Scarborough Consumer Proposal – Parmenia’s Balancing Act
Parmenia (not her real name) was a 51 year old mother of two who was drowning in debt. When her marriage had ended 11 years previously, she had been left with very little. In fact, after the divorce settlement she had just barely enough money to move herself and her children into a small, Scarborough townhome rental.
Fortunately, she had a good job with the company she had started working for when she was 20. By taking night courses and learning everything she could about her industry, Parmenia had worked herself into the position of Chief Accounting Clerk.
After her divorce, Parmenia found that she was relying more and more on credit. Over the next 10 years, she was always very careful to make at least the minimum payment on her credit cards, but eventually she maxed out her credit cards and began to look elsewhere for credit. Her bank gave her a personal loan to pay down her credit cards, but within a year, she had maxed out the cards again.
Parmenia became an expert at juggling her minimum credit card payments, bank loan, and bills. While she keep excellent accounting records at work and balanced everything to the penny – at home she was always in the red.
Her balancing act took a major hit when she was forced to take three months off work due to illness. Covered by long-term disability insurance that only paid a portion of her normal pay – she became desperate for more credit, to keep the act going.
Against her better judgement, Parmenia took out a high-interest personal loan with a high-risk lender, as no one else would lend to her. A few weeks later, when her car broke down, she took out another high-interest personal loan with a second high-risk lender.
When she was finally able to return to work, she was in a financial mess.
It was obvious that she could not make all the payments she was balancing, but when she missed two payments to one of the high-risk lenders, she suddenly realized how dangerous her situation had become. Unlike the ‘friendly reminders’ she had received from her credit card companies, the high-risk lender was threatening to put a garnishee on her wages. A garnishee on the Chief Accounting Clerk’s salary, would not be acceptable to her company.
Parmenia knew she needed to take immediate action to get this under control – she called David Sklar & Associates for an appointment.
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At her initial meeting with Richard Sklar, Estate Administrator, Parmenia reviewed her financial situation in detail:
| Monthly Net Income: $3,100 | ||
| Credit Card Debt: | $21,500 | |
| Bank Loan: | $8,500 | |
| High-Risk Lender Loans: | $12,000 | |
| Cell Phone Bills: | $3,000 | |
| Total Debt: | $45,000 |
No Assets in excess of the exemptions permitted in the Ontario Exemption Act and the Bankruptcy and Insolvency Act
After discussing all her options with Richard and the Trustee, Parmenia chose to file a consumer proposal.
Although she knew she was only at the start of the process – making the decision to file, gave Parmenia a sense of relief and hope that she had not felt in years.
David Sklar & Associates filed the consumer proposal and presented it to her creditors to vote on. The proposal was accepted.
It is important to note that the moment the proposal was filed, Parmenia’s creditors were required to stop charging her interest and to stop all collection efforts (including calls, legal action and garnishees).
Parmenia’s consumer proposal was for $365/month for 60 months. During that time she is to attend two credit counselling sessions and honour the terms of her proposal. At the successful completion of her proposal she will be released from her debts.
Although she has not yet completed her proposal, there is every reason to believe she will be successful.
Parmenia is enjoying not having to juggle payments, and honestly feels that she is on the right track to a better financial future.
To protect our clients’ privacy, aspects of this case study have been altered
