Freda: Managing Excessive Debt on a Fixed Income

Table of Contents

‘Freda’ a Case History on Managing Excessive Debt

Freda (not her real name) had never imagined that at 68 she would be needing the services of a Bankruptcy Trustee. Having spent her entire life in the Greater Toronto Area, she had built what she thought was a good life with her husband, complete with a nice home and great kids. She had worked in retail for over 30 years (for the same department store), and had been looking forward to retirement.

Mismanaged Finances

When Freda turned 62 – her husband ended their marriage. In the ensuing divorce, Freda learned that he had been mismanaging their finances for years. Since Freda had totally relied on him to handle all the money matters, she had no idea how bad things were. Poor investments in risky stocks, uncollectable loans to ‘friends’, and refinancing mortgages that had all but eaten up the equity in their home, were just the beginning of the financial nightmare that Freda discovered she was in. At the end of divorce proceedings Freda was left with a car and $50,000 of debt ($20,000 in credit cards and $30,000 in an unsecured bank loan).

Moving to modest rental accommodations, and keeping her expenses to a minimum enabled Freda to pay down the $50,000 of debt to $25,000. By taking a part-time retail job after retirement at 65, Freda was able to continue to work on paying down the debt, but at 67 she was forced to give up that job due to poor health. Now living on a fixed net pension of $1,650/month Freda had tried to keep up with the $650 per month she was paying on the outstanding debt, but soon discovered she had to use her credit cards to buy food and medication.

Debt, Creeping Back Up

By age 68 her debt had crept back up to $28,000 and Freda had fallen behind in her credit card payments. Approaching her bank to see if she could get a consolidation loan to reduce her monthly payments she was denied. Despite her impeccable history of paying her bank loan, and a working relationship with the bank that went back decades, the bank told her she was not eligible for a consolidation loan because she was a pensioner on a fixed income. Contacting her two credit card companies in hopes of making some sort of reduction agreement – resulted in denials as well as demands for lump sum payments.

Defeated, stressed and feeling she had no other choice, Freda came to the offices of David Sklar & Associates to see about filing for Bankruptcy. During her initial consultation with Estate Administrator Richard Sklar, her finances were reviewed in detail. At that point in time she had credit card debts of $12,500; an unsecured bank loan of $15,500; and assets that consisted of a seven year old car which was owned outright.

An Alternative to Bankruptcy

After reassuring her that there was a way to reasonably fix her present problems, Richard reviewed her choices with her and explained Consumer Proposals in detail. Freda had not heard of this alternative to Bankruptcy, and was eager to have the opportunity of at least repaying some of her debt, staying out of Bankruptcy, and keeping her car. Working on her Proposal and establishing a reasonable monthly budget, it was determined that she could afford to pay $175/mo towards her unsecured debt – for a period of 60 months. Even before her Proposal was presented to her creditors, Freda began to experience a sense of empowerment and control and that had been missing in her life for many years. With Richard’s help, she had come to the realization that she had options.

Her creditors were presented with the Proposal which showed her financial situation clearly. When the Trustee recommended the creditors accept the Proposal because they would get nothing if Freda went into Bankruptcy, her offer was accepted.

Although Freda was pleased with the outcome of the Proposal, she wondered why her bank, who was the major creditor and had readily accepted the offer from the Trustee, had not listened to her when she had explained the situation to them in person.

Moving Forward

As part of her Consumer Proposal, Freda was required to attend two financial consulting sessions. During these sessions she learned how to manage her money. After years of relying on her husband to take care of the finances, followed by years of hanging on by shear will power – Freda was pleased to be able to tell Richard that she had come to the point in her life where she had gained the knowledge and independence she needed to take control of her own life.

To protect our client’s privacy, aspects of this case study have been altered

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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Very knowledgeable, helpful and fast service
Anthony Mcfeat
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I am so delighted to have found this company. They are the best. Everyone in the office is very nice never to busy to assist you. Thank you David Sklar and Shirley and associates for being you. 😊🌺😊
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Trina was amazing and quick. No judgement was made and they all made me feel I made the right decision. Would highly recommend them
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Trina was very easy to work with. Any questions I had were answered promptly. What seemed like a complicated process was explained in a clear manner that wasn't at all intimidating. It made for a more comfortable experience during a turbulent time.
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Jackie is very professional...I would recommend David Sklar to anybody especially knowing how understanding they are.
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I had Shirley and Kim take care of my finances. From the very first moment I spoke with Shirley I could sense how caring, professional and patient she was. She was also very understanding with my lack of financial knowledge and never made me feel dumb as some other companies have.Her and Kim were always very quick to respond to emails, always available if I called and answered my abundance of questions in such detail that I now believe I have a thorough understanding of how finances work. I am hopeful about my fresh financial start and very grateful I had the privilege of meeting and working with these two beautiful women.I also spoke briefly with Richard over zoom and he to was extremely friendly, patient and made sure I was well taken care of.I could not recommend David Sklar and Associates more. Thank you again.
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Good professional team! Jennifer is the best, helped me through everything and answered all my questions. Made the process easy! Would recommend Jennifer and the team at David Skylar.
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Christine and her team are amazing and professionals. I called for help and she responded right away to help me.thank you and I really appreciated for everything you do.
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Thank you so much for the helpYou took away the most stressful things in our lives which was our dept you guys are amazing and would recommend you to everyone
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The staff here are fantastic (Cori handled my visit) and are willing to go above and beyond to help people who need help, I recommend them 100% for people who are looking to move on in good standing.
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