Bankruptcy Kitchener Blog by Scott Schaefer

It is always important to remember the things that matter in life. Children and family tend to be number one on our list of importance. Some consider vehicles, homes, investments, trips, etc. as well, but ultimately these items are of lower importance. Sometimes it is easy to get caught up in the everyday grind of going to work and paying our bills, that we can lose focus on what matter most. Stress levels can rise and it seems we are just putting in time.

When I meet with people in my Kitchener office, I look at their financial situation and discuss the options to best deal with their debts. I always take into consideration the future and the values that matter most for each specific person before we come up with the best plan of action. With every plan of course, there are pros and cons. In order for the pros to outweigh the cons, personal values/objectives need to be met.

The people I meet with never planned to be sitting with a trustee in bankruptcy contemplating filing a consumer proposal or personal bankruptcy. The fact is however, that things happen and debts can become unmanageable sometimes to the point of consuming our lives. This is the time to re-focus and consider what matters most. Both a consumer proposal and a personal bankruptcy negatively impact your credit rating; however both options also allow an individual to look towards the future and start rebuilding their situation on a personal and financial level.

If you would like to sit down and have an honest, non-judgmental meeting to review your situation, then give me a call at 519-747-0660 or send me an e-mail. My office is conveniently located between Kitchener and Waterloo at 607 King Street West.

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According to Wikipedia, a staycation “is a neologism for a period of time in which an individual or family stays at home and relaxes at home or takes day trips from their home to area attractions. Staycations have achieved high popularity in the US during the financial crisis of 2007–2010 in which unemployment levels and gas prices were high.”

In the Kitchener-Waterloo Region, I have seen and heard this term being used more and more. Staycations are a great way to take in the vast amount of activities and attractions we have in Kitchener and Waterloo. I think there are many activities that we have never experienced because they are local and often overlooked. So from a budget and local impact point of view, a satycation is an excellent way to save money and still get out. But the reality of it is that many people cannot afford to travel away from home right now. With financial debt levels increasing, the amount people are spending just to make their monthly debt payments is growing into a large number. I understand how the past 2 years have affected many people and families in the area.

I have found that summer can be a time when families in the Waterloo Region look at their situation and ask themselves, is this where they wanted to be financially? If a staycation is in your summer plans due to your debt levels, then maybe this is the sign that it is time to consider a plan for your future financial situation. Maybe a consolidation with a bank will help, or maybe it is time for a debt management plan or a consumer proposal.

At this point, the best thing to do is:
a) Create a list of all your debts with total owing and monthly payments to each;
b) Work on a monthly cash-flow tracking what you have coming into the family unit as income and where you spend your funds. See this link for a budget worksheet;
c) Talk to someone to see if your cashflow is missing or omitting something that you missed and will affect your decision making;
d) After drawing up your cashflow, determine what your overage or shortage is.

If you would like to sit down and review your situation to determine how the various options work for you, please call my Kitchener office at 519-747-0660 or send me an e-mail. There is no cost or obligation in meeting with us. We will gain an understanding of your situation and then provide you with details of how the options work and at what monthly amounts you would have to pay.

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A wage garnishment by a creditor is stopped on the date that someone files a consumer proposal or personal bankruptcy. From my office in Kitchener, I e-file the consumer proposal or personal bankruptcy documents to the government right after they are signed. From that moment in time, there is a “Stay of Proceedings” that stops garnishment. This stay of proceedings is then faxed to the payroll department to advise them that the garnishment must stop.

Let’s talk about the process and timing to get to the point when the garnishment is stopped. The first thing we need to do is to arrange a free meeting in my Kitchener office to sit down and discuss the situation and options in detail. This meeting can take 30 minutes to 1 hour. From there, if a consumer proposal or personal bankruptcy is decided on, we need to complete an application with basic information. The application information is inputted into our computers and official government documents are printed – ones to be sent to the government and creditors. If there is a garnishment in place, we can complete the paperwork in a timely manner. The final step to make the procedure official is to come back into the office to sign all the paperwork.

