Three years ago, I met with a gentleman who had no source of income, was unable to find employment and owed approximately $20,000 in credit card debt. Let’s call him “Joe.” Joe and I reviewed his financial situation in detail to find a solution that would provide him relief from the stress of not being able to pay his debt.
Joe’s expenses at the time were minimal, but he still needed approximately $1,400 a month to pay for his rent, utilities, food, etc. During our discussion, Joe advised that he had funds in a Registered Disability Savings Plan (that were exempt from seizure) and in a Tax-Free Savings Account.
I advised Joe that if he filed an assignment in bankruptcy at that time that I would seize the funds in the TFSA, leaving him with no ability to pay his rent, buy food or look for employment.
Fast forward 3 years, and Joe recently came back to see me. His savings in his TFSA have been depleted as he used them to live off during his two years of unemployment. The great news is Joe has been working full-time for a full year and has maintained his place of residence. He has still been struggling with his monthly debt payments and finds with accumulating interest, the debt is not decreasing.
Joe could have filed an assignment in bankruptcy and paid the minimum fee of $1,800 with no recovery to his creditors. Instead, Joe chose to file a consumer proposal, offering to settle his debt at $7,200 at a monthly amount that he can afford. Based on votes to date, it appears the creditors will accept the terms of his proposal.
As Licensed Insolvency Trustees, we help people on a daily basis deal with their debt. Joe’s story has touched me a little bit more, and I was so pleased to hear he is doing well and enjoying his job – truly getting a fresh start.
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)
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