Archive for Category 'Money Problems'

Question: I’ve heard ads on the radio for Cambridge Life Solutions, and I saw your previous question about them and debt consultant companies.  What else do you know about them? Can they settle really settle my debt?

Answer: Cambridge Life Solutions is a California based debt settlement company.  In the article A Fact Checking Review of Cambridge Life Solutions Claims prepared by the Credit Counselling Society, a not-for-profit counselling agency, they reveal that:

the chances of you becoming “debt free” from using one of these American style debt settlement programs is less than 10%, and 65% leave the program having paid for a service they never received.

They also reveal that various credit card companies, like American Express and MBNA, refuse to deal with Cambridge Life Solutions.

So, before you part with your hard earned money, be sure to investigate them thoroughly, to ensure that you are dealing with a company that can actually solve your debt problems.

Question: My boyfriend and I got a call from a collection agency last night. They claim he owes $3K on a credit card from 1994 – 16 years ago. He swears this to be untrue – he was 16 years old! Also, he has a line of credit with the alleged creditor, so wouldn’t they have worked it out with him years ago?

Anyways, the collection agency said they are sending a letter in the mail, and that if it isn’t him (mistaken identity) he has to get a signed affidavit claiming that the debt is not his and send it back to them all within 20 days. Does he really need to take a day off of work and pay someone for a signed affidavit? His credit report is clear, but they said they can “add it back on, reopening the debt” – is this true?

The collection agency also said that if they do not have a response within 20 days, than they will be calling us 3 times a week until the debt is paid. What can we do here? It wasn’t him, so what are our rights? please help!

Answer: Sadly, these are not uncommon collection agency tactics.  Collection agencies have been known to call about a debt that isn’t real, or that isn’t your debt.  It’s easy for them to make a phone call; it’s much more difficult for them to actually create phony paperwork to send you, so it’s quite possible that you will not hear from them again.

Also, various locations have Statutes of Limitations.  For example, in Ontario a creditor is required to commence legal action within two years, so it’s highly unlikely they will take him to court for a 16 year old debt.

If they do contact you again, you could discuss it with a lawyer experienced in collection matters.

Question: I am considering making a consumer proposal, because the amount of debt that I have is just unmanageable. My home is worth about $350,000, with maybe $20,000 in equity. I have about $35,000 in credit card debt, and a $100,000 unsecured line of credit. I have three children and a non-earning spouse, and I earn $130,000 per year. I am making minimum payments on credit cards and the LOC (which is interest-only) and I am always hugging the line every month. It’s very stressful, and I’m not getting ahead.  Is a consumer proposal an option for me?

Answer: Yes, a consumer proposal is a possible option for you.  A consumer proposal works best when you have a good income, but are unable to repay your debts in full.

We suggest the following approach:

First, make a budget to determine what you can afford to pay each month in your consumer proposal.

Second, use our debt options calculator to determine the approximate cost of a consumer proposal.

If the numbers work, contact a consumer proposal administrator for a free initial consultation to review your options in detail, and to determine the best course of action.

Question:  I live in Ontario, and the collection agency said that the debt occurred in 1996 and was written off in 1998. I do not think this was an unpaid debt, but after all this time what can I do? How can I prove that it was or was not paid now?

Can the collection agency still come to me after this many years?

Can they put a judgement against me after all this time, and will this affect my current credit score?

If this turns out to be an old unpaid debt, can I settle for a lesser amount?

Thank you

Answer: You have a number of options.  First, you can do nothing.  It is highly unlikely that a collection agency will take you to court for a 12 year old debt.  In fact, it is possible that the Statute of Limitations has expired on the debt, although you would need to consult a lawyer for more information.  (Here’s a book that may help: The Wolf at the Door: What to Do When Collection Agencies Come Calling).

You can also negotiate a settlement with them, if you so choose.  However, to start, you should request proof that you owe the money.  Given the age of the debt, they may not have the original paperwork, and in fact you may not even owe the money, so getting proof of the debt is your first step.

