Consumer Proposal when on Strike
I have roughly $35,000 in unsecured debt ( Credit card, Line of credit, Credit loan) and A $140,000 mortgage and a Car Loan (car loan is almost paid off, $1800 remaining).I have not worked in 9 weeks and counting due to a labour dispute with my employer. So basically I have no income other than strike pay which is meager at best. ($170/week). Making payments on anything has been impossible during the labour dispute and I am already in arrears on my credit payments but i am up to date with mortgage although i have asked for deferment on the mortgage and got approved for 12 weeks.A friend of mine is suggesting that i file for bankruptcy and of course I do not want to do this as the last 5 years of my life will be for nothing.
i have asked for deferment on the mortgage and got approved for 12 weeks.A friend of mine is suggesting that i file for bankruptcy and of course I do not want to do this as the last 5 years of my life will be for nothing.
What are my options?
Posted from: Ontario
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. 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 feel free to contact me directly.
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.
Obviously not every option works in every situation and to determine what options suites your scenario it is best to sit down to review all the little pertinent details. Although, in your situation with very limited income I think it would be very difficult to look at anything other than filing for bankruptcy. However, it would be important for you to have a local trustee review things in more detail to determine this for sure.
You may also find this debt options calculator useful.