Debt Scenarios
Is This You?
- Credit card debts
- Tax debt
- Job loss
- Marriage breakdown
- Single parent
- Addictions
- Health issues
- Business failure
- Student loans
- Budget problems
- Senior citizen/fixed income
- Corporate restructuring
Over many years, the balance of Susan and John's joint credit cards built up so high that their monthly minimum payments took up almost half their combined incomes. We were able to assist..
A. We met with Susan and John and reviewed their entire situation. We determined that a lot of the debt was incurred while Susan was out of work two years ago and they were not able to recover. Their current budget indicated that with them both working they had $400 available to pay creditors each month. We were able to assist them in making a proposal to their creditors which offered $400 each month for three years. The proposal was accepted by the creditors. Susan and John were happy to avoid a bankruptcy and were able to carefully budget. With pay increases they were able to complete the proposal in just two and a half years!
Peter was self employed and worked long hours yet never seemed to earn enough cover all his expenses and put away money for his income tax obligation. As a result he did not file his income tax return three years ago. Subsequently the situation did not improve and tax returns were not filed for the past two years either. Canada Revenue Agency has notified him requiring that tax returns be filed. Peter doesn't know what to do and so he called us.
A. Peter came in for a free consultation and we were able to estimate his tax obligation as being at least $30,000 plus interest and penalties. After reviewing his estimated income and expenses each month, it was clear that Peter needed all the relief available to him. A proposal was not affordable. Peter made an Assignment in Bankruptcy to get protection from collection efforts and was able to live on a strict budget. He made monthly remittances of taxes on his current income and met his duties in bankruptcy. As a result Peter was discharged from the tax debt with no delays.
John has built up considerable debt over several years and then lost his job. He used his credit cards to survive for five months. The credit cards were at their limits and he was loosing sleep. John emailed us and asked for help.
A. We were able to meet and review John's situation. John was still unemployed and after discussions he decided to file for bankruptcy. The relief that the bankruptcy provided allowed John to sleep better and focus his energy on finding work. Four months later he obtained a great job in his field and came back to our office. With his new level of income he decided to offer a proposal to his creditors. The creditors accepted the proposal and the bankruptcy was cancelled. John felt relief and completed the proposal in 24 months.
Mary's ex-spouse agreed to take over paying all the joint debts in exchange for her not seeking any spousal support. She found out that her ex-spouse declared bankruptcy and the debts are not being serviced. The credit collectors started phoning her for payment of the accounts. Mary's lawyer suggested she call us.
A. We met with Mary and agreed with her lawyer's assessment that pursuing the ex-spouse in bankruptcy would not help her. Instead Mary worked with her lawyer to pursue future spousal support. In the meantime, Mary offered a proposal to her creditors. She wanted to avoid bankruptcy but had no ability to make any payments on her own. Mary's parents offered to fund a proposal to help their daughter with the proposal. We sent the proposal to all creditors offering $7,500 to be paid immediately if the creditors agreed to settle the $40,000 in debts outstanding. The proposal was accepted and the funds were paid out. Mary was planning to use any spousal support received in the future to repay her parents for their help.
Sandra was on her own, with her two kids, for three years. She worked hard, but even with some child support she did not have enough money to pay her rent, day care, car payment, children's expenses, and pay back her debts. Each month the debt just grew and grew. We received a call from Sandra.
A. Sandra agreed to complete our Information Form and come in for a free assessment. We spent time together to understand her situation and review her monthly income and expenses. It became apparent that Sandra had used credit cards to buy food and cover car expenses as she did not have enough money each month. There was no way for Sandra to pay back the debts and without the credit cards Sandra was not able to "make ends meet" each month. Sandra left the meeting and discussed her situation with friends and family. She knew that a bankruptcy would help resolve the credit card debt but that was only part of her solution. She had to reduce expenses. Much to her relief one of her friends offered to sell her an older but reliable car and the payment would be $100 per month. This allowed Sandra to start her bankruptcy and return her new leased car to eliminate the high monthly payments. By returning the car, Sandra saved $400 per month with a lower payment and lower insurance costs. Her budget now balanced and the bankruptcy cleared all her old debts.
Frank lost all his savings, incurred big credit card debts and has been lying to family about his financial problems, all because of gambling and alcohol addictions. Out of desperation Frank called us.
A. We met and spent time understanding Frank's debts and his addictions. Frank told us he needed relief from the debts and that he wanted to cancel his credit cards to make it easier not to gamble. We reviewed options and given his high income level, Frank understood that in a bankruptcy he would be required to make monthly payments each month. Frank felt the bankruptcy was the relief he needed. We discussed how the addictions would continue even after the bankruptcy started and he acknowledged that if he continued gambling he would not be able to afford the payments in his bankruptcy. Frank decided to attend AADAC again to get additional support in dealing with the addiction. After attending AADAC Frank called our office to confirm he wanted to start his bankruptcy. During his bankruptcy, Frank did have some relapses but each time recommitted to stop gambling and drinking. With some delay Frank did meet his duties and was discharged from bankruptcy. We hope that with dedicated effort Frank will have long term success in dealing with the addictions just as he has had long term relief from his debts.
Fred had been on long term disability for a year and did not know when he would be well enough to re-join the work force. His disability income was barely enough to pay his living expenses and nothing was left to pay his debts. Collection agencies were calling everyday. One of the creditors told him "if you have no money to pay us, just go bankrupt". Fred was angry but looked at our website and called us.
