gasoline purchases (we have switched to debit payments now)
6.   Grocery purchases (we have switched to debit payments now)
7.   Some gym weight plates (should have used debit but this was made back in November)
8.   Go Station presto card (we have switched to debit payments now)
9.   Internet Service (required a credit card payment at that time but we have switched to online payments now)
10.   Trivial online purchase for some rechargeable batteries (required credit card as I did not have enough paypal balance at that time and it was a one day deal)

We have been advised not to apply for a secure credit card just yet.

We should have used cash or debit card to make those purchases (mostly in November) in hindsight but the friend purchases along were already $1,200 or so.

We have been advised by a few people on this and another forum not to make the full payment to this credit card account as it may be deemed preferential creditor treatment.  Will paying off $3,000 now put our C/P in jeopardy?   This $3,000 is a small fraction of what we will be including in our C/P but the creditor will not be happen with the way we racked this amount up (currently have the ability to repay completely or partially if that will be under the radar).

Again, we have stopped using all credit cards this week and was just wondering if we should just pay the minimum of $90 or consider paying a bit more, especially with the friends’ purchase, which we will be getting reimbursements for.  We will be filing for C/P once we file our tax returns this holiday season. 

Any advice will be appreciated.

Hi Tipler,

Good afternoon.  Thanks for your response. I meant to respond to you on Friday but didn’t get a chance to do so.

Over on the other bankruptcy Canada site, I was informed by the Trustee that credit cards with zero balances may be kept by those filing for C/P but I’m not sure if this was the standard protocol.   Did you not have to include all your credit cards, whether there were no balances owing? 

I’m thinking I will have to include this card in my C/P because as you had mentioned, paying this down completely may result in other creditors complaining and making it harder to get the majority approval.

Yes, I have not received the money from friends yet and so can only partially pay for some expenditures we should have paid for using our debit card.  I actually forgot to put a stop to these as I was busy at my employment.  I’ve already sent my query to the Estate Manager who I think though stern is seriously concerned and ready to help.

As for taxes, yes, I really want to finish filing but ours is not very easy as there is the other professional income component and some capital gains in 2010.  If I only can have my wishes come true, I’d with these tax returns were done so we can proceed with filing the C/P. 

I have already decided on which trustee to use.  I have not filed for C/P but you are right, if I have concerns, I should keep the communication channel open, even if he is just the estate manager.  He knows what he is talking about unlike a few I had met earlier.

It’s good that you dealt directly with the trustee.  In my case, I noticed that an Estate Manager and a Trustee was willing to take my case at $0.50 to the dollar but with this last Trustee, they will start off at $0.30 which may go up to $0.50 or so.  $.50 is probably where most creditors will accept a proposal (which is why the other two offices were so eager to take me on but one of them did no provide any good advice while the other though helpful treated me like a business.  I like the approach of the 4th trustee office to start off at 1/3 of what is owing.