Lifestyle "luck has never been on our side"

"I am a 65 year old man who still works in a steelworks," said his email.Last March, he contracted a loan of $ 34,000 to consolidate his debts, it was read.

"My wife was declared invalid at the age of 42, and as she worked part -time, she did not contribute enough to receive a disability pension.She is 59 years old, so right to nothing for the moment, which means that we have only one income for a very long time.»»

He does not have a pension plan.The recent stock market slippages compressed their RRSPs at a meager $ 25,000.

« Je ne vois pas le jour où je pourrais prendre ma retraite»», écrivait-il.

After an email asking him for more information, the phone rang.

« C’est moi qui vous ai écrit pour mon mari»», a annoncé l’interlocutrice.

Executive in a company, Normand* had lost his job at 40 in a wave of layoffs, explained Johanne."We had just bought a house, it was fine.»» Sans autre formation qu’une cinquième secondaire, Normand a cherché du travail pendant plus d’un an avant de déclarer faillite.

Johanne became invalid shortly after and then stopped working.

She suffered five operations in the spine."I have always worked part -time.I did not contribute enough, I do not have the right to have Quebec rent.»»

Nor disability pension. « Il me manquait juste une année»», dit-elle."Luck has never been on our side, and that's how it is on everything.»»

The couple, who have two adult children, live in Montérégie, 75 km from Montreal, in a accommodation that costs them $ 800 per month."It is in the cheapest that we can have.»»

The monthly payment of the consolidation loan amounts to $ 735, that of the rental of its SUV at $ 470.

The infiltration that Johanne receives four times a year in Montreal is billed $ 650 each, her tailor -made corsets cost $ 2,000.

"We are at the limit of everything," she says.The rent and the rental of the paid truck, there is not much left.»»

She resolved to write in a lifestyle. « Ça ne coûte rien, des fois qu’ils auraient une solution à tout ça…»»

Numbers

Normand, 65 years of employment: $ 3,600/month after taxesrrq: $ 635/Moise: $ 25,000

Johanne, 59 years old.

Debt consolidation loan: $ 34,000

No property

The answer

Éric Lebel, associated with the Raymond Chabot recovery and insolvency group, and his colleague Stéphanie Poisson, financial recovery advisor, resumed the budgetary problem of the start, even before considering the destiny of the debt of $ 34,000.

They first rebuilt a complete and plausible budget, to better assess the couple's options.For Corsets and Johanne infiltration fees, they retain $ 442 per month.

To the current expenses that she listed, they add reasonable envelopes for the positions not mentioned (restaurant, gifts, clothes, personal care, etc..), for a monthly total of $ 3868, before reimbursement of the debt.Normand's monthly income, RRQ included, total $ 4,235.

The budget therefore releases $ 367 per month for the reimbursement of the debt.

However, it currently costs them $ 765 per month."There is therefore a deficit of $ 398 per month," notes the two experts.The status quo is not an option.»»

They have developed other scenarios.

A bankruptcy

According to the standards of the bankruptcy Superintendent, a second bankruptcy, given Norman's income, would lead to monthly payments of $ 500 for 36 months.

A bankruptcy would therefore cost $ 18,000, but would prevent the couple from repaying the balance of the loan of $ 34,000 and the interest.

Given the budgetary surplus estimated at $ 367, Normand and Johanne should therefore reduce their current expenses by $ 133.

Or a consumer proposal

Normand and Johanne could rather make a consumer proposal - a proposal made to creditors through a trustee to reimburse only part of the debts, in a schedule of a maximum of five years.

« La proposition de consommateur pourrait être de 60 paiements de 375 $ pour un total 22 500 $»», ont estimé Éric Lebel et Stéphanie Poisson.

This avenue is longer and more expensive than bankruptcy-$ 22,500 rather than $ 18,000-, but considering the initial budgetary surplus of $ 367, "the consumer's proposal would cause a deficit of $ 8 per month, they doto be worth. L’impact financier mensuel est beaucoup moindre»».

And retirement?

But what happens to Normand's retirement?

With RRSP savings of $ 25,000, the couple can only count in practice on public annuities.

Normand already affects his RRQ pension, at the rate of $ 635 per month.Johanne is not entitled to it, she said.

A total of $ 2416 per month.

Selon ce qu’on peut déduire de l’information fournie par le couple, leurs seuls revenus entre les 60^e et 65^e anniversaires de Johanne seraient ceux de Normand : RRQ (635 $), pension de la Sécurité de la vieillesse (PSV, 613 $) et Supplément de revenu garanti (SRG, 514 $).This would add the Canadian allowance of $ 654 per month granted to Johanne from the age of 60, while waiting for it to touch the PSV and the SRG at 65.

If Normand is retiring, he will have to continue to make the agreed payments in the consumer proposal.

In the case of bankruptcy, however, the payment fixed by the Superintendent is established on the bases of income.With Normand's retirement income, bankruptcy would be reduced to 24 months, without payment.

The couple's monthly budget would be summed up at the $ 3868 initially calculated by our two experts, faced with retirement income of $ 2416.The deficit would be around $ 1450.

Normand « devra nécessairement réduire ses dépenses et pourrait alors envisager de remettre le véhicule»», suggèrent-ils.The measure would allow $ 767 to be entrenched in the monthly budget, but is insufficient to balance it.

The situation will barely improve when Johanne reaches 65 years and will start to touch the PSV and the SRG.Presumably, the couple's income will then stand at around $ 2575 per month, in today's dollars - barely $ 160 more.

It is inevitable: in anticipation of retirement, that it occurs sooner or later, Normand and Johanne will have to make, with the help of a budget advisor, an exact calculation of their expenses and predict a painful exercise of compression exercise.It is very likely that they must do without vehicles.

Unless you find an extra retirement income ...

*Although the case highlighted in this section is real, the first names used are fictitious.