Bankruptcy

[lecale]

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[khipson]

Insane - Yes, first and only. I can't get so much as a Zellers credit card, though, which is funny since they were lining up to give me cards when I was barely old enough and working part-time... and somewhat frustrating at times... but at the same time it has been liberating, too. We are operating now on a cash basis and have no debt aside from our car, which is a nice place to be.

We got the car through TD Financing Services and while the interest rate is brutal, it is a way to rebuild. Don't take this idea lightly, though. Have some serious discussions with a trustee and also with anyone who might be affected by it. We ended up in bankruptcy against our will when our business failed after thirteen years in business. It was a blow, but also in some ways it has been the best thing to happen to us as we took it as what it is meant to be - a way to start over and to escape an impossible situation. We didn't default on our house or my car, which helped us a lot - we paid off the car not long after, and sold the house a year later, so we have some positive marks on our record now. We didn't get a letter to be able to get our current vehicle - we had a very good relationship with our trustee so the lender actually just phoned their office to discuss it.

[Insane]

I spoke with a lawyer today and he wasn't terribly helpful. I've called a trustee he found (I was looking for a recommendation, but he didn't know any! oh well!) It can't hurt to go find out. He said likely the car would be safe as the value of the car is likely about what is owed on it, if not less! Most times, if you are up to date with payments the trustee is willing to let you keep with it as it's not worth dealing with it. But I could walk away from it. But I don't want to. But I think it will be better to get it from the horse's mouth. One thing he did say was that the kid's RESPs are subject to getting seized! They are jointly in mine and hubby's name at his bank, but they are subject to getting taken. I hate to see the kid's penalized for my mistakes (it's mostly birthday money, money given when they were born, ect...not a whole heck of a lot was put in by me alone). The lawyer also got me thinking in that he said...yes you are screwed, sometimes for long periods of time....but really, are you going to have a downpayment right after being discharged? He's right, it will take me a long time to get my financial house in order, and by then we will be years and years away from this (because I will still be paying the OSAP!). And he said my OSAP and car payments would help me to restablish credit. I do a lot of online shopping just because of where I live, there isn't much, in particular in shopping for children's clothes. But i was thinking last night, there will still be hubby's CC and there is also prepaid CC.

I realize that it's not without consequences. But just like anyone, I guess I need to find out what exactly those consequences are and way the pros and cons. I need to put about 1/2 my take home pay every month into debt retirement for the next 7 or so years to get it done with in 7yrs. I can't keep a roof over my kid's head, feed them, cloth them, ect....and pay 1/2 my pay to the bank. Gail Vaz Oxlade says if you can't get debt free in 3yrs (5 for student debt) then it's time to declare bankruptcy and move forward.

It's interesting the misconceptions I had about it all before a few days ago. Lots of misinformation out there.

[Insane]

thank khipson! Don't worry, I'm not taking it lightly! I'm not looking to accumulate massive amounts of debt again-EVER. Mine is mostly student debt. I'm just concerned that you get into a financial vicious circle where you can't establish credit because you can't get credit. Credit makes the world go round, so if you cant' establish a good credit after all this, how do you get ahead?

I'm glad you got to keep your car too. I'm sorta worried about the car. It's awful how dependant you are on it. But we've never defaulted on it either, not once.

[lecale]

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[khipson]

Yes, the kids RESPs will be taken, as well as any other investments you have. We cashed ours out beforehand... gray area but they decided not to penalize us for it. She put it down as us having needed the money for living expenses, which was pretty much accurate - plus it was only a few hundred dollars anyway.

[ashedfc]

Bankruptcy is not the ultimate freedom, as it ruins the credit history, & it takes a long-long time to rebuild.
However, if its the only option, than, a one should always protect whatever assets are remaining. All debts should be written-off, & as much as possible assets should be protected. 2 suggestions, I can think of right now is...
1. Transfer the assets into an RRSP, (an RRSP is creditor protected, unless CRA is the creditor)
2. Sell the assets or transfer it to some other person (like spouse, etc).

[Insane]

I spoke with a trustee and made an appt for a couple of weeks to discuss things. She said yes, the RESP are subject to being seized, but only 1/2 as they are in both our names. And we aren't talking about that much money. Other than that and the car, I (and we) have got nothing. Wait...do my coupons count?

I'm afraid to transfer assets (like take my name off the RESPs or transfer car loan to hubby) as I don't want to commit fraud. I'm not looking to defraud the system.

I understood what you were saying, don't worry. You know lecale, the emotional toll is already so high. But the family backlash will be huge. But at some point I need to move forward and now I am just spinning my wheels. Thank you for your kind words!

[matty's mom]

Yes, family may not understand, but you and your family can get past it. My DH did. And so did his family.

My DH declared about 4 years ago. He had debt that he didn't want to bring into our marriage that he was unable to recover from. (Bad business partener etc.) It has been quite a challange, but some of your dreams may be possible. For example, I bought our house. As I had RRSP's and great credit- I could do it. DH just had to sign of that he was legally aware that his spouse was buying a house (We are legally considered a unit when married.) So working to make DH credit outstanding will help.

For him, we saved $1000 and got him a secured credit card. ( You don't need that much, some card are available for $500) We were able to get it for him a year after the discharge. Also, we transferred some of the bills that require credit check into his name, so that they will report to equifax. We had to pay a waiver on some, but it was worth it. We are now four years in and he far better on paper than before.

As my DH is a contractor- not one of his tools were touched for the bankruptcy. He got to keep them all. We bought a truck about 6 months later from his discharge- but put it on my line of credit- and paid it off.

Good Luck Insane. My thoughts are with you. It is tough stuff making these decisions. But do what is best for your family - you, DH and your little ones- all other family is secondary.

[ashedfc]

Once you have decided to go the bankruptcy route, than: it makes sense, to take on as much more credit as possible. They all will go to "zero" anyway. So why not take advantage from bankruptcy. Talk to your local bank, & explore some options..

[Insane]

Once you have decided to go the bankruptcy route, than: it makes sense, to take on as much more credit as possible. They all will go to "zero" anyway. So why not take advantage from bankruptcy. Talk to your local bank, & explore some options..

Ashedfc I have to question your abilities as a financial planner when you are telling people to commit FRAUD! That is FRAUD plain and simple and the banks are within their right to demand it ALL back if you defraud them. In fact it is the Trustee's duty to look into these sort of things.

[lecale]

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[Natalka]

Once you have decided to go the bankruptcy route, than: it makes sense, to take on as much more credit as possible. They all will go to "zero" anyway. So why not take advantage from bankruptcy. Talk to your local bank, & explore some options..

That advice is just sick.
It's unconscionable that you should say that.

Time to remove the words 'financial planner' from your status...

[ashedfc]

That advice is just sick.
It's unconscionable that you should say that.

Time to remove the words 'financial planner' from your status...

Its surprising that you do not understand basic Financial Planning.
Its exactly the same what General Motors (GM) did, by taking big money from US/Canada Govt, Bond holders, Banks, etc. & than declaring bankruptcy.
Above all: We are all in a Fractional Reserve Banking system, where Banks or Credit card companies do not lend their money. The money they lend is created electronically out of nothing & they charge interest on this newly created money.

For example: If a bank has a deposit of $1000, & the CRR (capital reserve ratio) is 10%, than the same bank creates $9000 of electronic money making a total of $10000. Leaving aside the $1000 reserve (10% ratio), they can now lend $9000, & charge interest (ranging from mortgage to credit card interest rate). In effect, the $9000 which is beging loaned was never there in the first place..

I suggest you get familiar with Fractional Reserve banking, before suggesting anything...

[travelgeek]

nevermind.