One tactic some companies have used over the years has been to promote their items via door-to-door sales. That is, the salesman would uninvitedly knock on your door and attempt to sell you a piece of machinery to improve the use of your home. Typically, these types of equipment would be home heating, air conditioners, or water treatment equipment.

Many times, these pieces of equipment were sold at inflated prices and then financed over many years, enabling small monthly payments to be made. It seemed very affordable; however, the true cost of the installed equipment may have been up to five times the actual cost that a reputable supplier would have installed it for. At the same time the contract was signed, the seller would also get a written agreement from the homeowner allowing the loan to be secured via a registration on title to the property that it was being installed in. What this means is that if the loan was not repaid, the seller could enforce the loan and was entitled to be paid out of the sales proceeds of the property when sold.

Recent changes to legislation has meant that the title registrations made by these companies on your homes are no longer valid and, on application, can be removed. The debt would still exist, and if you stopped paying, they would still be entitled to recover the equipment installed; however, they would no longer have security over the larger and more valuable asset, your house.

In reality, the seller would be unlikely to come and take back their water heater or water softener since it would be uneconomical to do so (the labour charge to remove it may be more than the equipment is worth). If you stop paying the monthly payments, the equipment sellers or finance company may elect to be treated as an ordinary unsecured creditor, like a credit card or payday loan, for example.

If you are having trouble paying these (and other debts), a Licensed Insolvency Trustee can help you with a formal plan to become debt-free, stop all the interest and generally pay back only a fraction of the amount you owe, depending on your income and assets.

Taylor Leibow Inc. has been helping people get out of debt in the Hamilton-Niagara area for over 75 years. To book a free consultation with one of their Trustees, Kathy Lenart or Jeffrey Lewis, please visit www.freshstartnow.ca or call 905 523 0003.

jeffrey lewisBy Jeffrey Lewis 
CPA, CA, CIRP, LIT