Single mom starting over

I am a single mom on disability, I raise my 2 sons and myself on less then 1300 a month, I am desperately trying to get my life back in order financially. I have a few debts that ate pretty serious for someone in my situation I have 15000 credit card debt and a 1000 dollar debt owing to icbc. I am unsure of what would be the route to take as I would like to build a credit rating back to where it once was please help I have no idea??! Thanks clueless

Posted from: British Columbia

One Response to “Single mom starting over”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

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 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 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 local bankruptcy trustee.

Obviously not every option works in every situation. The general rule of thumb comes down to your monthly cash flow, the more cash available at the end of the month the greater liklihood of being able to avoid a bankruptcy.