Archive for Category 'Credit Counselling', page 2

Question: My fiance had a credit card in his youth that went unpaid, and he went to credit counselling to pay off a $1,500 debt. He has paid it off ahead of schedule with a perfect repayment history.

We are now applying for a car loan and have been denied. They said his credit history said he has declared bankruptcy for $1,500. We knew his use of credit counselling would prove difficult to establish new credit, but why are they saying this debt repayment program is the same as bankruptcy?

His counsellor said his debt repayment would appear on his record for two years, however the car dealership says it is bankruptcy and it will appear for 7 years.. We’re confused..

Answer: It appears that everyone is confused.  According to Equifax, the largest credit bureau in North America, a debt management plan through a credit counsellor remains on your credit report for 3 years after the payments are completed.  A bankruptcy appears for six years after the date of discharge.  We suggest you get a copy of the credit report to see what’s actually reported on it; it appears that the car dealership is either reading the credit report incorrectly, or the information was reported incorrectly.

Question: I’ve recently received a letter requesting payment on my past due student loan.
I’ve gone to the bank for assistance but was denied. I don’t want to file for bankruptcy. What are my options?

Answer: You have three options.  First, you could simply make payments on your own.  If you can’t pay the full amount, you could pay them whatever you can afford.  It is possible that the student loan lender will continue to pursue you.

You could attempt a debt management plan through a credit counsellor.   Whether or not this will be successful will depend on the amount of money you have to contribute to the plan each month.

Finally, you could offer a consumer proposal, the success of which will depend again on the funds you have to offer each month.  If these options fail, a bankruptcy may be your final option.

Question: is bankrupcy right for everyone ?

Answer:  No.

If you have more debt than you can handle, bankruptcy may be an option, but it is the last option you should consider.  There are many bankruptcy alternatives, and you should consider all of them before deciding to file bankruptcy.

Start by making a personal budget to see if you can cut expenses and use the extra cash to repay your debts.   On this site we offer a free trial of budgeting software to make the job very easy.

Your next option is to consider a debt consolidation loan, where you borrow at a lower interest rate to repay your high interest rate debts (like credit cards and payday loans).

If you don’t qualify for a debt consolidation loan, a credit counsellor may be able to help you file a debt management plan where you get extended time, and lower interest, to repay your debts.

If that’s too expensive, a consumer proposal is a way for many Canadians to make a legal settlement on their debts for less than the full amount owing.  (In the United States, you can consider a Chapter 13 Wage Earner Plan).

Only after you have tried all of these options should you consider personal bankruptcy.

Question: I share workspace with 4 other people. We work shift-work and only one of us is there at any given time.

Two of my co-workers are receiving collection calls at work every week. They are unwilling or unable to stop these calls.

Is there anything I can do to stop these calls?

Thanks for any help you can give.

Answer: The short answer is no, there is nothing you can do to stop the calls, since they have nothing to do with you.  I would suggest the following:

First, when the calls come in, you should simply advise the caller that the person they are looking for is not in the office at the moment, and then hang up.

The better solution is to help your co-workers to actually deal with their money problems.  That may be through working out their problems on their own, or talking to a credit counsellor about a debt management plan, or filing a consumer proposal or a bankruptcy.  However, the decision is there’s not yours, so all you can do is provide them with information on their alternatives, and hopefully they will take action to deal with their problems.

Question: I have the following unsecured debts in my name and desperately need an answer as I have not missed any payments yet but I will shortly if I don’t get some help fast:
30,000.00 credit card
10,000.00 credit line through Canadian Tire Bank (it was through an old credit card that I no longer have, but still have the credit line)-the credit card was paid off and de-activated.
5,000.00 credit card – I can manage this one
I have secured debt:
10.000.00 – this is a truck loan in good standing for a year now.
My question is: Can I make a consumer proposal for the 30,0000 credit card debt and the 10,000.00 credit line and keep the 5,000 credit card and the 10,000.00 truck loan? The trucks value is about 13,000.00 after being paid off in another 4 years. I rent and I don’t own. I am single and also have one other asset 1 car being about 2500.00 my son drives this one but it is in my name. Can I pick and choose what consumer proposals I want or does it have to all or nothing? Please let me know a.s.a.p
thank you for taking the time to read this.

Answer:  A consumer proposal must be made to all unsecured creditors; you cannot pick and choose.  You may continue to pay secured creditors (such as car loans) if they agree, but you cannot include one credit card in a consumer proposal and not another credit card.

Given your level of debt your best option may be to file a consumer proposal for all of your debts, to give you a fresh start.  A trustee in Ontario can give you more information.

If you want to pick and choose, you either need to get a debt consolidation loan to pay off as many debts as you can,  or try a debt management plan through a non-profit credit counsellor.

