KEVIN ASKED: Am I able to claim bankruptcy if I already consolidated my credit card, line of credit and overdraft debts into one consolidation loan?
This person also has student and car loans that they’re paying, plus they just found out that they owe the government $3,400 in taxes. They feel like they’ll never get out of debt.
ANSWER: Often people who are struggling with money problems will attempt to consolidate their debts before coming to speak with a trustee. In some cases getting a consolidation loan can be the solution, but often even with the consolidation loan people still struggle.
Some of the common problems with consolidation loans:
Payments are unaffordable due to high interest.
The consolidation loan doesn’t cover all debts.
You deserve credit for trying to get out of debt on your own by getting a consolidation loan, but if it isn’t solving your problems then you need to look at other options. Use our Debt Options Calculator to know what option may be best for you.
You can definitely file personal bankruptcy and become discharged of a consolidation loan debt.
However, if you are:
able to qualify for the consolidation loan
able to make some payments to your creditor
…a consumer proposal would be another option to consider.
Your car loan is a secured debt
Secured debt means that the creditor has collateral for their loan. With a car loan, the money was leant for the purpose of purchasing a vehicle and the vehicle is held as collateral by the lender.
If you don’t make your payments then the car loan lender has the right to repossess your vehicle. In the context of personal bankruptcy or consumer proposal, you can keep your encumbered vehicle as long as you continue to make your car loan payments.
If you can’t afford your car loan payments or don’t want to keep the vehicle, we can show you how to surrender your vehicle and walk away from the debt.
Government debts, taxes etc. are no different than any other debt
They can be included in and discharged by filing personal bankruptcy or making a consumer proposal.
Student loan debts can only be included in, and discharged by, making a consumer proposal or filing personal bankruptcy if you have ceased being a full or part-time student for a minimum of 7 years as at the date of filing.
We have offices across South Western Ontario and consultations are free. We also have flexible hours to meet your needs so you don’t have to miss work.
Let us help you get a fresh financial start today!
