Possible Solutions - bankruptcy

Contact your creditors

Explain why you can't make your payments and suggest making lower payments over a longer period of time. You may be surprised by how many creditors are willing to accept such arrangements.

Credit counselling

Credit counselling services are available, but may be different from province to province. Contact a local family or community counselling office or a credit counselling association to find out how to get in touch with such a service. If you have difficulty making a budget and sticking to it, counselling may help you.

Debt consolidation loan

You can ask a bank or financial institution about combining or "consolidating" your debts into one loan. In such a case, the bank or financial institution will pay off all your debts and, in return, you make single monthly payments to the bank or financial institution. Make sure to shop around because interest rates are different. It is important to stop buying on credit. Continuing to use credit could make your debt load too great for you to handle.

Consolidation order

If you live in Alberta or Saskatchewan, you may apply for a consolidation order. A consolidation order sets out the amount and the times when payments are due to the court. The court will distribute your payments to your creditors. This part of the Bankruptcy and Insolvency Act (Part X: Orderly Payment of Debts) lets you pay off your debts over three years and frees you from creditor harassment and wage garnishment. Unlike bankruptcy, you do not lose your assets.

Voluntary Deposit scheme

For residents of Quebec, the Voluntary Deposit scheme (better known as the "Lacombe Law") is similar to a consolidation order. You must make a monthly payment based on your income and number of dependants, to the court. This service is usually available at the local courthouse.

Consumer proposal

Under the Bankruptcy and Insolvency Act you may make a consumer proposal to your creditors to reduce the amount of your debts, extend the time you have to pay off the debt, or provide some combination of both.

Bankruptcy

If none of the above methods solves your debt problem, you may choose to declare bankruptcy. Bankruptcy should be a last resort if you cannot meet your financial obligations through affordable payments over a specific period of time.

Bankruptcy is a legal process performed under the Bankruptcy and Insolvency Act. Because of your inability to pay your debts, you assign all of your assets, except those exempt by law, to a licensed trustee in bankruptcy. This process relieves you of most debts, and legal proceedings against you by creditors should stop.

Recognize the danger signals - bankruptcy

You have a debt problem, or are going to have one, if:

• you continually go over your spending limit or you use your credit cards as a necessity rather than a convenience;
• you are always borrowing money to make it from one payday to the next;
• your wages have been garnisheed to pay for outstanding debts;
• you pay only interest or service charges monthly and do not reduce your total debt over many months;
• creditors pressure you for payment, threaten to sue or repossess your car, furniture or television, or hire a collection agency to recover the money for them; or
• utility companies cut off service because your bills have gone unpaid.

Condo hotel background

Here is a link from an older post about condo hotels in the United States. The concept is the same regardless of the location.


Bob Waun is CEO of Vacation Finance, a mortgage brokerage and lending company inBirmingham, Mich. He owns two hotel rooms that pay him to stay away.

Until recently, Mr. Waun owned a traditional vacation home, a cottage in upper Michigan. But after a particularly bad winter -- he arrived during a snowstorm to find that the plow service hadn't cleared the driveway and that the pipes had burst -- he sold the cottage and bought two condo hotel units instead.

Now, Mr.Waun and his family vacation in resort hotels in Michigan and Florida, and earn money when the rooms they own are rented out to other guests. Mr. Waun, his wife Lynn and their nineyear- old daughter spent the Memorial Day weekend in their unit at the Inn at Bay Harbor in Petoskey, Mich., a 152-unit condotel managed by Marriott's Renaissance brand.

"As we were checking out, someone else was checking into our room and I made $60 that night," Mr.Waun says. "If Marriott rents out the unit during the Fourth of July holiday, I'll make enough money to take my family on a trip to Mexico."

Experiences like Mr.Waun's are driving the market for condotels -- condominiums you buy that can be rented out as hotel space. According to Smith Travel Research in Hendersonville, Tenn., almost 10% of all hotel rooms under construction in the U.S. are condotel units and there are plans for 232 condotel projects with 98,237 rooms that could be built within the next decade.

Condotels are also being developed in Europe, South Africa, the Middle East and the Caribbean. Joel Greene, president of the Condo Hotel Center in Miami, a real estate brokerage firm that deals mostly in preconstruction units, lists 115 projects on his Web site, including five in Dubai.

Guy Maisnik, an attorney with the Global Hospitality Group of Jeffer, Mangels, Butler & Marmaro LLP in Los Angeles, says his firm has handled 65 condo hotel projects and "almost all the new projects we see have a condo hotel component. This is a concept that definitely
has legs."

Condotels started in Europe and first appeared in south Florida in the 1980s, but did not become popular until the travel slump after 9/11 made it difficult for hotel developers to obtain conventional financing for new projects. They turned to the condotel concept, pre-selling rooms to individual investors, to raise equity.

In theory, the condotel meets two objectives -- that of the developer to get a project built and that of the buyer who, like Mr. Waun, wants a hasslefree place to vacation and the chance to make a little money on the side. Baby boomers are becoming active vacation homebuyers, says Mr. Maisnik.

"If you buy a condo in Aspen," he says, "you're not likely to use it more than 30 days a year. If you want to rent it out, you'll have to hire a management company and take your chances. The attraction of a condotel is that you can own a unit in a hotel with a well-known name, like Trump or Mandarin Oriental, enjoy first-class amenities and standards of maintenance, then let the
hotel company arrange all rentals for a 30% to 60% share of the revenues."