no idea

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barkalot

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no idea
« on: August 07, 2013, 03:28:39 PM »
hi

I am married and  our home is paid for.
I have over $50,000 in credit card debt and a private loan for $55,000 that I pay the interest on twice a year.
I have had a drastic decrease in income due to one business I opened not doing well and having to close.
My other business also the sales have declined.
This is how I got in this mess.
My husband did not sign for any of the charge cards.
What are my options?
A proposal, bankruptcy?
How does either work if we own our home.
The debt is mine not his, I do not want him to suffer also.
Thanks

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Stewart

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Re: no idea
« Reply #1 on: August 07, 2013, 04:02:20 PM »
In decreasing order of harm to your credit rating, here are your options;

  • Take out a mortgage on your house to cover all the debt, credit card and private alike. Pay everything off and manage your single monthly payment from here on out.
  • Find a company/bank/lender that will give you a consolidation loan, same effect as the above but not secured against your home. Keeping in mind the approval criteria will be harder and the interest rate will likely be higher, but the loan will be more flexible than a mortgage for repayment acceleration.
  • Credit Counselling. Find an accredited, not for profit credit counselling organization and use their services to repay your debt. These companies can often negotiate reduced or eliminated interest on many of your debts so you can pay down the principal amount faster. Note that this is a purely voluntary arrangement and offers you no creditor protection under the law, so you must make good on your payments and stick to all your arrangements. This works best if you are current and up to date with all your payments.
  • Consumer Proposal. This option gives pennies (more like nickels) on the dollar to each of your unsecured creditors. With the amount of debt you're carrying you'll likely wind up in for 60 months, however the proposal is open so you can repay it sooner. After it is completed it and all associated trade lines will fall off your credit file after 3 years.
  • Bankruptcy. This won't affect your home because it is owned outright. You'll be in for either 9 months or 21 months, depending on your exact income situation. If your income fluctuates greatly you may wind up in for 21 months due to surplus income. BKs fall off your credit file after 7 years. If you ever file a second one, both will remain on your file for 14 years after discharge.

In the latter two cases, I'd first pull your and your husband's credit files to ensure that no debt is shared between the two of you, otherwise he'll have indications on his file about your CP or BK.

Remember that if you talk to a trustee, the last two options will likely be the only options discussed. Take their advice with a grain of salt, keeping in mind they get paid when you file either a CP or a BK. "When the only tool you have is a hammer, all problems start to look like nails."

 

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