Question: I am considering making a consumer proposal, because the amount of debt that I have is just unmanageable. My home is worth about $350,000, with maybe $20,000 in equity. I have about $35,000 in credit card debt, and a $100,000 unsecured line of credit. I have three children and a non-earning spouse, and I earn $130,000 per year. I am making minimum payments on credit cards and the line of credit (which is interest-only) and I am always hugging the line every month. It’s very stressful, and I’m not getting ahead.  Would a consumer proposal work for me?

Answer: Yes, a consumer proposal is a viable option for you.  The key will be to determine what you can afford to pay each month, and that will be the basis of your proposal.

Your creditors will know that if they don’t accept your proposal and you file bankruptcy, they will be entitled to the equity in your home (say $20,000), and a portion of your surplus income, so your proposal will need to be for more than they would receive in a bankruptcy.

We suggest you make a detailed budget to determine what you can afford to pay each month, and then contact a consumer proposal administrator to help you determine what monthly payment is likely to be accepted by the creditors.

Question: We were served with papers that the mortgage holder will be taking possession of our home. My husbands plan is to lock the doors and move away. My fear is coming home to changed locks and life time of memories auctioned off to strangers.
Is there anything at all that we can do to save our home?
It is currently for sale which was agreed upon by all parties involved.

Answer: If the mortgage holder has notified you that they are starting power of sale proceedings, you should discuss your options with the mortgage holder.  If they have agreed to allow you to sell the house, then it seems strange that they are now proceeding with a power of sale.

If you cannot reach an agreement with them, then your husband’s approach is correct.  You should find a place to rent, and move, so that none of your possessions are in the house when the bank changes the locks, if that is what they are going to do.

For more information, you should consult a lawyer or a trustee in bankruptcy; they will want to review the actual letters and documents the mortgage holder has sent you so that they can advise you fully.

Question: My wife and i have over $85,000 of unsecured debt. and add $185,000 first mortgage and $25,000 2nd mortgage = almost $300,000 total debt

our house was valued at $220,000 2 march’s ago. but now we need the roof repaired $10k for that. and found the basement foundation to be slowing getting bad so we think the value will be lower. plus housing been dropping the past year. so no equity at all in our home

my van still has $7k left to pay on it and it’s valued about $7k right now also so no help from that. my wife other 2 vehicles have dead engines needing over $3k in repairs each.

last yr my wife was making about $40,000 plus $15,000 in over time. $19/hr plus OT = almost $7/hr . i was making $18/hr $37,000 a yr. great income and just a little ahead of the bills. had plan to get rid of 1/3 of debt in 1.5 yrs and another 1/3 in 3 yrs.

but then i got laid off for 3 months and had to take a job for $14/hr , not to bad $4/hr less. we were still making the bills. just not much extra. Then my wife lost her job and fould a job 2 months later for $12/hr. thats from almost $26/h with the OT to $12/h, huge loss.

our income dropped $18 a hour. making the reg bills. mortgage utils food. we borrowed $600 from a church. plus food from them. just to try to catch up. even tried to get 2nd jobs.

we’re now behind $4k in bills. and utils 3 month back close to cutting off.

should we file right now. or save a bit of money by not paying the credit cards and mortgage. and pay the utils and save up to move? then file

or is it just best to file asap and then work on the bills and saving to move?

sorry for long question. just wanted to give most of the details. we are filling out the paperwork i printed off line for the trustee. but just havn’t made the appointment yet.

oh and 2nd question is how fast will we have to move when we file? i hear it’s hard to rent a place if in bankruptcy. so could take time to find a place too?

thank you

Answer: In most cases it is best to deal with the urgent issues first.  In your case, if the plane is to surrender your home to the morgage company and find a place to rent, it is probably best for you to stop paying the mortgage and save enough so that you can move.  Having a place to live is a high priority.

