May 1st, 2012 by Questions
My husband and I are separating and have a mortgage and loan together. I cannot afford to undertake this much financial burden as I only make minimum wage and work for a temp agency. What are my options?
Posted from: Ontario
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May 01, 2012 at 12:50 pm, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
The standard options that we suggest people consider when they are experiencing financial difficulty include:
1) A debt consolidation loan – you approach a bank or other lender and apply for a loan to repay all of your existing debts. This solution is the only one listed here that will not adversely affect your credit rating. The advantage of a consolidation loan is that the interest charged is generally significantly lower than credit card interest rates. If you apply for a consolidation loan at a bank and your application is turned down that means the lender thinks you have accumulated more debt than you can reasonably be expected to handle.
2) Credit counselling – a voluntary program where your debts are pooled together (they aren’t actually paid off) so that you are only required to make a single monthly payment to a non-profit counseling agency. As you make your payments the agency forwards funds to each of your creditors in proportion to your total debt. The advantage of this procedure is that the interest is fixed at 5%, and while you are required to repay 100% of what you owe, due to the reduced interest your monthly payment is much lower than all of your minimum payments would have been without the plan.
3) A Proposal to Creditors (also called a consumer proposal)- this solution is used by people who cannot afford (or get approval for) a consolidation loan or a credit counseling plan, but don’t want to file bankruptcy. In a proposal you offer to repay a portion of the debt that you owe. Consumer proposals are an excellent alternative to bankruptcy, but they are not well known so if you would like to know more details about a proposal you should contact a local trustee.
4) Bankruptcy – if none of the other procedures listed is appropriate for you then bankruptcy may be correct solution. The concept behind bankruptcy is that you cannot afford to repay even a portion of your debts. To file bankruptcy you must meet with a licensed trustee, like myself.
A tool that you may find useful is the debt options calculator, it can give you an idea of what costs you may be looking at to manage your existing debts.