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View Full Version : Customer proposal (I'm going to give in)



Juicifer
1-26-13, 10:09am
Hi,
I am the owner of a nice Line of Credit that has been sitting on my bank statement for years. My spouse and I applied for the LoC in 2008, we wanted to renovate an appartment and rent it out, we told the bank we estimated that $8000 would be enough and sure enough the officer gave us the credit. When we came home we could see it was already added to our online bank accounts.

I think we used it pretty sensible. We shopped and renovated the apartment, we started renting it out until in the same period of time a tenant left and I lost my job. Since we had a family to take care of we sometimes had no choice but taking money out of the LoC and as a result we racked up quite a debt.

We have been making payments but barely enough to pay back on the principal. This has been going on for a couple of years now, our monthly budget works out pretty good but making significant payments on the LoC, that is just not possible.

So, I'm going to put in a customer proposal hoping that the bank will honor this request. There is a trustee here in town that has send me the information. I don't feel proud that I'm doing this but at least it's not bankruptcy.

Has anyone done this before? There is no real guarantee that the bank is going to help is there? They could reject the proposal and because we still pay all our bills and have no other outstanding debt (and a good credit rating) I am afraid that is exactly what they might do. The bank would cash in years of interest if they want to.

Anyone any thoughts on this?

Valley
1-26-13, 11:46am
I'm a little confused reading your post. What are you proposing to the bank? I am sorry if I am missing something obvious.

Juicifer
1-27-13, 11:14am
I apologize, it's called a consumer proposal: http://consumer-proposals.org/

jennipurrr
1-27-13, 2:10pm
From reading the site provided...you and the bank agree to a reduced amount to repay and new term, then when that is competed the remaining debt is wiped out?

What are the negative ramifications to this? If any? In the US payment plans/short sales, etc similar to this often leave a nasty sting on a credit report.

I am not sure what the interest rate situation is in Canada, but is there anyway to refinance this line of credit and possibly the larger mortgage to take advantage of new, lower rates? If so, you may be able to lower your payments/term and keep your credit intact.

Also, I have to question if a bank would even agree to your consumer proposal (sorry, don't know anything about Canada) on a piece of investment property. Why can't you just sell the property, pay off the loan, and be done with it? Has your property value fallen significantly?

iris lily
1-27-13, 2:20pm
I wondered about swelling the investment property as well.