Question: I HAVE A HUGE 22.000 DOLLAR DEBT ON ONE CREDIT CARD. SINCE I RETIRED, A YEAR AND A HALF AGO, I HAVE BEEN PAYING THE MINIMUN PAYMENT, 250 PER MONTH, THAT ONLY COVERS THE INTEREST. ALSO HAVE ANOTHE CREDIT CARD WITH A SMALLER DEBT OF ABOUT 3.000. I HAVE TWO PENSIONS, ONE FROM WORK, PROVINTIAL GOV. 1400 AND MY CPP, 500.ALSO HAVE A LINE OF CREDIT WITH MY BANK OF 10.000, WICH USUALLY GETS ME TROUGH THE END OF THE MONTH. I HAVE COME TO REALIZE THAT IF I LIVE TO BE 100 YEARS I WOULD NO BE ABLE TO PAY THE BIG DEBT. IF I JUST STOP PAYEING THE ONE CREDIT CARD, CAN THEY GARNISH MY PENSION? WILL IT AFECT MY OTHER CREDIT CARD? CAN THEY GARNISH MY LINE OF CREDIT? I DO NOT HAVE ANY PROPERTY, NO CAR, ONLY OLD FURNITURE AND MY PENSION. WHAT CAN THEY DO TO ME? MY PENSION BARELY COVERS MY RENT AND FOOD.THANKS
IF I JUST STOP PAYEING THE ONE CREDIT CARD, CAN THEY GARNISH MY PENSION? WILL IT AFECT MY OTHER CREDIT CARD? CAN THEY GARNISH MY LINE OF CREDIT? I DO NOT HAVE ANY PROPERTY, NO CAR, ONLY OLD FURNITURE AND MY PENSION. WHAT CAN THEY DO TO ME? MY PENSION BARELY COVERS MY RENT AND FOOD.THANKS

Answer: In most cases it is impossible for a credit card company to garnishee a government pension. You could open a new bank account at a new bank where you don’t owe any money, and it is unlikely that any of the creditors will be able to pursue you further. For more information, you can contact a credit counsellor or a bankruptcy trustee.

Question: If I am 5 months behind –off and on payments because of sickness , will the lender put those in the rearer all in one and let met me pay it like that? Could that be considered, and play some kind of catch-up.?

Answer:  It depends on the lender.  In most cases a lender will allow you to defer one or two payments and add them on to the end of the mortgage.  However, once you fall three or more payments in arrears the lender will often begin taking steps to foreclose and recover their money.  However, given the increasing number of foreclosures that are happening, it may be possible to negotiate with your lender.  We recommend the following approach:

First, make a detailed monthly budget to determine what you can afford to pay over the next few months.

Next, call up the mortgage company and offer them a payment plan.  If your budget shows that you can afford to pay $1,000 per month, that’s what you should offer the lender.  If your normal payment was $800 per month, your lender may allow you to pay something extra each month until you are current.  The key is to present your lender with a plan to get back on track.

However, if you are five months behind and have no hope of getting caught up, and if your house is more expensive than what you can afford to pay, it may be wise to sell your house and pay off the mortgage, and find a less expensive place to rent.   If you are going to lose your house to a foreclosure, it is better to sell the house on your own, so that you can recover the maximum amount of money.

A credit counsellor may be able to assist you further if you have any questions about your options and alternatives.

Question: In 2004, I lost my job and left some credit card debt unpaid before leaving the country for a time. Since I’ve returned to Canada, I’ve been using cash only, since I learned from my mistakes.

If I get a credit report from Equifax or apply for a credit card, will my former creditors then come looking for me?

Answer: Possibly.  It depends on whether or not they have completely written off your debt.  In most cases creditors will do a search every year or two for delinquent debtors.  If you were to apply for a credit card your current address would eventually appear on your credit report, which then makes it relatively easy for the creditors to find you.

If you have old debts, it is probably wise to get a copy of your credit report from Equifax to determine who you owe money to; if the amounts are not large, you may be able to work out settlements with them.  If the amounts are larger than you can handle, you may need to consider credit counselling or a consumer proposal as a way to deal with your old debts.

Question: I have two credit card debts both for $5000. This September will mark 2 years that I have not made a payment. I do have $5000 in savings that I will be using to move. I would like to go to credit counselling but I am anxious that I will have to use my savings. I am anxious that there may be a court settlement regarding these debts that I am not aware of. Are government credit counselling services obliged to divulge my contact information to creditors or law inforcement if I request their services?

Answer: First, in most provinces credit counselling agencies are private not-for-profit agencies; they are not run by the government.   Their job is to work out a settlement plan with your creditors, often in the form of a debt management plan.  To do this they will communicate with your creditors, although legal they are not required to disclose anything you don’t want them to disclose.  In your case the settlement plan may involve you paying $200 per month for 50 months, which would pay off the debts in full, and would still allow you to use your savings to move.

Another possible option would be to file a consumer proposal, where you offer to use some of your savings towards a lump sum settlement, with additional payments over time.  For example, you could offer to pay $2,000 upon acceptance of the proposal, and then $200 per month for two more years.  In that example the credit card companies don’t get all of their money, but it may be enough for them to be satisfied.   However, all assets must be disclosed in this process, so the advice of a trustee is necessary before proceeding.l

Question: My wife and I are having money issues. Currently I am looking for work and collecting the max for UIC. My wife brings home 2000/month.
We have a house that was appraised at 175,000 but is worth more on the open market. Mortgage is 142,000 and we have a line of credit at 28,000. We have credit card debts totaling 6,000 and a small loan of 4,000. We are not behind on anything but right now, we have to keep borrowing to pay the bills. Total bills are about 1200/month including our 300 car payment which is paid in full next month.
My wife is too embarrassed to seek help. Any suggestions? Other than finding a job quick!

Answer:  Seek help.

Everyone gets embarrassed by financial problems, but ignoring the problem won’t solve the problem.  Talk to a credit counsellor or a bankruptcy trustee.  They will offer you a free initial consultation, and they can explain all of your options.

One option to consider would be to sell the house, and use the money to live until you are back to work.  Obviously finding a job soon would also help.  A consumer proposal or a personal bankruptcy may also be options, but a consultation is necessary to explore all of the options and then decide which option is best for you and your family.