Not sure what to do.

 Hi, I am in a financial disaster.  I have approximately 150K in unsecured debt ( credit cards and LOC) the LOC is with my bank that I have been with for over 35 years.  I also have a mortgage of $235K and a home equity LOC of $83K. 
I have a good job, been there 1 year 7 months.  I make 90K a year.  I got into this mess as I lost my job  6 years ago in a massive layoff at a major corporation.    I was making a salary of 180K, had a nice house and had done major renovations in it.   Boom no job, yes I did get a severance package, but it did not last long.  I was out of work for over a year and could not find a job in my field.  Even tried looking outside my field and still could not find one.  Sold my house and bought a townhouse.   Finally was offered a position at $50K a year with commission.  Well the first year I managed to make around 75K, second year similar, 3rd year was not so good.  The company I worked for was facing severe financial problems due to expanding too quickly.  The fourth year there I was layed off along with 80 other reps.  It took me another year and 3 months to find the job I have now.  Well being off without employment took its toll on my LOC and credit cards.  UI does not exactly pay all the bills!    Fast forward to today, I am up to my neck in debt.  I have never missed a payment yet, but stealing from Peter to pay Paul only works for a while.   I know I have to do something, and was thinking of filing a Consumer proposal.  Problem is, my job requires me to travel and I need to have a credit card for hotels and car rental.  The company reimburses me for my expenses.   I know I can get a secured credit card, but I need to have the cash to load it with.   I am single and have my son living with me.  No one knows the financial mess I am in and I need some answers.  That is why I am reaching out to this group. 

Welcome Jules123, You've come to the right place.
I was also in your shoes 3.5 yrs ago.  My debit was a little smaller than yours, but all debt is the same. I had buried myself in a hole i couldn't get out. I was getting collection letters, harassing calls, i even had a garnishment on my wages. I thought i was done for, till i did a CP.  The biggest challenge is given up all your credit cards.  But you can get pre-paid cards or even a secured card. 
As soon as i did the CP i felt like i was out of the hole and could breathe again. The Garnishment stopped, no more letters, the calls stopped.  I made a financial plan that i have stuck with.
I'm happy to say that my CP comes to an end May 2014(7 more payments) and i got a non-secured credit card from Capital one last April.
Do the CP, we will feel like a new person with the weight of the world lifted off you.
As for credit cards for work, you have  pre paid ones or the secured kind offered at a lot of banks.


Good luck

Your debt load and situation is eerily similar to mine.  I was about $150k too - although a ginormous amount of that was owing to CRA.  I travel a lot for work as well - often internationally - and had no idea how I'd survive without credit cards.  It does take some creative thinking, but honestly, not having the debt hanging over my head makes it so worth it.

There are a few things - prepaid cards for sure, visa debit (a godsend, as it is accepted as a credit card in more and more places, including with the airlines), asking the boss to consider providing credit cards - if you give him the research it's hard for companies to deny that this is a better option, even finding one good friend who you can hand a chunk of cash and ask them to use their card (in a pinch).  Those are some of the things I've done, and it's a bit frustrating at times, but it works.  I'm five months into my payments (18 months to go!), and I'm getting along ok without a credit card - and I've been to Hong Kong twice, Geneva and Johannesburg each once.

Most importantly, I feel so much better about life.  That horrible feeling in the pit of my stomach is gone.  I can sleep at night.  Do yourself a favour and go see a trustee - at least hear your options and think it through with someone who's an expert.  It's totally worth it, I promise!  Do it for your mental health and for your kid!

Welcome aboard Jules 123!
You have already heard from two of us and now another. You can't describe the feeling when that proposal goes through. Just a 1/2 hour of your time with a trustee can sure make a difference. As for the credit cards, I have been without them for a year now and really, I don't miss them. It stops you from spending on things that you really don't need or can't afford. If one is needed for work then I'm sure you can get a secured or prepaid one. But whatever you do, don't start with them again. I'm sure if you polled anyone on the site, they would tell you that credit cards are what brought them down. Do yourself a favour, go see that trustee!
Good Luck!

Thank you all for your replies. They really did give me a boost that I needed.   I am so scared right now.  I know i have to do something.  My son has no idea what financial trouble I am in and he relies on me for a roof over his head, etc.   I did get a prepaid credit card and now I will have to stop paying some of my bills in order to fill the card up.  I wanted to ask you if you waited a couple of months before fiiling your CP in order to get some cash in hand beforehand and to fill up your prepaid credit card and establish another bank account etc.. And how long before they try to garnishee your salary?  I have to arrange several auto withdraws from my . bank to my new bank.   Insurance, car lease, etc.   I am thinking to file in early January and stop paying several credit cards next month.  I will continue to pay my mortgage and secured loc. 
I did go see one trustee, but he was not very nice.  Basically told me I had 2 choices, CP @950.00 a month for 5 years or bankruptcy at $1020.00(surplus) for 21 months.  Not much of a difference is it?  I told him that if I went bankrupt I would lose my car and my house and how would I work, as I need my car for work?  He said to work out something with my leasing company.  I am only 1 year into my lease, I doubt they would let me keep the car, not to mention the shame of it all.  And my house, I have maybe 20K equity when you factor in the LOC.  I need a place to live, so if the bank takes my house, what do I do?  Whose going to rent to me if I go bankrupt.  Filing the CP, I get to keep my house, but the payments are much more over the 5 year period.  It seems weird to me the closeness in the monthly amounts between CP and bankruptcy.   Anyways I am going to see another trustee to see what they say.  I look forward to your replies and opinions and once again, thank you for your support and kind words. 

