Considering Bankruptcy

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Maritimes

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Considering Bankruptcy
« on: April 19, 2015, 11:38:38 PM »
Hi,

I am considering bankruptcy, I am up to my neck in credit card debt and the bank will not work with me in regards to a consumer proposal. I make all my payments, I have good credit but when I'm paying all I can (minimum payments) I'm not getting anywheres.

I have a car, a newer car which is in my name and somebody elses. I always make my payments, I've never missed a payment, never late, nothing. I owe approximately $5000 more than my car is worth but ideally in the event of a bankruptcy I would like to keep the car, but keep making the payments on it.

I need a car to get to work everyday I also have a child and I don't want to lose my means of transportation and be forced to either get a high interest loan because of my bankruptcy (my current loan is 2.9%), or an unreliable older car. When I bought my car I intended to keep it so I have an 8 year/200,000 KM extended warranty so it's headache free for another 5 years.

Basiclly, where I owe more on my car than it's worth would they let me keep it and continue making payments on it? I have 0 assets.

Thanks for your help!

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NotATrust-E

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Re: Considering Bankruptcy
« Reply #1 on: April 20, 2015, 09:03:42 AM »
You are required to pay an amount equal to the amount of equity you have in a vehicle, minus any provincial exemptions. A list of exemptions can be found at bankruptcy-canada.ca/bankruptcy-exemptions-canada.

Let's say that you had a car worth $10,000 and your equity is $5,000 and Ontario's motor vehicle exemption is $5,650. Since the exemption is worth more than the vehicle, you may be able to keep the car.

This isn't a 100% guarantee, but banks usually are okay with people continuing to pay money for vehicles since it costs them money to take back a car and re-sell it.

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TreeFrog

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Re: Considering Bankruptcy
« Reply #2 on: April 20, 2015, 12:16:47 PM »
Hi Maritimes,

I was wondering - when you say your bank will not work with you with regards to a consumer proposal - has a trustee filed a consumer proposal for you, and has it failed due to being rejected by a majority creditor (your bank)?

Otherwise, If you've simply spoken to bank staff about a consumer proposal, they may not have been aware of exactly what was being discussed, or they may be confusing it with a debt consolidation.

Since it sounds as if you make a regular income, consumer proposal may work well for you, as compared to bankruptcy. Best thing is to lay out your situation with a Trustee - the Trustee will let you know what your options are. People who have been good with their payments, as you have been, often do well with consumer proposals.

Hope this helps,
~Wendy
[completed CP in 2013]

 

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