Everything seemed to present themselves for Kevin, an employee of the 27 -year -old health network. A drop in salary and a car accident will change the situation.
“My working hours have been reduced, and I suffered a significant drop in salary. As if that was not enough, I had an accident, and my vehicle is a total loss, ”says Kevin. The catch is that his insurance barely covers half of the loan of $ 30,000 contracted to buy the car. Result: he owes $ 15,000 to his creditors for a car he no longer even has in his possession.
Shortfall and debt
Due to the decrease in his income, Kevin began to use his credit card to overcome the shortfall. Little by little, he accumulated $ 2,500 on it in addition to a microprope with a high interest rate of $ 5,000. Added to this is the balance of the loan of his accident vehicle ($ 15,000). He also owes $ 3,500 to his telecommunications supplier.
Each month, a good part of his salary of $ 1975 therefore goes into the minimum payments he must make on his debts, which now climb $ 26,000, and he finds himself trapped in a spiral from which he fails to get out of. “He accumulates delays and unpaid invoices, and recovery agencies call him several times a day,” explains Karine Lavigne, financial recovery advisor at Raymond Chabot.
A new start
Kevin is increasingly anxious and has lost sleep. “Even if he wants at all costs to take over on his debts, the amount due is too high to try a budgetary reorganization, and his income is clearly insufficient,” says Karine Lavigne.
The advisor examined several avenues for the young man. A loan consolidation loan is not possible, because its debt level is too high. The consumer’s proposal, an offer made by the authorized insolvency trustee with creditors for a lower amount than total debt, is another option.
But the period on which this type of arrangement spreads – a maximum of 60 months – seems far too long in Kevin, who prefers to opt for bankruptcy. “With it, he will make a reasonable monthly payment and will be released from his debts after nine months. This is a quick solution to give a new start to any honest but unlucky person, ”notes Karine Lavigne.
His financial situation
Active:
- Toyota Yaris 2009: Value of $ 1925
Debts:
- Auto financing: $ 15,000
- Credit card: $ 2500
- Microper: $ 5000
- Unpaid telecommunications fee bill: $ 3,500
Total debts: $ 26,000
Monthly income:
- Job income: $ 1975
- TPS credit: $ 43
Total income: 2018 $
Monthly expenses
- 1925$ (including rent, electricity, telecommunications, grocery, car loans, insurance, petrol, license and registration, etc.)