Garnishments happen for many different reasons but the fact of the matter is that if someone is having part of their pay taken for an existing debt, it can really affect their ability to pay everyday living expenses. If you have a garnishment or are facing a garnishment and want to discuss your options with me in my Kitchener office, please call me at 519-747-0660 or send me an e-mail.

Please note, that neither a personal bankruptcy nor a consumer proposal can stop or change family law support garnishments.

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Since the last snowfall, the government has been issuing warnings to consumers to reduce debts as interest rates will be rising in the future. This of course is in despite of the government not listening to their own advice as the government debts are rising too, but that is another issue. We just witnessed the Bank of Canada make their first increase, so when are we going to see interest rates increase again and how fast? What do these warnings mean to consumers?

Consumer debts are reaching new levels and as all debts are tied to interest rates, any increase will have a significant affect. I have an economic degree from Wilfrid Laurier University so analyzing trends and effects is quite interesting to me, but one does not need this degree to see the impact interest rates will have on the people from Kitchener Waterloo. Every increase in an interest rate will affect everyone’s amount they have to pay. Let’s consider some of the following areas:

- First through the debts that they pay as interest rates are tied to prime – for example, line of credits, overdrafts, new loans, etc.
- Second, the cost of items we buy will have to rise over time due to businesses carrying debt. If the costs to a business go up, then they will have to pass these on to the consumer in order to maintain their profits.
- Third, higher interest rates could affect government debts as well, which are paid through taxes.

Overall, we have seen very low interest rates for a long time. People are not talking today about how mortgages used to be at 20% back in the early 1980s. That is like paying your mortgage on a visa card today. I am not saying we are going to see these high rates again, but the government is warning us to be ready for rates to increase.

The hard part is, as consumers we need to spend to help us recover from the recession, so if we are paying off our debts verses spending the money on consumer goods our economy could take longer to recover. With rising debts and costs, the question people are asking is how do we reduce our debts and still afford to live. Everyone’s situation is different so the same solution is not always available to everyone.

If you are from the Kitchener Waterloo area and feel that your situation is too tight now, then it may be time to consider a plan to deal with your debts. A debt management plan to pay 100% of your debts without interest may be one solution or a consumer proposal where you make one monthly payment to pay back part of your debts may be another. We can arrange a free consultation in my Kitchener office to review your situation and gain an understanding of how the various options would work in your situation. I can be reached at 519-747-0660 or by e-mail.

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Wells Fargo announced yesterday that they are closing their Canadian operations. The following notice was posted on the Wells Fargos website yesterday:

“Effective June 9, 2010, Wells Fargo Financial Corporation Canada discontinued sales of new customer loans, and closed Wells Fargo Financial store locations across Canada. We have shifted our focus to serving existing real estate, auto, and consumer loan accounts. There will be no change to our customers´ existing account terms and conditions.”

Wells Fargo had a store location in both Kitchener and Waterloo. Several local residents used Wells Fargo as a lender for many different reasons. One of the main reasons was that the banks had turned them down. So with this lender now not available in Kitchener Waterloo, individuals may not be able to consolidate their debts or renew their mortgages the same as they could in the past. This is one more example of the fall out of the financial crisis and recession has lead to.

If you feel your debt load is now too large to manage and want understand how a consumer proposal or a personal bankruptcy would work in your case, call me in my Kitchener office at 519-747-0660 or send me an e-mail. We will sit down and have a free meeting to discuss your facts and impact of each option.

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We keep hearing in the news that the economy is improving and that businesses are recovering. For the past 18 months there have been some major impacts on the economy with job loss, hour reduction, decline in the stock market etc. Like all recessions, we eventually come out of them, but in today’s day and age we live in a global climate and as such as Canadians we feel the effects of a lot of other problems in other countries, such as the current collapse in Greece. This turmoil could cause the recession to remain and the recovery to be slower than in the past.

