Debt Settlement - My options? - Canada

a good place to talk about links

RE: My options?

Postby winston » Tue Mar 22, 2011 05:49:33 AM

One again thanks for the information.

I do have much to think about and not much time.

I do have a surplus which would make my payments out of range, in case of a Bankruptcy.

However if a Trustee feels a Proposal of $450 a month is an ideal sum and based on my budget it is not exactly a smooth ride, I could take the "risk" and attempted to tackle my debts myself and pay say $375 a month (pay Visa & Line of Credit) bit my bit for a while and see if I make a bit of progress.

Maybe holding off for a few months would shed some light on my true abilities.

Defaulting and Not-Paying is not my goal. Peace of mind is.

Thanks.
winston
Member
Posts: 7
Joined: Mon Mar 14, 2011 08:17:29 AM
Province: ON


RE: My options?

Postby footloose » Mon Mar 21, 2011 08:34:44 PM

The Statement of Income and Expenses is only one document that a Trustee must complete in putting together a package of documents to be submitted to the Superintendent of Bankruptcy to initiate a Consumer Proposal. The expenses that you made reference to should definitely be included in your expenses. I have no idea why the Trustee chose to ignore them. However, having said that, that may be the least of your concerns at this point.

In your initial post, you indicated that bankruptcy was not an option, but you didn't explain why. It has now come to light that you had declared bankruptcy previously in 1997. After discussing your options with a second Trustee, your estimated monthly payments will be $450 a month, up from $300 to $325 a month. Based upon the information that you submitted in your posts, that monthly payment represents an impossibility for you to meet.

When a Trustee submits a Consumer Proposal to your creditors, he/she must furnish as much detail as possible so that a creditor can make an informed decision as to whether to accept the Proposal or to reject it. If the Trustee did not state in the Proposal that you had previously declared bankruptcy and when, and the creditors learned of this fact later, they would apply to the Superintendent of Bankruptcy to have the Proposal annulled ( cancelled ) and the Trustee would in all probability be “disciplined” by the Superintendent of Bankruptcy including suspension of his/her licence to practice as a Trustee.

The fact that you had previously declared bankruptcy and now find yourself again in financial difficulty does not sit well with your creditors. That is why that in a Consumer Proposal, they would be demanding a higher monthly payment than if you had never previously declared bankruptcy and the Trustee knows that all too well as they are continuously dealing with these matters.

That leaves you with two options. Bankruptcy or a lawsuit. Let me examine each one independently.

Because you have been previously bankrupt, I don't have to bore you with all the details, however, there are 2 things that you should be aware of. First, if you declare bankruptcy, that information will remain on your Credit Reports for both Equifax and TransUnion for 14 years from the Date of Discharge. Second, if you do NOT have surplus income, you are ELIGIBLE for a discharge after 24 months in bankruptcy. Application must be made to the Bankruptcy Court. There is no guarantee that you will be discharged in 24 months and there may be conditions attached to the discharge. The discharge is NOT automatic. If you have surplus income, you are ELIGIBLE for a discharge after 36 months in bankruptcy. Same rules apply as stated previously.

If you are currently in collections with RBC, that means that at some time in the past, you had defaulted on your monthly payments and there is a better than average chance that you will default on your future payments. Having said that, RBC will no doubt go on the offensive and attempt to sue you in either Small Claims Court if your debt is 25K or less or in the Superior Court of Justice if your debt exceeds 25K. If the lawsuit is brought in the Superior Court of Justice, you do not have the knowledge , experience or expertise to defend yourself so that means you will have to hire a lawyer to represent you and that costs money. Your defence could include a promise to pay $X per month but RBC may challenge that amount through a payment hearing, and if successful, could make it difficult for you to meet these payments. Should you default on these payments, after 15 days RBC can then apply to the court for a judgment which is usually granted. Unlike the previous Limitations Act in which a judgment was valid for 10 years and renewable for a further 10 years, under the current Limitations Act, 2002 effective January 1, 2004, there is NO limitation period for judgments and court orders. In effect, you could be subject to a judgment for the rest of your life or until the debt is satisfied whichever occurs first. Not a bright outlook but that's how I see it.

----------------------------------------------------------------------------------------------------------
Educating one Consumer at a time
footloose
Member
Posts: 654
Joined: Mon May 31, 2010 07:12:21 PM
Province: ON


RE: My options?

Postby winston » Mon Mar 21, 2011 03:03:44 PM

Footloose, thanks for your input thus far.

So I went to another Trustee. We reviewed the numbers but I found he wasn't considering putting things in to my "expenses" such as any for Entertainment or Misc items (toilet paper, grooming, clothes). Monies I may spend on "medical" things such as parking or prescriptions? How does one or can one put these in to a proposal.

Then another thing came up. The proposal at the start was looking $270ish a month. Then he asked if I ever declared bankrupty before, I said a long time ago (1997). After that he said it will change it to $450 a month.

This is all very hard to keep track of! Thoughts?
winston
Member
Posts: 7
Joined: Mon Mar 14, 2011 08:17:29 AM
Province: ON


RE: My options?

Postby footloose » Tue Mar 15, 2011 06:02:03 PM

Thanks Winston for your quick reply. I am happy to see that your paycheque is made by direct deposit into an account at a different bank than the one that is currently frozen. In a previous post, you raised the question of garnishment of your wages.

In order for your wages to be garnished, RBC would first have to sue you, take you to court and hopefully obtain a judgment. If they obtained a judgment, they would then have to apply to the court for an enforcement order ( garnishment ) before they could garnish your wages. If at all possible, you want to try to avoid this from happening.

