Archive for Category 'Debt Management Plan', page 2

Question: My husband and I owe $96,500.00 in unsecured debt, and an additional $40,000.00 in secured debt. We do not own our own home, we rent.
We have never missed a payment nor have we ever been late on a payment. But we work to pay our debts. There is no money left over. Only the minimum is paid on our bills each month so we aren’t getting anywhere.
What would you recommend?

Answer: You have five choices.

1. Keep working hard, cut your expenses, and use whatever money have to pay off your debts, starting with the highest interest rate debts.  If you can only afford minimum payments, this startegy won’t work.

2. Get a consolidation loan from a bank.  If you have good credit, you may be able to consolidate your unsecured debts at a lower rate of interest, so that more of your payments go towards principal, and you repay your debts faster.  However, it is unlikely a bank will lend you $96,5000 with no collateral.

3. Do a Debt Management Plan through a non-profit credit counsellor.  To repay $96,500 over a 5 year period would cost over $1,600 per month, so credit counselling only works if you can afford it.

4. File a consumer proposal through a licensed trustee in your area.  In most consumer proposals you are able to repay less than the full amount owing, so in your case it may be possible to pay, say, $500 per month for three to five years to eliminate your debt.  Certain rules apply, but if your debts are joint with your husband, this may be a good option.

5. The final option is personal bankruptcy.  Bankruptcy eliminates your debt, but the payment you are required to make each month is based on your income.  The higher your income, the more you pay, so this may or may not be the correct option.  For more information, contact a licensed trustee in your area. 

There are options, so we strongly suggest that you investigate your options, and decide on the solution that’s right for you.

Question: I had a car loan with a bank. I kept up with the payments for 3 years. I then went through a separation with my common law and was forced to enter a debt management program. I thought I could still keep up with the car payments but other things happened and I was forced to not pay them. I did contact the bank to ask for an extension or even a new loan they said they couldn’t help.
I just received a letter from a collection agency and wonder what can they do. If they take me to court can they get payments higher than the original bank loan?
I am still in the debt program and wonder if it’s too late to try and get the car loan included?

Answer: If they take you to court, the court may order a payment which could be higher than the original car loan.  Your best option will be to talk to your credit counsellor to see if the car loan shortfall can be included in your debt management plan.  If not, it may be necessary to consider a consumer proposal or personal bankruptcy.