Question: I got myself in a mess was divorced 4 years ago and have sole custody of my 14 year old. One year after the divorce I was laid off my employment after 12 years and it took me 5 months to find a job, finally found one less money of course but again 1 year later that company went bankrupt. The last time it took me 7 months to find another job again less money and I was very behind paying everything. I have been working since 1 1/2 years but I just cannot catch up my loan payments and living expenses are just not enough to catch up.
I went to meet with the Bank about a debt consolidation loan and they are offering something but almost 2 weeks of my salary will have to go to pay it off and will take me 8 years they say best they can do. I owe about 45K and after 8 years I will have paid 91K with what they are asking. I just do not know if I should try to do this and kill myself doing it or go another way. I would appreciate it if you could tell me your opinion. My x-husband has nothing to do with me or my son and under no circumstances do I want him to find anything about this. Is there another way I can go. I had a friend who filed for bankruptcy in Toronto; I don’t know if I should filed for bankruptcy here in Montreal. Also I have a good job not and do not wish for my employer to find out either.
Thank-you.
Answer: You have presented a good analysis of your situation. You are correct that the first option to consider is to work through your debts on your own. You start by making a personal budget to determine what expenses you can cut to free up more cash to pay your debts. This will also help you understand how much you can afford to repay if you get a debt consolidation loan. The bank has already given you a lot of debt consolidation loans information, so you know the numbers on which to base your decision.
It would appear that it would be very expensive for you to make the payments on the consolidation loan for the next eight years. Given that you know how difficult it is to keep a job during a recession, a big concern would be whether or not you will have un-interrupted income for the next eight years so you can make all of the payments. That’s a big risk.
Another option would be to consider a consumer proposal. In a consumer proposal you make payments over a period of up to five years, but in most cases you are repaying less than the full amount of your debt, so the payments are affordable.
If that’s not possible, a bankruptcy may be necessary, but that’s a last resort.
We suggest you start by using a debt options calculator to evaluate your options, and then contact a Montreal bankruptcy trustee for a free initial consultation to review all of your options.
