I just defaulted on a consumer proposal. And all it does is keep the collectors from phoning you for a while.

But you won't pay off the loan during your term, unless your payments are like $1,000 a month, and if they are, you could have continued your monthly payments, right?

I panicked, to be honest. I didn't know about this forum either at the time; I just had three collection agencies after me for my $60,000 in student loans. A credit counsellor told me (wrongly -- none of them know anything because they are only trained in consumer debt) that I could declare bankruptcy on the loans that were more than 10 years old, so I called BDO Dunwoody, who handles bankruptcy.

And after your term is up, you'll still owe your student loans. They can't be discharged until ten years after you ceased being a full- or part-time post-secondary student. And even then, that's at the discretion of the courts.

Your bankruptcy trustee, as much as they claim to know what's what, have no CLUE about student debt. They sell proposals; that is their business. In fact, my trustee told me that I could ride out the ten year rule by continuing to take out consumer proposals until I could declare bankruptcy on the whole lot. EXCUSE ME? That would have been, for all intents and purposes, FOUR bankruptcies in ten years! If I didn't think I could get credit before, well no WAY would they have given me credit after that!! And I would have been 50!

Where I ran into problems was when I was laid off from my job last January. You see, as you read the posts on this forum, you can't guarantee that you will have a secure job four or five years from now, ...Life really holds no guarantees. I tried to keep up the payments while on EI, but I got behind...my trustee couldn't renegotiate for a longer amortization because the creditors would discover that I was unemployed and all bets would be off.

So I defaulted.

And that is the reality, panthers. I'm so sorry that you had to find out after the fact. But don't beat yourself up. Nobody out there knows anything about our issues; that's why we're here. We all tried to find the answers through "traditional" sources first, and only got in deeper trouble.

You can always hope that the laws will change for the better by the time your proposal is finished. In the meantime, hang with us, read and learn...you'll be better prepared to consider ALL options by then...

Welcome!

Poly

 Panthers,

 A consumer proposal is bankruptcy. It is a program that is governed by the Bankruptcy and Insolvency act, and is administerted only by liscensed bankruptcy administrating groups and individuals, so it is bankruptcy. And ..Big Father is absolutely correct - half the benefit and twice the cost. All the consumer proposal allows you to do is pay installments - and you didn;'t need to do a consumer proposal to do that. I am surprised the bankruptcy administrator who sold you this didn't advise you of these things.

 Just put it this way, you have paid a certian amount already for the proposal fee. The additional fees that the trustee gaffsa from you are 20% of your monthly payment that is set up for you by them. That is right. 20% of EVERYTHING you pay in to the proposal goes in the coffers of that bankruptcy firm.

 As for credit reporting, you will have a derogatory bankruptcy narrative on your credit history for 3 years AFTER you you have successfully completed this proposal.

 May I ask if the trustee advised you that they will be keeping 20% of your monthly remittance fee to them? Sometimes, they try to sugarcoat this and tell people that they colelct a "small fee" from you this way. There is a difference between "small fee" and "20% of evrything you pay in". After 5 years you are back to square one given the predicament you have described.

 Lastly, fixing your credit will be extremely difficult. Youwill have to wait until 2 or 3 years after you finalize the CP. Even then, it is going to be difficult to sell yourself as a low-risk client to a potential lending institution.

 If you need help, let me know. I would love to question the bankruptcy administrator in your case as to why he or she did not offer you advice or the chance to become aware so that you could avoid falling into his program. I am afraid to say that it is only going to band aid a very large wound - and it iwll likely become infected. The bankruptcy trustee does not know how to treat that infection, you see. Come to me if you need help and I will straighted this crap out for you. If the consumer proposal issomething that will cause you further problems down the road, and the trustee failed to properly educate you about these issues, they should be held accountable for making matters even worse for you.

 In all liklihood, the bank wouldn't "come after you" in the event. It is obvious that collection agency interactions may have "scared" you into the hands of the bankruptcy administration. This is what bankruptcy trusatee like, you see. Collection agencies create BIG business for bankruptcy firms.

 Evenif the bank were to come after you, there owuld have to be a good enough reason. I could have easily protected you fromt hat wiothout these extremes.

 Wow. Sorry for all the typos.

  so once a consumer proposal is done, im finished with the debt.  It worked out to me paying 48% of the debt.  I know that it screwed my credit, but the collection agency screwed it up already.  From what ive read when something goes into collections, its on your credit for 6 years anyway.  Who is going to lend money out.  Just want to start fresh that all .  Will this do that??

You raise a very good point on the issue of collection agencies scaring people into bankrupty. 

I have had it recommended to me.......right from the jump when my student loan went into collections in 1997.....I sent in PD cheques... filled out the F/Q's and within a year they were recommending that I file for bankrupty.......they wrote in the CA notelines ...

