Parents are in quite a bit of debt

March 15th, 2009 by Questions


My Parents have $69,000 of unsecured debt. They have no real assets other than apartment contents and a vehicle less than $3000. One has an income of $35,000 and the other lost their job but is on govt retirement income. The one cannot find a job because medical conditions hinder his capability.

They HATE the idea of bankruptcy. They tried to consolidate but things ran up again. Suggestions? I see credit councilling or deb settlement may be an option for them but they see anything close to `Bankruptcy` as `bad` for the image. Ideas? Would a proper credit councellor negotiate for them? Would debt settlement be a viable option, yet they could still live a good life? They are also both close to 65 (age).

Posted from: Ontario


One Response to “Parents are in quite a bit of debt”

, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:

What options are available to going to depend on their monthly cash flow. The more available income they have, the more options that are available. The typical options we suggest people consider are:

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 Counseling – 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.

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 (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.

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