I meet with people from the Kitchener Waterloo area and feel and understand how these times have been tough on them and their families. They are not alone, in my Kitchener office, we are still seeing many people who are trying to recover from these hard times. These people are finding that the banks and credit card companies are not working with them to get over the hump of this recession. Maybe the creditors are being tough as they have had larger than normal losses, or maybe it is the volume of people calling them to work out a deal. Either way, debt levels are up, income is down, and costs are higher which is leaving families struggling.

Last month, April 2010, more people filed a consumer proposal or personal bankruptcy with me than any other month in our Kitchener office’s 12 year history. Given these tough times, the option of a consumer proposal or personal bankruptcy offer effective ways to deal with debts and let families get back on with their lives.

No one plans to run into financial problems, but when the economy plays a major role in their ability to deal with their debts, they need a solution. A consumer proposal or a personal bankruptcy does affect one’s credit, but if they are able to deal with debts and rebound, then the purpose of getting a fresh start is met.

The message of this blog is to recognize that if you are reading this, you are not alone. Many people from Kitchener Waterloo are having hard financial times which is affecting their health, work, relationships, etc. Call me at 519-747-0660 and we can arrange a free consultation in my Kitchener office to explore your options.

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As a licensed Trustee in Bankruptcy, I am a one of just over 1,000 Trustees in all of Canada. A Trustee in Bankruptcy has a unique role. We are like a referee in the bankruptcy process. We sit down with people who are experiencing financial hardship and assess their situation as well as review the options to deal with their debts. Then, if someone needs the protection and relief from their creditors, we administer the bankruptcy process. We are not lawyers, but rather licensed by the government. We are all required by law to uphold a minimum standard and we report to and are monitored by the government.

So how are the Trustees at our firm different?

At Hoyes Michalos and Associates Inc. we think that people make the difference. In our Kitchener Waterloo bankruptcy office, my associate Ian Martin or myself meet with every individual. Ian and I are both Chartered Accountants. We personally work with everyone who sees us in the Kitchener Waterloo to make the process is fully explained and understood.

I was sitting in the Kitchener Bankruptcy Court last week where I noted some major differences between trustee firms. There were 65 individuals being seen by the court for their discharge hearing that day. Not all personal bankruptcies have to appear before the court, only certain cases go to court to get their discharge. I was there to report to the court as the trustee on 5 individual bankruptcies. There was only one other trustee firm represented at the court, even though there were individuals at the court for at least 10 other trustee firms.

How does court work? The judge deals first with clients whose trustee is present. Therefore, the individuals there from Hoyes Michalos were dealt with first and out of the court within minutes. After that it got interesting. I decided to stay in court until all cases were heard. I sat in the court room watching what happened for the individuals whose trustee chose not to appear at court. Each case was heard one by one, with just the individual sitting before the court and having to speak alone – without the support of their trustee. There were some cases where there appears to be some miscommunication between the trustee and the individual and the trustee was not there to sort it out. This left the individual confused and not sure of what had just happened.

For most people, they have never been in a court house. Now if their bankruptcy has to go to court, they are left to go it alone. At Hoyes, Michalos and Associates Inc. we will appear at all discharge hearings because we see it as part of our role as trustees. Further, it is imperative that everyone understands want the process is so that there is no confusion. This is one major difference between us and the other trustee firms in the area.

For a free assessment of your situation, call me at 519-747-0660 or send me an e-mail. The Kitchener Waterloo office is located in the middle of both cities at 607 King Street West in Kitchener – near the intersection of King and Victoria.

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In a personal bankruptcy, the amount someone has to pay to the bankruptcy trustee depends on how much take home pay the person and their family unit receives. When a person’s income is above the government limit, this is referred to as surplus income. 50% of the amount over this limit must be paid to the trustee. The overall concept is that the creditors are to be paid back a portion of the debt based on the net income received during the personal bankruptcy. This surplus income concept can be relatively complex as each family unit’s income varies on a case by case basis; especially considering the range of income levels in Kitchener Waterloo.

