Need Advice, should I or shouldnt I?

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Need Advice, should I or shouldnt I?
« on: January 07, 2015, 08:29:34 AM »
I'm seriously considering a consumer proposal, the low down is that over the years my wife and I have made several mistakes budgeting poperly, moving to fast and buying / trading in vehicles. We can probably scrape by some more but this family of 4 is going to family of 5 in a few months. Here's my situation:

Total owing:
35000 line of credit with RB
15000 visa with RB
10000 MBNA
15000 capital one
6000 desjardins
3000 american express
2500 cdn tire card
approx 86500 total owing unsecured.

I also have:
dodge ram owe 44000, worth approx 35000
jeep Grand cherokee owe 17400, worth approx 10000

I pay approx 1000 a month in auto loans which is really hurting the budget. I would love to get rid of that jeep as it is having a lot of issues (been in one accident already.. had to replace the heads due to faulty water pump). I'm underwater so its not going to be easy to get rid of the jeep or the truck even if i wanted to.

I make approx 78000 a year and usually get a healthy bonus of around 10000. The problem is that we struggle every year until that bonus comes and usually it goes quickly. I'm the sole income for my wife and 2 children (3rd comming soon) and we need to figure something out.

I could continue to try to pay it down and evenutally downsize our vehicles when they're not underwater but thats at least 2 - 3 years away. It would probably take 10+ years in total to pay off all that debt, so which brings me here. Does anyone think  a consumer proposal is an option? even with my high income? i dont have much equity in the house, if it was sold and after realter fee's there's maybe 5000 in equity. Our mortgage is pretty small (130k) because we live in a small town.

One thing that worries me is that royal bank is over 50 percent of debt, even if i handed in the keys to the jeep to add the unsecure debt into the proposal. I have heard they can be tough to negotiate.

any advice please!?



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Re: Need Advice, should I or shouldnt I?
« Reply #1 on: January 07, 2015, 10:57:47 AM »
As always, you're best to speak to a trustee so that you can figure out what you need to do - it's a free consult.

You've asked if a consumer proposal is right for you. I think a better question is "Would any of my other options work?". As I see it, you can:

1) Do nothing and pay your debts in the normal course
2) Try to refinance your house/get loans from other sources
3) File a proposal
4) File for bankruptcy

For argument's sake, lets say you returned both vehicles. That would give you a debt of $102,900. In my experience, a proposal that pays 40% on the dollar is a solid one, maybe high average. Assuming a 5 year proposal, that gives you a payment of $686 per month for 60 months, but obviously no vehicle. I'm not suggesting that this is possible, but it gives you an idea of the numbers that could  be  involved. You might be able to do some combination of #2 and #3 so that you could refinance and use the funds as part of a proposal. This is another case where consulting a trustee would be helpful.

I don't know how much you're paying in interest per month, but my concern would be that your situation might get worse before the 2-3 years elapses. In my mind, you want to make sure that a proposal is an option as opposed to bankruptcy.



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Re: Need Advice, should I or shouldnt I?
« Reply #2 on: January 07, 2015, 12:29:54 PM »
Thanks for the reply!

I wasn't sure if I should approach a trustee right away, I do have options to talk to some finicial advisors (from my benefits) - they may have a more unbiased approach. I do require a vehicle to get to work and my wife needs one for the kids getting to school. Comming up with a new budget (if the path was proposal @ 600 a month or so), I could afford to keep the truck since its under warranty and a better interest rate. The annual bonus is comming soon so if i need to I could purchase a cheap car for the 2nd vehicle.

or throw that money on a credit card, I just have a feeling we will tap into it over the year as our budget isn't entirely realistic and she won't be finding a job anytime soon. (child care is way to expensive around here and she would only find a minimum wage job)

The interest rates are not terrible, as I have been balance transfering - but that is getting difficult to manage and might not be around forever. One of the credit cards hit 20 percent but I cant do anything about it until money arrives in march.

I just dont know if we will be able to manage another mouth to feed and keep things afloat, its adding a lot of stress for me and my wife. we just want to get a plan and stick to it, she is opposed to a proposal or bankruptcy but i mentioned to her my credit score isn't great now anyways.

refiancing the house isn't an option just yet since I still owe approx 90 percent of the value.

What would you do in your situation?? anybody have a similar experience?

I just feel like its an easy way out, but in the same sense I don't think we will be able to continue realistically unless we start buying cat food and live like hermits.


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