Sandra, 45, is a single mother of two. After a difficult breakup, she went into debt to get back into an apartment. A cosmetologist, she works on the road and somehow manages to keep her head above water.
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When Covid-19 hit Quebec, Sandra’s employer asked her representatives to meet their clients by video link. While her children were also confined to the home and were attending remote school, Sandra had to get herself ready and buy computers and office furniture. With no savings, she used her credit cards.
At the beginning of the summer of 2021, she was on a family vacation in a rented chalet in Bas Saint Laurent, again on credit. Tempted by the region, she decided to settle there permanently and leave the big city.
She sets her sights on a beautiful country house and bids $260,000, without inspection or legal guarantee, in order to make her offer more attractive to the seller. The latter accepts and Sandra continues the acquisition thanks to a $200,000 loan from her financial institution and by cashing all of her TFSA accounts ($25,000). You agree with the seller on the $35,000 sales price balance secured by a second mortgage. At the end of the summer, she moved to her new home. What seems to be the beginning of a great adventure will unfortunately quickly turn into a nightmare…
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rain of bad luck
Starting in September, the black series begins. She has to change her water heater and then get to work solving the problem of water leakage in her basement. To pay it off, she resorts to a $15,000 loan at 19% interest granted by a trust company.
Another blow in October: her employer decided to cut several representative positions, including her own. So she finds herself unemployed and experiencing a sharp drop in income despite work insurance.
Throughout the winter, she has to pay very high costs for electricity and heating, and also has to do many plumbing repairs. Icing on the Cake: In the spring, a parapet wall collapses on its floor.
This time the cup is full. With no more savings, only being able to rely on her work insurance and child allowances, she is unable to meet all of her financial obligations. In addition to paying off the mortgage, she also has to pay off credit cards and other loans totaling $95,000. Not knowing how to get out of this bad situation, you consult a licensed insolvency trustee.
start from nothing
Stéphane Gauvin, partner, Raymond Chabot’s transformation and bankruptcy group, quickly realizes that Sandra’s situation is untenable. “She has lost her job, has no savings and is heavily indebted. Her debt also has a high interest rate and she will not be able to overcome it,” he explains. These, including the mortgage, amount to $343,000.
Moreover, the real value of her property, taking into account all the problems noted, is only $ 175,000, which is far less than what she still has to pay her mortgage creditors.
Given all these factors, Sandra’s best solution is bankruptcy. So she returned the house to her financial institution, but was able to keep her car by paying the trustee a reimbursement amount of $3,600, or $400 for nine months,” says Stefan Goffin.
She freed herself of all her debts and was able to start off on the right foot. Her credit report will be severely affected for the next six years, but at least Sandra has managed to get back to sleep.
◆ a house : 175,000 dollars
◆ Cars 2016 (funded): 3500 dollars
◆ Consumer debt:
- First class mortgage (financial institution): $200,000
- Second mortgage: $35,000
- Credit cards (four) with 19.99% interest: $80,000
- Credit company loan at 19% interest: $15,000
- Tax Transfer: $2,335
- Electricity and heating: $1750
- moving house : 5500 dollars
- Taxes still due: 3500 dollars
► Total debt: $343,085
◆ Monthly income :
- Job income: 2000 dollars
- Family Benefit and Canada Child Benefit: $430
► Total revenue: $2,430