My advice is to take the CP option, keep your house and your car, ride them out through the CP. Step up the CP payments at every opportunity and try to have it paid off before your lease comes due so you'll at least be completed before you go to buy another vehicle. If not, ask your leasing company to extend the lease for you for another year or two. If you've maintained a perfect payment history with them they shouldn't have a problem doing so at the same monthly rate.

The CP will be done in 8 years (unless you pre pay) - 5 for the payments + 3 years on your record after completion.

The BK option would be on your file for 8 3/4 years (1 3/4 for the payments + 7 years on your record after discharge)

The BK option would also make your life more difficult if you wanted/needed to file a bankruptcy again down the road where both BKs would remain on your bureau for 14 years after discharge.

Ask a couple more reputable trustees in your area (make sure they're registered trustees, do NOT go with a 'credit counsellor'!) to see what kind of payment you can arrange on the proposal then, once filed, become an expert in budgeting and living on 80-90% of your means and you'll be fine.

Once you've filed the CP, contact Capital One and TD Canada Trust to apply for a secured credit card (one, the other or even both would be just fine). You should be able to secure a card with $300-500 worth of funds (one-time) which will then be open for use and help alongside your car lease payment to show a positive payment history. Over time with a perfect payment history they'll gradually increase the limit and eventually return your security deposit to you. This will transition you off the pre-paid credit card. If possible, go with an option that has the lowest (or $0) annual fee, regardless of interest rate. Pay off the card every two weeks and you'll never pay a penny in interest.

n.b. Paying back $57,000 over a 60 month period is absolutely peanuts compared to paying back $150k over xx number of years plus interest (which could very well turn into well over $300k all said and done).

Thank you Stewart,

You make a lot of sense, especially with your last sentence!  I am going to make an appointment with another trustee to see what they say.  I think the hardest thing to do is to just do it!  I will let you know the outcome. 

Hi Jules,

I just wanted to weigh in with my support as well. I've just finished a five-year CP, and I can tell you that as soon as it was filed, that feeling of shame began to fade away. Stewart's advice regarding your car, house, credit rebuilding is excellent - as well as the end of his post where he mentions what a favourable arrangement CP is.

When I filed, I ended up speaking to a couple of creditors' reps on the phone (I had maintained a perfect payment history before I hit the wall, but I did get a couple of calls). When I told them about the CP, they were very cheerful and said that with so many people going bankrupt these days, their companies really appreciated it when a customer was organized and responsible enough to arrange a CP instead. That gave my spirits a real boost.

The reason the trustee's estimates of BK payment and CP payment were so similar is that the bulk of either payment is determined by your monthly surplus income.

Please do interview trustees until you find one you like. After all, you'll be dealing with them for 5 years, and it's good to be with someone who will be there to answer any questions along the way.

Best wishes,
~Wendy

Well I have an appointment with a trustee this afternoon.  My office thinks I am going to the dentist, wish for once I was! (haha).   When I called they were very nice on the phone and very comforting.  I thought I would re-read all your great advice that you gave me for a boost before I go! I am scared and so ashamed of myself for getting into this mess!   I finally told my son the financial problems I was having and he was so understanding and told me not to worry, it will all work out.   I have no choice but to do this.   I will let you know how it goes. 

Good luck, Jules. I hope your visit at the 'dentist' goes well.  We all felt your shame as well at the beginning. Taking the next big step of doing something about the debt situation will start to diminish the feeling of shame you're having and start replacing it with relief and pride that you're facing your problem and doing something to resolve it. It isn't an instant change, but a gradual one that just gets better with time, believe me, and believe in yourself!!
I'm glad your son was so understanding, it's nice to have his support too!!

Keep us informed!!

JEC

I did it, well I will be signing the documents next week.  What a difference with this trustee.  She was so nice and supportive.  I broke down crying in her office and she really comforted me and told me it is not as bad as I think it is and they would work things out for me.  We went through everything first of how I got myself into this, then to taking a list of all my debts, assets etc.  Then to doing a budget and then she gave me my 2 options, bankruptcy or CP.  CP will be approximately $500-$600 a month for 5 years, ( a far cry from the other company that told me $950 a month!)   Bankruptcy would be $1250 for 21 months because of the surplus.   Both ways though, I would be able to keep my home as there is not much equity in it due to my line of credit tied to my mortgage which is maxed out.    I chose CP, at least I hope it shows my creditors that I am not totally relinquishing my responsibilites. 
I left her office feeling so much better.  They will confirm what day next week for the paperwork to be signed.  Now I am busy changing my direct pay of my insurance, etc.  to my new bank account.  I will keep you posted on the "dental plan"!!
Thanks again to all of you for your amazing advice and support.  Without it, I don't know what I would do. 
Jules

First step is always the hardest...just keeps on getting better!

Good for you Jules. It will be a good weekend for you...lots of relief in your life,  and stress off your mind.  My Trustee was very supportive too.  You've taken the hardest step, and look how much better you feel!!  It does only get better!

Best of luck to you.

JEC

well just when I think it can't get any worse it does.  My trustee called me yesterday and told me that my mortgage has a clause in it where whether my debts to them are secured or not, I am responsible.  I do not read the clause in that way as it says D1, Obligations secured, there is no mention of unsecured debt.  My mortgage is with Scotia Bank.  How could they put such a clause in a mortgage?  Anyways, now he is recommending bankruptcy.  I am a mess!  I am going to see him this morning at 10:30.   I will let you know the outcome. 

Not sure what you mean, Jules,

You have mentioned your mortgage and secured LOC - which you've said you intend to keep paying.

What is it they're saying you can't clear with the CP?

As far as I know, bankruptcy clears the same debts as CP does.

Let us know what you find out. Hope you trustee is worrying you for nothing! Might be time for a third opinion.

~Wendy