Best Coarse of Action?

January 3rd, 2006 by Questions

I called off my wedding with my common law spouse and decided to take short work trips in the US for my Canadian employer. I met a girl in the USA while working. I wanted to date with her and we established a long distance relationship. I began taking time off and travelling to visit her. During this time I was overcome with depresion from all of my problems of losing my house car and dog. I quickly used up my line of credit of $25,000 but knowing that I was making $100K a year and living with my parents I decided to take out two more lines of credit (30,000 and 20,000)so I could afford to visit her and take her and her kids to England to visit her family for a month. My dression grew stonger and I eventually lost my job for failing to attend work. I was drinking and taking 6 medications perscribed by a doctor.

Before losing my job I took out a work visa and looked for work in the USA. I thought I could find a high paying job once I was here, but the wages are low and my work visa limits my employement. I can’t keep up the payments on the loans with my $17.00/hr job, and I am desperately trying to find better employment. My full intension was to pay back these loans but I don’t know how I am going to do it.

My credit cards also crept up and now are at $18000. I have finally straightened myself out and stopped the meds and the drinking. I would like to find a solution to my problem of debt.

I have spent so much money helping out my girlfriend and her kids. I did cash out my RRSP’s and made some payments, but that quickly went. I am still kinda relying on my last line of credit to keep me going with bills.

What should I do? Declare bankruptcy, or try to settle with creditors?


One Response to “Best Coarse of Action?”

, Barton Goth, GCO Inc. Bankruptcy Trustees said:

The first thing you need to do is stop using any credit cards or other loans, if you continue to use these and then file a bankruptcy or proposal you can encounter significant difficulties.

In terms of what to do, we suggest people consider the following options when they are experiencing financial difficulty include:

1. Negotiate with your creditors. Explain why you have fallen behind in payments. Outline your financial situation and expectations for the future. Suggest a payment plan that is realistic and reasonable for both you and your creditors. As this is an informal process make sure that if you come to an agreement get written conformation. .
2. Apply for a consolidation loan. Take out a loan to pay off all of your debts. This can potentially lower your interest rate, total monthly and sometimes the total length of the contracts. With consolidation loans it is important that you examine your current spending habits and stop using your so you do not continue to fall further behind.
3. Make an application to Credit Counseling. This is 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 usually the interest on your unsecured debts is reduced to prime or even eliminated. You are required to repay 100% of what you owe, but because of the reduced interest your monthly payment is much lower than all of your minimum payments would have been without the plan.
4. Make a proposal to your creditors under the Bankruptcy and Insolvency Act. 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 (perhaps 100%) of the debt that you owe. Proposals are an excellent alternative to bankruptcy, but they are not well known so I suggest you contact a local trustee and ask them about proposals if you are interested in this solution.
5. File for 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.

Certain provinces have an additional option for their residents called an Orderly Payment of Debts. When you speak to a trustee they will advise you whether or not this solution is available where you live and makes sense for you.

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