Bankruptcy Kitchener Blog by Scott Schaefer

When I meet with someone who is self-employed, their biggest concern is usually tax debt. Income tax debt can become too large to manage for some self-employed individuals.  Let me give you an example of a recent consultation I had with a gentleman from the Kitchener-Waterloo area, and the steps we took to find him the best solution for his situation.

Income:  Bob (not his real name for privacy reasons) was a self-employed construction worker who worked in the roofing business.  Bob worked when the weather permitted and was only paid when he worked.  During peak times, he was able to make what he thought was good money. 

Expenses/Debts:  Bob was previously married and as a result of the divorce, is paying $300 per month in support for one child.  Bob rents his home and has an old pick-up truck worth about $2,000.  He has not filed his taxes for 4 years, but after consulting with an accountant, it is estimated he will owe $34,000 in income taxes.  Bob also has $18,000 in credit card debt, on cards which he uses in place of income when he is not working due to the winter slow times.  With all of his debts combined, he is now at a point at which he cannot pay them in normal monthly payments. He called Hoyes, Michalos & Associates in Kitchener at 310-PLAN to seek some advice and get some help with his financial situation. 

Plan:  I sat down with Bob and reviewed his situation with him.  He was upset about his debts and not sure what he should do to go forward.  We discussed the options available to him and he decided that filing personal bankruptcy was the best solution for him to get a fresh financial start.  However, before he filed personal bankruptcy, he needed to file all of his outstanding tax returns.  In doing so, Bob realized just how unstable his income was and that he needed to obtain steady annual income.

Result:  After filing his returns, Bob returned to our office a month later to file for the bankruptcy. He is now working a steady job and earns $2,000 a month after taxes. He is well on his way to his fresh financial start.

If you are self-employed and are behind in your taxes, or if you have questions about bankruptcy, call me at 310-PLAN for a free consultation. You can also email me any questions you may have about income taxes or bankruptcy. Your financial future may seem bleak now, but with the right plan you could be living your fresh start sooner than you think.

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Today I met with Shelia (not her real name for privacy reasons). She wanted to file for personal bankruptcy.  She was a 24 year-old single mother and had $29,000 in unsecured debts.  She found herself in financial hardship for several reasons and as a result, filed a personal bankruptcy to obtain a financial fresh start.  Her situation was as follows:
 

She had a factory job where she was working for $18 per hour.  She was managing well with her financial situation until she was in an accident which resulted in her losing her job and having a three month period of unemployment.  During this time, she was to receive child support, but payments didn`t always arrive on time and couldn’t be relied on.  As a single mother, she needed to ensure she could feed and provide housing for her 5 year-old son and herself.  The only income she could count on was the Child Tax Benefit. As there was barely enough funds for the basic needs, her car was returned to the bank to avoid unnecessary costs.  She just recently found new employment, but the pay is significantly lower than before, at $9.50 per hour. 
 

The debts that stacked up during this period of unemployment were in credit cards, and phone, dental, and cable bills, to name a few.   Several of the debts were in collections and there were numerous collection calls being received each day.  The stress from her financial situation was affecting her life and she was worried about her  future. That is when she called Hoyes, Michalos & Associates Inc. to help her develop a plan for her debts and future goals.  After meeting with us and making a plan, she has a positive outlook on her future and her ability to rebuild her credit again after bankruptcy.
 

If you are experiencing a similar situation and want to start to develop a plan for your future, call me at 310-PLAN for a free consultation. You can also email me any questions you may have.  If you want a healthy financial future, contact me so we can make it a reality.

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I’ve met with a number of seniors in Kitchener recently that find they are struggling with high debt loads. Debts may have carried over from a time they were working, but reduced income may make it almost impossible to keep up. In some cases, insufficient income tax is deducted from a pension which adds to the financial stress when a tax bill arrives.

The possibility of health care requirements that may not be covered by benefit plans just increases the problem. Without resources such as equity in a home or personal investments, some seniors are finding that they simply don’t have enough income to go around. High interest rates, phone calls from creditors and embarrassment at not being able to adequately provide for themselves have left some seniors overwhelmed at a time in their lives when they should be enjoying retirement.

If you are a senior experiencing any of these problems contact us in Kitchener at 519-747-0660 or at 310-PLAN (no area code required) for a free consultation with one of our professionals. Offering a proposal to creditors is one example of how we could help you to develop a plan to get your financial life back on track.

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For the second straight year, the number of personal bankruptcy and consumer proposal filings in Kitchener decreased in 2006. In 2006 1,177 individuals in Kitchener and surrounding area filed personal bankruptcy, and 316 people filed a consumer proposal. That’s 1,493 people who filed, as compared to 1,529 people in 2005, a decline of 2.4%.

It appears that this decline is caused primarily by a strong labour market in Kitchener. The unemployment rate declined to 5.2%, and employment continued to increase (although not as fast as in 2005).

While a declining bankruptcy rate is good news, let’s not forget that Canadians are carrying a record level of debt. Household debt increased 9.8% in the first 10 months of 2006, and in September 2006 the ratio of debt to personal disposable income reached a record 122%. This means that for every $4 the average Canadian earns in a year, they now have $5 in debt.

If you live in Kitchener and are carrying a lot of debt, you may not be able to financially survive even a temporary job loss or reduction in your income.

If you have too much debt, give my office a call in Kitchener at 519-747-0660 or 310-PLAN, and let’s get to work on making a plan to deal with your debts.

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