A. Fred came into our office and we met for a free consultation. Fred had never considered bankruptcy and told us that he did not want to "go that route". We reviewed his situation and discussed his health concerns. We then spoke about the options available to Fred including dealing with collection calls, informal arrangements with creditors, Orderly Payment of Debts, a proposal and bankruptcy. Fred agreed it was necessary to understand all options - even bankruptcy. At the conclusion of the meeting Fred felt prepared to handle the creditor collection calls without getting as stressed and was comfortable that he now had time to decide how he wanted to proceed. A month later Fred contacted us to advise that his health care providers had told him he should not return to work and that he would benefit from less stress in his life. Although he wished he could afford a proposal he decided a bankruptcy was best for him and was fair to creditors given his health situation. The collection calls stopped immediately and Fred completed his bankruptcy in nine months.
Janice owned and operated her own business operating as a self employed painting contractor. Things were great for the first couple of years, but then business dropped off and in order to pay suppliers, payments to the government were not made. Ultimately Canada Revenue Agency froze her bank accounts and Janice called us.
A. Janice decided that she needed to get the freeze cancelled so that she could still use her account for her business. The two options to get the freeze lifted were to offer a proposal or to file for bankruptcy. Janice considered her business prospects and decided she couldn't afford to offer a proposal so started a bankruptcy. Janice was forced to reassess the viability of her business. She decided she would scale back, do more painting herself to reduce the costs on the jobs and have more control on the quality of work done. This allowed her to concentrate on a few more profitable jobs and make more money. Janice completed her duties and obtained a discharge from her bankruptcy in nine months.
Stuart last attended school five years ago and had over $15,000 in student loans. He could not find a job in his chosen field and is only earning minimum wages. As a result he had incurred another $10,000 in credit card debt trying to keep up with all his expenses.
A. Under the present law, student loans may be forgiven under a bankruptcy but only if a person has been out of school for over ten years. In Stuart's situation he was in arrears with his debts and collection agencies were calling at home and at work. We reviewed the situation together and Stuart realized that with his current income he could only afford $200 per month towards all his debts. We considered a proposal but believed that Student Loans would vote against any proposal he could afford. Ultimately Stuart started a bankruptcy and cleared his $10,000 in credit card debt. He then still owed his Student Loan debt and went on the Orderly Payment of Debt program paying $200 per month to avoid having collection agencies start pursuing him again.
Jamal never learned how to budget his income and expenses. He had a good job but was constantly behind on payments and gradually incurred sizeable debts. He contacted us wondering what his options were, given he owed $25,000?
A. Jamal decided to complete our Information Form and come in for a free consultation. We reviewed the form and had a good meeting. He advised us that he had gone to his bank for a consolidation loan but was turned down unless his parents would consign the loan. He was not prepared to have his parents obligated to pay the loan if he lost his job or was otherwise unable to pay. During the meeting we spent time considering what his living expenses were and how much he could afford to pay his creditors. In his situation he had a good steady job and could afford to pay $800 per month to his creditors. Given his ability to pay, we recommended that he contact Credit Counselling Services of Alberta and start an Orderly Payment of Debt program. This would reduce his interest costs and get the debt paid off in less than four years. If Jamal had only been able to pay $300 per month, a proposal to creditors or a bankruptcy would have been options to consider.
Sarah and George were both in their 70s and living off pension income. They had no valuable assets or savings and kept getting tax bills each year that they couldn't pay. They had also used credit cards and lines of credit to fund living expenses. They confided with a friend who suggested they call our office.
A. We had a good meeting and began to understand the monthly expenses, their health considerations and also expenses related to their grandchildren. It was apparent that their fixed income had not been adequate to fund all their activities during the last several years. Sarah and George decided they needed to reduce the stress of the debts. A bankruptcy was part of the solution. They also reviewed their expenses and decided to reduce living costs by moving to a less expensive apartment. They prepared a strict budget spending less on "extras". Although they felt bad not being able to accomplish all the things they were used to doing, they felt very good and relieved that there was no longer any debt to cause further stress.
Harry and Jennifer are the sole shareholders and directors of Acme Manufacturing Inc. a company that had been successful for many years. The company owed Canada Revenue Agency corporate tax, payroll deductions and GST. It also owed money to suppliers.
A. A detailed review of the company resulted in an assessment that the debt was the result of bad operational decisions of a former General Manager and a lawsuit resulting from an accident with a company vehicle. The company was fundamentally profitable but could not make money quickly enough to pay back all its debt. The company decided to make a proposal to creditors. The legislation requires that most of the government debt be repaid in full within six months. Therefore the company could not pay any of the supplier debt until after the first six months of the proposal. The proposal offered to pay supplier debts twenty per cent of the indebtedness over an additional 12 months. As the creditors would likely not have recovered any of their debt if the company had declared bankruptcy, the creditors accepted the proposal. With this financial relief the company focused on its operations and was successful in completing the proposal.
Since Harry and Jennifer did not shut down the company, they avoided putting employees out of work, creditors losing more money and having to pay certain company debts to the government out of their personal assets. The restructuring benefited everyone and produced a true win-win result out of a difficult situation.
For further information or to get assistance contact us by phone at 403 266-6665, email or come in for a free consultation.
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