0026 - Debt Related Queston: Bankruptcy Question # 0026

<<< Back

QUESTION #0026:

I have been making the minimum payments to my creditors, but now have maxed out all the credit cards, line of credit and my overdraft. After I pay my mortgage, utilities and some groceries, there isnít enough left to make the minimum payments to all the creditors. If I donít make my payments will the creditors take my assets? I donít want to lose my house.



ANSWER:

First, if your cash flow (income) only allows for minimum payments to creditors, this is a red flag that you have overextended yourself. As to seizing assets, an unsecured creditor does not have the ability to do this, they would have to sue you (and win) then apply to Court for a judgment to attach to the house. There is legislation protecting your assets such as household furnishings and appliances, and some equity in your home. However, if you have equity in your home you may be eligible for a loan to consolidate your debts. A mortgage broker can advise you on this. If you canít consolidate the debts into an affordable monthly payment then a settlement offer (proposal) or bankruptcy may be your solution. To calculate what you can afford you can book a free consultation with a trusteeís office, or visit our website and download the excel budget workbook (for free).