To prove that you are not alone in dealing with too much debt and to give you some comfort about how easy it can be to call me for help, here is story #2 of a debtor named ‘Joe’.

Joe is 30 years old and has accumulated a significant amount of debt due to addictions, unemployment and deteriorating health.  He is getting his life turned around by seeking counselling and treatment and now wants to deal with the burden of $40,000 in debt. A large portion of his debt is for ten different pay day loans. I caution everyone who comes to see me about borrowing from these establishments.  I understand that when you need to pay your rent and buy food for your family that you are desperate and will borrow from anywhere, but the annual interest rates on payday loans can be upwards of 300%.  Once you borrow from one and do not pay it off immediately with your next pay, it becomes a never-ending cycle of borrowing at exorbitant interest rates.

I reviewed the following options with Joe:

  1. A debt consolidation loan would not be a viable option at this time as he has no source of income and a bank would require a co-signor to advance any funds. I typically do not recommend making anyone else responsible for paying your debt unless there are some really unusual circumstances.
  2. A debt management program would not be a viable option at this time as he is unable to pay his debt in full over the next four years.
  3. A consumer proposal would not be viable at this as there is no source of income to offer monthly payments to his creditors.
  4. An assignment in bankruptcy would stop the payday loan cycle, eliminate his responsibility to pay his debt and allow Joe to concentrate on his health issues. As Joe has no assets and currently has no income, he would be obligated to pay the minimum monthly trustee fee of $200 for 9 months.

Joe felt relief after discussing his options and knowing he has a plan going forward. He decided to file an assignment in bankruptcy to provide him relief from the phone calls from collection agencies. Joe will be required to attend two counselling sessions which will review budgeting and money management skills and ensure he is seeking counselling for his addictions.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)