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Is good credit a problem in a proposal?

I have a nearly perfect credit rating (I missed a payment about four years ago, when I forgot to pay a bill – R2 rating.)

My credit has been good because I’ve been advancing money from my credit cards and lines of credit to make my payments. I have enough credit available to do this for another year, but I expect the amount I owe will keep increasing as I don’t have enough money each month to pay my debts.

How will my creditors view my consumer proposal or bankruptcy if I haven’t missed any payments in years?

One Response to “Is good credit a problem in a proposal?”

A licensed trustee said...

As strange as this may sound, your creditors would prefer you to correct the problem sooner rather than later – particularly if you’re not really putting any “real” money into your payments each month. By that I mean, if you are simnply borrowing from card A to pay card B, you aren’t paying down any of the debt and eventually all the interest that card A and B think they have earned will have to be written off if/when you file a proposal or bankruptcy. Better to stop the charade and fix the problem.

I understand your concern – we see many people that do/have done exactly what you are doing. Their credit looks great right up until the day they file. Of course, their good credit is a myth – they are tricking the system into thinking that they are handling their credit wisely.

Even though you have enough credit left to carryb on for another year, I strongly suggest you contact a local trustee and take the steps necessary to solve the problem. Good luck sorting things out.