You mentioned in a previous post that paying $300 a month is creating a financial hardship for you given that you have to put a roof over your head, food on the table and clothes on your back plus gas in your car in order to get to work. I want you to consider very carefully how much that you could COMFORTABLY pay RBC each month WITHOUT putting a strain on your finances. If the number is $50 a month, then that's O.K. If you can afford more than $50 a month COMFORTABLY, then you might consider a larger payment, such as $75 a month. I want you to STOP trying to pay an amount that you CANNOT afford, and start paying an amount that you CAN afford. Obviously, RBC will be upset, however, they can afford to accept a lower payment. If a collection agency attempts to get on your case, hang up immediately. There is no law in Canada that says that you have to talk to a collector or a collection agency. If RBC is not happy with these lower payments, they may attempt to sue you by issuing you a Statement of Claim. If that happens, report back immediately to this website and I will walk you through the next set of procedures or send me a Private Message. In the event that you receive a Statement of Claim from RBC, you will be required to attend a mandatory Pre-Trial Settlement Conference to discuss your situation. I can confidently say that no judge in Canada will award a judgment to RBC as long as you are making some attempt to pay down your debt, no matter how small the payments may be. A judge may order a larger payment but NEVER issue a judgment. A judgment is usually ordered when a debtor ignores a claim or absolutely refuses to make any kind of partial payment or settlement of the claim. And without a judgment, RBC will not be able to garnish any bank accounts that you have at other banks ( not branches of the RBC ) or garnish your salary or wages.

------------------------------------------------------------------------------------
Educating one Consumer at a time

footloose
Member
Posts: 654
Joined: Mon May 31, 2010 07:12:21 PM
Province: ON


RE: My options?

Postby winston » Tue Mar 15, 2011 02:02:17 PM

Direct Deposit to another account with another Bank.
winston
Member
Posts: 7
Joined: Mon Mar 14, 2011 08:17:29 AM
Province: ON


RE: My options?

Postby footloose » Tue Mar 15, 2011 01:54:05 PM

When you get paid, do you receive your paycheque by direct deposit or are you handed a paycheque? If you receive your paycheque by direct deposit, does it go into your "frozen" account? Now that I know that you are in collections with VISA, I will discuss your options as soon as you can answer my question

----------------------------------------------------------------------------------------
Educating one Consumer at a time
footloose
Member
Posts: 654
Joined: Mon May 31, 2010 07:12:21 PM
Province: ON


RE: My options?

Postby winston » Tue Mar 15, 2011 12:23:37 PM

At this time... I am in collections with VISA (go figure? they froze my acct and took money anyways?) and I paid last months Line of Credit Intrest, however I have no funds for this month.

How long does it take for any time of garnishment to begin? Do I get any notice if I do not pay by "X" day we will garnish?

I will take your advice and talk with a few more Trustee's.

I need to get this monthly payment at $300 or less. I can't keep living like this, as at times food and fuel to get to work is a challenge.
winston
Member
Posts: 7
Joined: Mon Mar 14, 2011 08:17:29 AM
Province: ON


RE: My options?

Postby footloose » Tue Mar 15, 2011 11:46:26 AM

It costs nothing to talk to a Trustee so the price is right. If you are not comfortable with the Trustee that you talked to, I would suggest that you talk to some other Trustees, explain your situation and see what they are able to suggest. If after talking to possibly 2 or 3 Trustees and they all indicate that your monthly payments would be in the $300 a month range, then this is about as good that you can expect.

Having said that, here is your real problem. You are currently making your monthly payments, albeit, it is a real struggle and you don't see any significant reduction in your principal. As long as you are making your monthly payments, even if they are minimum payments only, creditors are reluctant to reduce any interest payments, let alone reduce the principal. This is the problem that Trustees face when attempting to negotiate with creditors and they know it.

If your payments were 9 - 12 months in arrears, you would stand a much better chance of negotiating a better deal with your creditors. They would know that you are in financial trouble and instead of taking the chance that you may declare bankruptcy and they would recover very little in return, if anything at all, they would become much more receptive to a Consumer Proposal with much better terms.

I would suggest that you contact 2 or 3 additional Trustees and run this idea past them. Then, you would have a better idea of just where you stand. Also, keep in mind that both your Credit Report and your Credit Score will take a major "hit" but your current problem is cash flow or lack of it. If you default on your current debts, in time, collection agencies will be after you. If you can hold out for 9 - 12 months, and then file a Consumer Proposal, the interest is frozen and the creditors/collection agencies can no longer contact you or garnish your bank accounts or salary or wages.

As I mentioned previously, talk to 2 or 3 Trustees about this idea. Then think about what I said as well as the Trustees before making any final decision. Your peace of mind is far more important right now than a Credit Report or a Credit Score. Chart your course of action and then get on with your life. Remember, you are not on this planet for a long time, just a good time. Something to think about.

-------------------------------------------------------------------------------------
Educating one Consumer at a time

footloose
Member
Posts: 654
Joined: Mon May 31, 2010 07:12:21 PM
Province: ON


RE: My options?

Postby winston » Tue Mar 15, 2011 09:09:00 AM

The Trustee I went to see said the best they would do was $325 a month.

Which in itself would be hard for me to pay.

Is meeting trustee's like shopping around or something?
winston
Member
Posts: 7
Joined: Mon Mar 14, 2011 08:17:29 AM
Province: ON


RE: My options?

Postby winston » Mon Mar 14, 2011 11:49:42 AM

Seems like the proposal is the way to go then!

When it is all said and done, I am pretty much paying back the full amount.

I owe $25K.

The trustee said my situation unfortunately makes it tough and that RBC is difficult to work with. So I would be looking atleast $325/5yrs. (found the email on it). So I would be paying back $19500.
winston
Member
Posts: 7
Joined: Mon Mar 14, 2011 08:17:29 AM
Province: ON


,

Return to Debt Settlement - Discussion Area