Will parents of twins have to declare bankruptcy?

Parents of a 2-year-old girl, Charles and Magalie have just learned that the stork will be bringing them… twins! With their student debts, credit card debts, and all the upcoming expenses, they are wondering if it would be better for them to declare bankruptcy.

Charles is a high school teacher and earns a gross annual salary of $52,000. Magalie, on the other hand, is a pharmacy technician and has a gross annual income of $41,000. The maternity leave has taken a toll on the couple’s budget, and they have compensated for the loss of income with their credit cards.

Together, they now have $26,000 in credit card debt, in addition to Magalie’s $9,000 student loan and Charles’ $30,000 student loan. Charles also has a personal loan of $8,000. They are already struggling to make the monthly payments and are very concerned about the future. With the arrival of the twins, they will need to move and acquire furniture and accessories, not to mention the cost of diapers and infant formula. They see no other solution than to declare bankruptcy to get rid of their debts. Therefore, they are consulting a licensed insolvency trustee.

Soaring expenses

«Charles and Magalie were wondering if they should both declare bankruptcy or if they could transfer all the debts to one spouse in order to preserve the other’s credit», explains Pierre Fortin, a licensed insolvency trustee and president of Jean Fortin et Associés. In other words, what solutions are available to them to cope with the new expenses and not jeopardize the quality of life for their children?

Currently, the couple and their daughter live in a 4 1/2 apartment with a rent of $800 per month. They have been living in this apartment since the beginning of their studies and have therefore benefited from low annual increases. When they move, they will have to opt for a larger and inevitably more expensive apartment, which they estimate will cost $1,400 per month in rent.

During Magalie’s first maternity leave, they were unable to reduce their expenses and increased their credit card balances, resulting in monthly payments of $540 for Charles and $240 for Magalie. In addition to that, they have respective payments of $410 and $230 to repay their student loans. They are therefore very stressed about the second maternity leave, fearing a financial catastrophe.

A plan to get back on track

«We worked together on a budget to determine the cost of their new housing, as well as the options available for their existing debts», says Pierre Fortin.

With at least one additional bedroom and increased heating costs as a result, their housing costs could increase by $700 per month. At the same time, Magalie’s maternity leave will deduct about $625 net monthly from their budget, while family allowances will increase to $930 per month from the birth of the twins.

For Charles, the best solution is to file a consumer proposal, reducing his debt from $26,000 to $12,000, and his monthly payments to $200 per month for five years instead of $860. «Being protected under the Bankruptcy and Insolvency Act, he can also suspend the repayment of his student loan during Magalie’s maternity leave, which will give them some breathing room», Pierre Fortin explains.

As for Magalie, she will not have to file a proposal since her debt was not very high, and a repayment plan for 36 months could be put in place.


Charles’ Debts Amount Monthly Payments
Credit cards $18,000 $540
Student loan $30,000 $410
Personal loan $8,000 $320
Total: $56,000 $1 270

Charles’ Income: $52,000$ gross/year


Magalie’s Debts Amount Monthly Payments
Credit cards $8,000 $240
Student loan $9,000 $230
Total: $17,000 $470

Magalie’s Income: $41,000$ gross/year