Settlements vs Proposals

I have been reading some of the postings on this very informative site and I see people saying that Consumer Proposals are a waste of time.  They may well be, but what other options are there? Bankruptcy? Don’t like that one much either. 

I also see postings about settlements – is there a way for settlement without a Proposal?

I have also taken the seemingly consensual advice and talked to Mr. Leblanc but unfortunately I didn’t get the rapturous result others have.  He suggested a settlement with CSL is almost impossible unless I suffer some serious accident and then some.  He did offer to help me (and he seems very genuine and efficient) with some wellness or debt counseling but I don’t think I need that – I just need to do something about a student loan that I first contracted for in 1979!  (I don’t have any other debts – I don’t have much income – UI – but I don’t spend much). Perhaps, I should mention I have tried to talk with people at CSL collection department for years but they don’t seem to care if they resolve anything.  I have never been called by any private CA or threatened with any trouble but I need to get this monkey off my back. So again, is there a way for settlement without a Proposal?

Thanks for reading.

 Faith,

 You had come to me with many questions. I answered them. The truth is what you were told and I apologize if this is not what you wanted to hear.

 If you are looking to settle a guaranteed Canada student loan, you are going to have to propose it. There is no way around this. You just can't offer the government a sum of money and demand that they accept it just because you don't want to pay any more than what you feel is fair.

 As for consumer proposals and bankruptcy... they are all one in the same. Consumer proposals are a program that is governed by the bankruptcy and insolvency act.

 Lastly, you are not a client of mine, therefore, i do not give advice. I answered your questions, that's all.

 Johnny  

 Laurel,

 Unless the bankruptcy and insolvency act has changed... then a consumer proposal is JUST another form of bankruptcy. If they are not the same, then why are they governed by the same act ... and administered ONLY by a bankruptcy administrator?

 A consumer proposal is an alternative to bankruptcy. Well, Pepsi is an alternative to Coca Cola. They are both colas - just a different brand. They are both dark, sweet to the taste, and have this ability to capture so many people.

 A consumer proposal is certainly that, Laurel - an offer to pay a debt. Is it bankruptcy? Yes? No? Is a consumer proposal a program or service that is administered ONLY under the Bankruptcy and Insolvency Act?

 Here, let's spell it out....

  http://laws.justice.gc.ca/en/B-3/C.R.C.-c.368/20594.html#rid -20791

 Also ...

 http://laws.justice.gc.ca/en/B-3/C.R.C.-c.368/index.html

 Lastly, I do agree with you that some people benefit from bankruptcy, of course. Those whoa re legitimately bankrupt will benefit. Those who go bankrupt because of bad advice, strong sales pitching from the bankruptcy sector, etc... are the ones who suffer even more.

 Johnny  

Johnny,   please don't take offense – I can see from the postings here that you are of great help to your clients and a great resource to all on this site.  I was just hoping to find a greater fit between the services The Canadian Financial Wellness Group (CFW) offers and what I believe it is I needed.  Please forgive my cynicism: I spent about 3 years trying to solve this using a debtor service here in Toronto and they really had no idea what to do – they told me they had all this experience but it became very quickly and very clearly I may have been there first case.  They certainly lacked the experience and knowledge you have – not to mention the integrity.

I don’t think I can demand anything of CSL given that I am in default and it is my own fault but I am talking more than just fairness – I once offered all that I could (most of the money coming from an aunt).  If it were only fairness! I borrowed $8500 and they have already received $11,000 in tax returns over the years but still want $21,000 more.

Consumer Proposals are the same in that you need a third party(trustee) and your are under their control for a significant period of time and your credit is screwed for a significant period of time – not that it isn’t already.

Pigeon: yes just the gov.  and as Momof 2 rightly says even though they have a group called collections they don’t seem to care if they ever collect (more cynicism: they are just waiting until they collect their pension – my file is so old I have gone through 4 contacts at CSL, two retired and one was promoted).  Partial monthly payments would have been a good idea but currently as we are going to have trouble paying next month’s rent it is not an option. 

Thanks to all – I am so pleased to have stumbled on this site for so long I thought I was alone. This site truly gives one faith and hope.

faith

another reason they dont care if they settle the account - look at all the interest they have added on over the last 25 years.  you've already paid almost 20K, and say they still want another 21K.  yikes.  can i ask what the original amount borrowed was ?  probably under the 19K you have already given them...

have you pursued debt forgiveness at all ?  as this matter has been ongoing for 25 years, maybe you can appeal somehow to have the interest suspended or some compassionate relief issued as you are on unemployment.  i honestly dont know enough about your situation to offer any other suggestions. 

i DO hope they have been issuing you statements of interest paid for your income tax over the years as you can claim 17% of the interest paid on your taxes.

sadly, if your loan has been in the system for 25 years, it doesn't give much hope for system reform, now does it.

So the question is this......if the student loan (even one this old) survives the bankruptcy and or proposal, and if this is faith's only debt, then is this a viable option?

I could be missing something, but it kinda sounds like the only two options are 1. to settle the loan for the full amount owed or 2. to set up partial payments. ???

OK, here is my take on bankruptcy and proposals. now granted this pertains to consumer credit more so than csl's.

going Bankrupt:

you walk in the door to your local trustee. you pay your $1500 and 9 mos later your life can begin again. debt free clean and simple no brain damge no hassles. 3mos into bk you can begin re establishing credit. one year post bk credit can begin to be repaired (high interest loans). 2yrs post bk qualify for mortgages at prime (ish) 3yrs into bk unsecured credit cards, prime rate smooth sailing 3 yrs to go and no record of bk.

the feel good route= porposals

trustee negotiates your proposal, you at that time get attached at the hip like a marriage to your new best friend your trustee(3-4 yrs),you begin to make payments thru your trustee to your creditors during your time in porposal you cannot re-establish credit... why you might ask.. well because if you can afford the luxury of re-establishing credit you can afford to escalate your payment to your creditors. so now that you have been in credit limbo for 3-4 and you have graduated from your proposal.. you can begin re-establishing your credit career or life. well its going to require the exact same three steps as the bankruptcy only instead of running in conjuction with your bankruptcy it begins after completion... the good news is you have paid your creditor a portion of what you owe the bad news well its going to take you the full 6 years of your proposal to be re-established... but hey you should feel good about paying back a portion of your debt to the people who wouldnt help you out of situation they help you get into...

just my opinion

Troy

I also would like to add to the above post,

I personally have had far far far to many clients come to see regarding loans that are in proposal... and everyone starts by saying

" but my trustee told me that if I/we went bankrupt it would be a permanent black mark against my credit... thats why we choose the proposal... he/she promised us that it was a much better route to bankruptcy and we would salvage our credit by going this route"

My only reply I have is " phone your trustee make an appointment to see them get permission in writing saying that you have been paying your proposal on time and that he/she will authorize you to obtain more credit"

Well to be blunt Im still waiting for the letters.

Troy

No, I agree...I know people who declared bankruptcy (one couple slipped in their student loans right before the ten year rule went into effect)...and had all the trappings of yuppiedom only a couple of years later...

So what IS the advantage, beyond that warm and fuzzy feeling you will get from being a good boy or girl and making payments on your debts?

Poly