....sz will see a trustee and call back with info....

....spoke to C/DB sz has done nothing about the debt, sz has not sought any advice, sz is doing nothing and has no intention to try aznb resolve debt or make debt decrease.....

This was there way of trying to get me to go bankrupt.........nice way to put that I did not agree with their recommendation.......I knew it was a non-issue then as I always have.

Anyways............you are very right here Johnny.

Hi  silence2long , I hope i made the right decision to go with the consumer proposal.  The alternative was to pay 1100.00 per month for 12 years.  And who can pay that?  Its crazy.  I got in a heap of debt because im a pilot.  Now after all said and done there is squat for new jobs for pilots.  The proposal cut my debt in half and if i can make double payments or something then I can get this out of my hair asap!!  The bank wouldn't consolidate, collection agency was on my ass, just had it up to my neck.  I had to give up.  I struggled with this loan for 5 years.  The interest was killing me.  Never really touched the principle. I hate the mess im in.  Just wish i knew before it got out of hand.  This is what i get for an education.  I have a full time job also .  Thanks alot!!!!

 PANTHERS,

 If the CP is closing at 48% of your debt then there are no guaranteed student loans in there (CSL or PSL).

 Also, you are currently in the middle of bankruptcy proceedings. Obtaining credit is something that you can worry about after you are finished with bankruptcy.

 Lastly, bankruptcy trustees are BIG on selling their products as leading to a fresh start. A fresh start to what? You are insolvent and tyur debts have been washed. Creditors recognize this for a lot longer than you think.

 Let's define FRESH START ..

 A fresh start is being placed or reset back to the beginning of something, so you can start over once again WITHOUT OBSTRUCTION or any OBSTACLES in your pathway.

 Bankruptcy doesn't do that for people. It is a sales pitch and "door prize" just like the "non profit" and "counseling" label attached to non-profit credit counseling schemes.  

 Anything to make you all warm and fuzzy.

panthers,

I know nothing about consumer proposal or bankrupty.....sorry can't advise one way or the other.......like I said it has always been a non-issue for me.

I am in deep........but have found a way to dig my way out of some of it over the years, as far as consumer debt went.  I still have the student loans to go.........and will try to figure that out, too.

If it works for you.........then it works for you.  I just wonder how it will wear on you paying 700 a month for the next 4 years?  If you can manage than good.  Glad you are currently full-time employed.

What happens if you miss a month ???

panthers,

I'm going to take a guess here and say.....if CBCL is calling you... it is already on your credit file.

Just a point to ponder on.........why do you want credit ????

Personally.........I find joy in ripping up all the applications that come in the mail on a weekly basis.  It is a reminder of a place I hope to never be again !!!  I have no want to rebuild the credit..... or to incur anymore..... but that is just me.  I go without a lot of things...... all the time.  I now have a different way of looking at possessions......... I ask myself is it really worth it ??  The answer to that is quite often NO.

But then again I have been poor for the majority of my life......I now know that I can live without credit..........

IS it really that bad too not have credit ????  I find myself in a much better position than friends I have ....that double my income... and have double the debt.  Why?? because they have the credit per say to incur the debt.  I worry for them sometimes...........What if they lost their job???????  Their whole world as they know it would come crashing down, and yes they would be in twice as bad.

 PSL is an abbreviation for Provincial guaranteed student loans.

 As for R7, I7, and 07, they are all equal to a 9. Again, they tell you "R7" to make it appear like it is something different than derogatory creidt. Frankly, anything 4 or more is derogatory int he eye of a credit granter.

 Bankruptcy could have been assigned, but if your income is higher than norm, and it appears that you can pay something, if the trustee were to push an insolvency package (straight bankruptcy) through, then they would look rather silly bankrupting someone who is able to pay. The consumer proposals are more of a delicasy to trustees because they taste better and earn them ooooodles more money per dish sold.

 John LeBlanc
The Canadian Financial Wellness Group

Ya Silence, CBCL called me after i missed 2 payments with AMEX (after i had arrangements with amex to make a triple payment)  They screwed my credit up, so now I figure how much worse can i get.  I went 15 years with perfect credit, and it took the pricks at cbcl and amex one second to screw up my whole credit file!!! 

   Johnny, my alternatives were very hard to swallow.  Either way I have to pay $65,000 worth of debt.  Now ive been doing it for 5 years and barely covering the principle.  Ive been threatened by cbcl that they were goin to take me to court, and unfortuantely in manitoba when you go to court, all the documents are accessable via the internet at this site, which includes civial criminal bankruptcys ect. http://www.jus.gov.mb.ca/registry/index.htm - http://www.jus.gov.mb.ca/registry/index.htm    Its to easy for someone to see that youve had problems, and i have a bit of pride.  Boy am I paying for it though.