The government released the new 2010 limits or threshold yesterday, they are now:

Family Size – Limit
1 person -$1,884
2 people – $2,345
3 people – $2,883
4 people – $3,501
5 people – $3,971
6 people – $4,478
7 or more people – $4,986

The amount of surplus income received during the bankruptcy impacts if the bankruptcy will last 9 or 21 months (24 or 36 months if it’s a second time bankruptcy). The surplus is averaged and is reviewed prior to making this discharge decision.

If surplus income is expected to be a factor for someone in financial hardship, then a consumer proposal is an alternative to personal bankruptcy. A consumer proposal fixes a monthly amount that someone has to pay each month as compared to a personal bankruptcy were the amount changes each month based on income.

If you are from Kitchener-Waterloo area and want to better understand how a personal bankruptcy with surplus income or a consumer proposal would help deal with your debts, call me at 519-747-0660 or send me an e-mail. We have free consultations in out Kitchener office to sit down and review your situation and gain an understanding of the pros and cons to the options in your situation.

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Statistics Canada released the bankruptcy and consumer proposal rates today and Kitchener Waterloo was hit harder than the Ontario and Canadian averages. 2009 was a year marked by the recession, the downturn in the automotive sector and financial crisis. These all contributed to individuals falling on tough financial times.

In 2009, 151,712 individuals filed a consumer proposal or bankruptcy in Canada. This was an increase of 31.0% over the 2008 number of 115,789. For Kitchener Waterloo, the increase in personal bankruptcies and consumer proposals was 39.2% which was higher than the Canadian increase of 31.0% and the Ontario increase of 32.7%. The numbers with respect to just personal bankruptcies in Kitchener are even more drastic – Kitchener bankruptcies saw a 45.9% increase as compared to Ontario of 28.5% and Canada 28.4%.

For my Kitchener office, we met with many people from Kitchener Waterloo and as such personally understand how hard this year was on them as they saw the impact of the recession on them and their families.

In the past, Kitchener Waterloo may have fared better due to our diverse economy with the high tech sector, universities and college, hospitals, insurance, and manufacturing sectors, but 2009 had a deeper impact that spread to all areas and sectors.

Kitchener Waterloo is rebounding, but individuals are still feeling the long lasting impacts that 2009 brought to their situation and with increased debt levels, individuals still will need the assistance to get a fresh start through a consumer proposal or bankruptcy.

If you would like a free review your situation to make a plan to deal with your debts, call our Kitchener office at 519-747-0660 or send me an e-mail.

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One reason someone seeks assistance from my office, is that they have a creditor taking part of their pay cheque through a garnishment order. The garnishment is generally too much for that person to deal with and still be able to pay their living and other expenses. If the creditor will not stop the garnishment or the person cannot pay off the debt, then a consumer proposal or a bankruptcy could be the only solution to stop the garnishment.

A consumer proposal or a personal bankruptcy both have a provision in the law that provides a “stay of proceeding” which stops a garnishment. There is an exception in the law for child or spousal support payments – neither of these forms of garnishment can be stopped in a consumer proposal or personal bankruptcy. Once the garnishment is stopped and the other debts are dealt with in a consumer proposal or personal bankruptcy, then the individual can focus on their fresh financial start. For a garnishment order to be implemented, it is likely that the debt occurred several years prior and something happened (such as a loss or a change in income) to cause the payments to stop or fall in to the hands of collections. These can be stressful years and a fresh start is what most of the individuals need.

The protection from garnishments in a consumer proposal or bankruptcy include that of Canada Revenue Agency for a tax debt or student loan.

If you are in Kitchener Waterloo and have a garnishment order against you or the creditors are threatening one, call me at 519-747-0660 or send me an e-mail. We can arrange a free consultation in my Kitchener office located in Kitchener at 607 King Street West. In this meeting we will discuss your situation in detail and make a plan for you to deal with your debts.

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