I just got off the phone with one of my Vaughan clients. She has received her bankruptcy discharge papers and wanted to say thank you for all of our help throughout her bankruptcy. I have decided to share her story as it is very similar to a lot of the people that I help.
Gianna (not her real name of course) came to me about 9 months ago in tears because she just received notice from her employer that her wages are about to be garnisheed by one of her ex-husband’s creditors that she had co-signed on. Her ex had filed bankruptcy in Toronto after their divorce and now the creditors that she was joint with were coming after her.
Gianna was only able to work part time as she had to take care of 2 small children, so her employment income was about $800 per month. She also received a child tax benefit of around $1,000 per month and child support of $1,000 per month so her total monthly income was $2,800. After basic living expenses Gianna could hardly afford to pay her own credit card bills (which had gotten quite high since her divorce) and were around $30,000 never mind having to pay the debts that were joint with her ex-husband and were around $40,000.
Gianna was very worried that if the garnishment went through she wouldn’t even be able to buy food to feed her family.
Because one of Gianna’s creditors had a judgement against her and were about to garnishee her wages, her options were limited. Her two options were trying to offer a consumer proposal or to file for bankruptcy. Only a bankruptcy or proposal has the legal stay of proceedings necessary to stop a garnishment order.
Gianna’s only asset was an older vehicle that was paid for and was worth around $4,000, due to the exemption laws in Ontario, that asset would be exempt in a bankruptcy and she would get to keep the vehicle. Also, Gianna’s income is below the surplus limit for a family of 3 which is $3,070. Due to those reasons Gianna chose to file for bankruptcy instead of offering a consumer proposal to her creditors.
I explained to Gianna that a bankruptcy is designed to give the honest but unfortunate person a fresh start and that as long as she completes her duties and co-operates with us she will be eligible for an automatic discharge in 9 months. A bankrupts duties include:
- Making payments to your trustee (usually around $200 per month for 9 months)
- Attend 2 debt counselling sessions
- Provide the trustee with the information required to file taxes
- Submit monthly income and expense statements
- Pay the required surplus over the guideline
- Co-operate with the trustee at all times
It has now been about 9 months since I first met with Gianna and she just mentioned how relieved and stress free she now feels as she doesn’t have to worry about creditors calling and making payments to them that she can’t afford. She also is very excited to start rebuilding her credit again.
If you would like to know how we can help you become debt free, book a free consultation with any of our Toronto bankruptcy locations or with me in my Vaughan office and I will be happy to go over all of your options with you.