Case studies
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Case study: Financial problems caused by overspending
These case studies are not true stories. They do not constitute actual client testimony. However, they are based on experiences observed by our Licensed Insolvency Trustees.Â
These fictional case studies are meant to demonstrate the possible outcomes of a debt solution. In reality, each situation is unique. All individuals struggling with debt should consult a Ginsberg Gingras Licensed Insolvency Trustee to determine the best solution for them, and its effects.
Julia gets back on her feet thanks to her consumer proposal
Julia is a single mother looking after two children. She has a stable job and has $2,000 monthly to support her family. Her rent costs $750 per month. Expenses relating to groceries, transport, and various services account for about $1,000 every month.
The trap of overspending leads to debt
Julia separated from her partner a few years ago. Because she did not want her children to suffer from the loss of income following the separation, she turned to credit cards to maintain the same lifestyle.
Despite her good intentions, this choice led to overspending. Furthermore, Julia had been counting on a pay raise, telling herself she would repay her debts, but the raise never happened.
Unable to continue making her monthly minimum payments on her credit cards, Julia decided to meet with a Licensed Insolvency Trustee (LIT) at Ginsberg Gingras. The LIT quickly settled Julia’s anxieties and reassured her.
After having heard the Licensed Insolvency Trustee’s recommendations, Julia decided to file a consumer proposal.
Julia’s debts before the proposal
| Tax liability | $514 |
| Credit card 1 | $6,412 |
| Credit card 2 | $7,809 |
| Credit card 3 | $8,001 |
| Credit card 4 | $8,516 |
| Debt total | $31,252 |
Once the consumer proposal was drafted, Julia signed the documents, and the LIT filed them with the Office of the Superintendent of Bankruptcy Canada (OSB). The LIT transmitted the proposal to Julia’s creditors. The creditors had 45 days to send their proof of claims to the LIT and request that a creditor meeting be held, if they wished. Two scenarios are possible:
- The LIT is not required to convene a creditor meeting if less than 25% of creditors submit a request. The consumer proposal is therefore deemed accepted.
- The LIT must convene a creditor meeting if at least 25% of creditors submit a request.
Following a creditors meeting, adjustments may be made to the proposal to satisfy creditors. During a meeting, creditors can vote against a proposal if they disagree with the terms. For a proposal to be accepted, it must be approved by creditors holding 50% + 1 of the debt total.
In Julia’s case, the proposal was accepted as is, and the creditor meeting was not necessary. To settle her debts, Julia made 60 monthly payments of $200 each for a total of $12,000, with zero interest. She then received a Certificate of Full Performance of the consumer proposal. Her balance and her debts from her overspending were erased.
Julia’s debts after her consumer proposal
| Tax liability | $0 |
| Credit card 1 | $0 |
| Credit card 2 | $0 |
| Credit card 3 | $0 |
| Credit card 4 | $0 |
| Debt total | $0 |
In summary, Julia filed a consumer proposal and fulfilled all her obligations. Her consumer proposal cost her $12,000 in payments on a debt of $31,252 total. The consumer proposal also allowed her to avoid bankruptcy.
At the end of the procedure, Julia had no other debt. She learned from this experience and gradually rebuilt her credit. Julia now understands how to avoid overspending. She always makes purchases based on her budget. Her children aren’t missing out, and since this misadventure, Julia has shared her new knowledge about personal finances with them.
Help to release you from your debts
Whether or not you are having financial difficulty like Julia, we can help free you from your debts. Together, we will find the best solution for your budget.
At Ginsberg Gingras, you’re always treated with respect and dignity.