However, with each passing day you will be getting phone calls from all of your creditors, and they may start legal action.  So, you will want to be ready to file personal bankruptcy when required.  In your case, given the amount of your debt, and your incomes, a bankruptcy may be your most logical option.

We suggest you book your meeting with a bankruptcy trustee now, so that they can start preparing the necessary paperwork, so that if a creditor does start court action you will be able to file quickly.

Question: Is there any way to get a loan to pay off the remainder of my consumer proposal (13,000) and we also have a car loan with 29% interest rate. I would like to get one loan to pay off both but i have called and the banks say they will not give us a loan because of the debt proposal is pretty much the same as bankruptcy.

Answer: As you have discovered, it is almost impossible to get an unsecured bank loan while you are in the middle of a consumer proposal.  Here’s why:

In a consumer proposal you offer to repay a portion of your debts.  For example, your total debts may have been $50,000, and you have made a proposal and still owe $13,000 on the proposal.  If for some reason you are unable to complete the proposal and pay the remaining $13,000, the proposal fails and all of your original debts return (less whatever they received during the proposal).  In your case that could mean you still owe close to $50,000.  That’s why a bank doesn’t want to lend you the money; they are afraid that if the proposal isn’t repaid, you end up with a lot more debt than they expected.

You have some options.

The first option is to repay the proposal as quickly as possible.  Once it’s repaid, your credit score will begin to improve, so that in the future you can refinance your car loan at a more reasonable rate.

Your other option would be to get a friend or family member to borrow the money for you, and then loan it to you so you can repay the proposal.

Or, keep the proposal in place and ask your friend or family member to co-sign for you on a new car loan, or to arrange for a new car loan in their name.  That may make it possible to refinance the car now at a lower rate, since the bank’s decision will be based on your family member’s credit score.

Unfortunately there are no easy solutions, so it may be best to simply continue with the existing payments.

Question: Me and wife have joint about $80,000 of combined unsecured loan,a joint $30,000 of secred loan. I have another $60,000 of unsecured loan on my personal name ,the total equity in my house is around $80,000 and I am leasing a car (don’t own it).  My gross yearly income is $90,000 and my wife gross is $36,000. What are my option for bankruptcy,proposal or credit counselling?

Answer: Personal bankruptcy in Canada is probably not the correct answer for you.  If you have $80,000 in equity in your house, you would lose your house if you declared bankruptcy.  In addition, in bankruptcy the more you earn the more you are required to pay, so you would have significant surplus income in a bankruptcy.  With your family income, you would be bankrupt for 21 months, and the payments you would be required to make would be significant.

A consumer proposal is a possible solution.  The amount of payments required in a proposal would be more than you would be expected to pay in a bankruptcy, or else the creditors would not accept the deal.  So, the cost of a consumer proposal would also be significant.

In a credit counselling debt management plan you keep your house, but you are required to repay your debts in full, over a three to five year period.  That may be prohibitively expensive for you as well.

You can compare the different options using our debt options calculator.

A final solution may be to downsize your lifestyle.  You could sell the house and find a place to rent, and use the $80,000 in equity to either file a lump sum proposal, or repay a significant amount of your debt, which leaves you with much more manageable monthly payments.

The correct answer will depend on your income and expenses each month.  A credit counsellor or trustee can calculate the cost of the different options for you in more detail.

Question: I have applied for permanent residency recently. If I go bankrupt now will it affect my application of permanent residency?

Answer: Possibly, but probably not. Immigration does not approve if you are sponsoring someone else to come into the country, because if you have gone bankrupt they are worried that you will be unable to support the person you are sponsoring.  However, if you yourself are bankrupt, it is less of an issue.

However, you should not take our word for it.  Review the permanent residency application to see if there are any questions dealing with bankruptcy.  You could also consult the government, or an immigration lawyer for further advice.