Archive for Category 'credit card'

Question: I have about $50,000 in credit card debts.  I got laid off two years ago, and it took me a year to find another job, which did not pay as well as my old job.  I live in Ontario, so I am wondering if I should file bankruptcy in Ontario, or is there something else I should consider?

Answer: Yes, there are other debt management options you should consider.  Bankruptcy should be your last resort, not your first choice.  Here are some options:

First, now that you are back to work, is it possible to repay your debts on your own?  If you can, that’s your best option, even if it takes a year or two to substantially reduce your debt.

Second, if you have high interest rate credit cards, a second option to consider would be a debt consolidation loan to consolidate your debts and reduce the interest you are paying.

Third, if the bank won’t give you a consolidation loan, another option is a consumer proposal.  In a consumer prop0sal you make a settlement with your creditors.  For example, the credit card companies may be willing to accept payments of $500 per month for 50 months, or $25,000 in total, and then right off the rest.  Whether or not they will accept that deal depends on your personal situation.

If those options are not possible then yes, filing bankruptcy in Ontario may be your final option.  You should consult with an Ontario consumer proposal administrator or an Ontario bankruptcy trustee to arrange for a free initial consultation to fully explore your options before you make a decision.

Question: hi. I had a consumer proposal that i filed in 2005. i had 3 years of payments, which i did, and it is listing on my credit report as discharged in 2008. how long before this disappears completely, or how do i go about getting it taken off, as it is difficult to rebuild our credit, when we cant get any.
thanks for your help

Answer: Each credit reporting agency in Canada will handle this differently.  In general, a consumer proposal will remain on your credit report for three years after the date of discharge.  So, if you completed your payments in 2008, the proposal should drop off your credit report at some point in 2011.

You can start rebuilding your credit by borrowing small amounts of money.  For example, you can get a secured Visa card; you put $500 or more on deposit, and you get a credit card with a $500 limit.  It appears on your credit report as a normal credit card, which is a positive sign for future lenders.

In addition, save money, and keep all of your regular monthly bills current, and you will gradually repair your credit.

Question: My wife and I are self employed. We have huge credit card debts because we’ve used them to finance our businesses. We also have about 20% equity in our home. The problem is business has been bad for the past six months and we’ve run out of cash. Is there a solution where we could defer making payments on the debts for six months or so and then simply resume making payments when business improves?

Answer: You are in a difficult situation.  In general, credit card companies will not allow you to stop paying for six months.  You have a number of choices:

First, you could simply stop paying.  The credit card companies will obviously call you and attempt to collect the money, and they may even take you to court.  If they do, they will probably have difficulty garnisheeing your wages, since as a self-employed person you have “earnings”, not “wages”.  Since it may take them six months to do that in any event, by the time they are ready to go to court you may be in a position to resume making payments.

A second option would be to continue making whatever payments you can, even if it’s less than the minimum payment, and hope that your business improves and you become able to make full payments again.

A third option would be to file a consumer proposal.  You could offer the creditors a nominal payment for the first six months (say $100 per month), and then gradually increase the payments after that based on your expectations for future income.  A consumer proposal only makes sense if you are confident that business will improve significantly in the future.

The final option would be to simply assume that business won’t improve in the near future, and declare bankruptcy.  This may result in losing your home, so careful consideration would need to be given to this option before making a decision.

A trustee can provide you with more advice on whether a consumer proposal or a bankruptcy is the correct option for you.  Either way, you will want to make a plan as soon as possible so that you can deal with your debts, and devote most of your energies to running your business.

Question: Hello! Can you please tell me if you fall behind in credit card payments or just pay small payments to credit card companies….can they sue you or place a lien on a mortgaged home? We are a one income home(pension), car is on a loan and our home is mortgaged. Can they take our home, force us to sell or move out? I am very worried! I do not want a consumer proposal or go bankrupt. I thank you in advance. M

Answer:  In theory, yes, if you default on your payments the credit card company could take you to court, sue you, obtain a judgment against you, and then enforce that judgment by placing a lien on your home.

However, that is very unlikely.  Since your home already has a mortgage on it, there is probably not a huge amount of equity.  Also, the credit card company, in order to get their money, would have to sell the home and pay off the first mortgage holder.  It is unlikely they will want to spend that much money to collect what you owe them on your credit card.

You should attempt to make payment arrangements with the credit card company.  If that’s not possible, it may be time to consider your other debt management options.

Question: I am two months late on my credit card payment because my business is losing money in this recession and I haven’t taken a salary in 8 months. If it goes to collections, I know they can garnish my wages (which are $0 right now) and take funds out of my bank account (which is also close to $0 right now). But can they take my RSP and put a lien on my house?

Answer:  In most cases RRSPs are exempt from seizure.  In order for a credit card company to be able to put a lien on your house they would first have to sue you, win, and then enforce the judgment through a lien.  That is a very unusual step for a credit card company to take.

To start, you should open a new bank account at a new bank (where you don’t owe any money), so that you are in control of the funds that you have.  Then, you should consult a credit counsellor or a trustee in bankruptcy to explore your options.

Question: I do not want to claim bankruptcy. I have about $25,000 debt, credit cards, loans etc. still good credit. been doing all my min payments. Don’t have a job. min payments are about all I can do. Am not getting anywhere with my debt. Will remain in debt forever if i don’t get help. Can anything be done?

Answer:  You have a few options.