    A Little trick i used to get CBCL off my ass for a while was i told them my phone number changed and i moved.  Gave them a fake number and never heard from them again.  Just got letters in the mail.  They like to bounce you from one agent to another every 3 months.  You'll get a call saying Hi this is ----- from CBCL special investigations dept.  Full of sh-- .  Ive heard that so many times, and by the way i was making monthly payment of 500.00 to these idiots.  Finally i just said screw it, What are my options.  Bankruptcy or proposal.  Im tired of kissing cbcl's ass so they don't sue me.  Just tired.  You guys are great to talk to, very very informative.  Ive learned alot about the snakes in the collections business, and Johnny , so many times CBCL called telling me to borrow money from where ever (which i learned is illegal) and calling me more than 3 times a day.  I finally gave them my cell phone # that way I could screen it!!  Its pretty sad when your making payments and have to worry when your with your buddies if the vultures will call you.  Very embarassing!!  Thats why I say to them "Govern Yourself accordingly" there famous line to try and make you feel like your doomed!!!

 Either way, bankruptcy, consumer proposal ... it is all bankruptcy. Some will argue that it is an "alternative" to bankruptcy. Well, Well, Pepsi is an alternative to Coca Cola. They are both Colas and they rot the hell out your guts. But damn, they taste good.

Consumer proposals are part of the Bankruptcy and Insolvency business and act. Only liscensed bankruptcy people and groups administer them. That means they are bankruptcy.

 On your credit history there will be a bankruptcy reported there for 3 years from the date you have completed the proposal. If it rated a 7, just know that it menas no different than a 9. Bankruptcy is bankruptcy.

 Lastly, I will relay to you what was said to me by a very wise and admired mentor of mine about bankruptcy .... (A long story shortened)

 "People who are drowning in debt see bankruptcy as a big boat and that if they get on it they have a chance at survival.

 These people take their chances and hop in the boat, but half-way across, they find that their vessel of salvation is leaking badly. They are now thinking that they are going sink, be swept away in some current - and then drown .

 When the boat finally did sink, these people suddenly realize that the water was only a couple of feet in depth. They could have simply walked accross the river on foot had they been aware."

 John LeBlanc
The Canadian Financial Wellness Group

 panthers,

 Here is some more enlightening for you...

 Your bankruptcy is public record also. It can be accessed by anyone who wants to know. These matters are all public record.

Yes but if it dosn't go to court like a proposal then its not recorded in the court registry.  Allthough you can pay $10.00 to some place and do a name search and find out that I had a proposal.  Big deal.  Who's gonna do that if its not free?

 You should ask your bankruptcy trustee about this. It may be against the rules for you to apply for any credit - or even hold it due to your bankruptcy stillin progress. It does seem like a conflict, if you think about it.

 Ask your trustee and get their permission first before you do it. Play by the rules. That is the only way to play regardless of who else decides to break em.

 If you'd have known about The CFW Group, your problem could have been solved  at A LOT less cost, less damage, and you would be walking away in a much better (healthier) condition financially.

 I wish you the best of luck and hope everythign works out for you.

 Having derogatory creidt can affect you in obtaining a new bank account. Banks are kind of "funny" and all with risk like this. All you can do is try.

 Panther,

I have seen many people go bankrupt because they thought it was an only or last resort only to later find out that it was the worst thing they could have done. I have also worked in various fields where I could see bankruptcy for what it really represents. I have seen how bankruptcy was as common as the cold back in 1993-1997 - and how greedy that system is to lure in people who owed student loans just because they had that open window to prescribe insolvency as a remedy - and cash in. 

I have never had my back to the wall, Panther. I have known how to keep that from happening since the age of 18. Today, I teach people how to keep away from being cornered or beaten by financial crisis.

panthers

if the "major banks" dont want to touch you with a ten foot pole, you may want to look into your local credit union as far as opening a bank account goes.  they are generally more understanding and less rigid and you may be able to rebuild your credit slowly with their help down the road.

good luck and keep us posted.

What???????? Can they do that??????

I never had to show them anything, Hunter. No pay stubs, no nothing. As long as they could cash my cheques, they didn't care.

Still wouldn't recommend getting one though.

Poly

No...Mine was ALL student loans plus one Visa card, panthers ($60,000 in SL; $2,000 Visa)...So I don't think that would be the difference.

Perhaps where Hunter had hers done made the difference? I went to BDO Dunwoody...

Poly

Poly, did you have to wait for the 10 year rule on yours?  When you finished it did it completely absolve you of all your debt?

Panthers...Yeah, since I have student loans, the ten year rule is in effect. If I had finished the proposal as scheduled in November 2005, the collectors would have been on my ass again for the next five years. The Visa card would have been discharged though...

BDO suggested that I should just take out another consumer proposal! SURE! Two bankruptcies in four years!! *shakes head*

Poly