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Card payments prior to filing

I am considering consumer proposal. I owe about $70,000 to credit cards. My take-home pay is $2600/mo. The credit was used to capitalize my business, which is running steadily and has been for 5 years. However, I have never been able to get out from under the debt load. The interest alone is almost $900/mo, which is really all I pay because I max out the cards each and every month, using one to pay the next, and so on. The principal amount of debt never goes down. I live frugally, and have few assets (home equity $3000, business inventory $10000, car $500). My husband`s profile is almost exactly the same.
equity $3000, business inventory $10000, car $500). My husband`s profile is almost exactly the same.

My question regards payments to my cards. I have read on your site that it is best not to use credit cards immediately prior to filing a consumer proposal. I have never had a late payment, so I would find it stressful simply to stop paying them. Should I contact them and request to skip a few payments, and file after that? What is your advice?

Posted from: Ontario

One Response to “Card payments prior to filing”

A licensed trustee said...

You are confusing using the card for purchases (in other words incurring more debt) and making payments to reduce your debt. If you make regular payments on your debts prior to filing you should not get into trouble.

A warning – this doesn’t mean you should make extra payments or treat any one creditor (or group of creditors) better than the rest of you creditors before you file. If you pay one off in full and don’t make equal payments to your other debts then this can complicate things too.

Use the links to contact a trustee in your area and gvie them a call – they will explain all of this in greater detail for you.