First, you could continue doing exactly what you are doing until you find a job.  You make your minimum payments to keep your rating positive, and then when you are back to work you can work on paying down your debt.

Second, you could file a debt management plan with  a not for profit credit counsellor who will work out a repayment plan where you repay your debts in full, but at a low or zero rate of interest.

Third, you could file a consumer proposal where you repay a portion of your debts.

Both a debt management plan and a consumer proposal require you to have enough money each month to make payments on your debts.  If you are not working that may not be possible, so you will need to review your budget to see exactly how much you can afford each month.

Finally, as a last resort bankruptcy is an option.  If you are not working you have no wages, so your wages cannot be garnisheed, so bankruptcy is not necessary to prevent a wage garnishment.  However, you may decide that it is better to deal with your debts now, so that when you return to work you do not have the stress of the debts.

We suggest you consult a licensed bankruptcy trustee to review your options in detail, and help you decide which option is best for your.

Question: When I was younger I messed up with credit. I had a join CC and some other department store credit cards that at that time I ended up maxing out and with no income just stopped making payments. That was some 7-8 years ago.

Well things are looking up now, and I want to get my credit back on track. All this time I have still maintained just one credit card that I have kept current without issue. However, on pulling my credit report today I have found 2 collections for the department store ones (CND Tire and Sears) , and one for Capital One credit card, which to my shock is now sitting at just over $11k. The last balance I recalled having on it was for about $7k back in 2003 I think. The other two together amount to $4900.

So I am looking at about a total of $16k in bad debt on my credit against my one credit card that is perfect. This is based on Trans Union info at the moment. Equifax online wouldn’t generate my report right away, so I have to wait till Monday to find out what might be on there.

There is no way I can cover $16K any time soon and I need to get this settled fast. I don\’t want to do a consumer proposal as that is just as bad as declaring bankruptcy with a ding to last 3 years instead of 7, and I don\’t care to get my current good credit card involved.

I have gotten numerous offers from the capital one collection agents to settle on my balance for something like $5000 to clear it.. but to tell you the truth, I don’t trust collection companies. I think I will make that payment and then they will start harrassing me to collect on the rest of the balance.

I currently have about $6000 that I can use to pay down my debts and clean up my credit history. I want to fast track this cleanup though, and would like to know if it isn’t unheard of to contact these people individually who say I owe them and offer them something like $0.40 on the dollar with one single payment and agree to remove it from my credit history, or at least show it as paid. If I get them to agree to this, will they, or do they, usually honor it? Will it show up on my credit history as cleared? Should I get them to send me something in writing to agree to this before I proceed with payments?

After this I guess I will be busy getting secured credit cards and building up more of a positive profile.

My goal is to get this turned around in 6 months. Am I dreaming? Or can it be done?

Answer: The advantage of a consumer proposal is that it’s a legally binding settlement; once accepted, the creditors cannot change their mind later.  However, you are correct, there is a note on your credit report that remains for three years after the proposal is completed.

Another possible option, if you want to propose a lump sum settlement to just the credit cards that are delinquent would be to use a lawyer to negotiate the settlement.  That way you get a legally binding settlement, on terms acceptable to you, with less impact on your credit report.

Question: If an individual has no income and no assets,and cannot pay the minimum on his credit card, but manages to pay something every month, can he be put into collections if he is attempting to pay?

Answer: Yes, a credit card company can send your account to a collection agency if you are not making the minimum required payment each month.  However, in most cases, if you are making payments the credit card company will continue to work with you, and probably will not send your account to a collection agency.

Question: I can not make a payment to my visa, mastercard, and line of credit because my parents are on disability right now. I  currently can only afford to pay mortgage which I had co-signed for my parents and utility bills. If I can not make further payment to my unsecured debts. Can creditors make me to sell the house to cover my debts. However, since I am only the co-signed of the house?

Answer: If you don’t pay your debts,  the creditors can take you to court, sue you, and get a judgment against you.  If you own a house, they could place a lien on the house and sell it, although that would be a very unusual action to be taken by a credit card company.  If the house is owned by your parents and you have only co-signed the mortgage, then it’s not your house, so your creditors would not be able to seize it.

Question: I have a card that is holding a balance of $7000 and the limit is $6500. The huge mistake that I made was taking out quite a few cash advances while first daughter was being born and the expenses in her first year.

What I did not realize was the extra interest on cash advances.

Steps taken were scissors to the card.

Now we just cant seem to get the balance back to its normal payment. Made a $500 payment (minimum was $190) and the next statement showed a $2 increase in the balance after interest added.

We can only afford $300 payments which will help if we can get back to the $190 minimum.

Our mortgage is up for renewal and we considered trying to consolidate this CC into our mortgage but not sure if that helps.

Any advice?

Answer: You have a few options.  The first option would be to call the credit card company and ask if they can reduce the interest rate, or convert the card into a loan with a reasonable interest rate and payments of $300 per month.  They probably won’t want to trade a high interest credit card for a lower interest loan, but it’s worth a try.

Next, you could do as you suggest and increase your mortgage when you renew by the amount necessary to repay the credit card.  If there is sufficient equity in your mortgage and you can afford the mortgage payments, this option makes sense.

If that isn’t possible, you could try a debt management plan through a credit counsellor. If all else fails, a consumer proposal or a bankruptcy may be necessary to deal with your debts, but because you own a house those options should not be considered until you have discussed your situation with a licensed trustee.