Bankruptcy Kitchener Blog

I received a call from a woman yesterday from the Kitchener-Waterloo area.  She was calling in about her situation and wanted to work out a plan for the future that would  help her deal with her debt load.

The caller was divorced and her children were grown and was therefore, living on her own.  Due to a medical issue, she had been off work for a period of time, which resulted in use of credit cards to maintain living expenses.  After returning to work, she consolidated her debts but advised me that she could not keep up on these living expenses and the loan payment, so her credit cards were used again to fund the short-fall each month.  Now with interest and monthly minimum payments, she cannot sustain payments to her creditors.  A summary of her situation is as follows:
 
Debts:
- $18,000 in credit cards,
- $16,000 in a bank loan for a prior consolidation of her debts, and
- $900 in bank account over draft.

Assets:
- a 1996 Chevrolet Cavalier, value at $2,000,
- Locked-in retirement account (LIRA) of $28,000 from a previous employer, and
- Normal household & personal items.

Income and Expenses:
- take home pay of $1,900/month,
- $150 of medical expenses per month, and
- rent, food, utilities, vehicle gas & insurance, etc taking the better part of $1,500/month

After briefly discussing her situation over the phone, we have booked a free consultation for her to come to our office in Kitchener at 204-607 King Street (by Zeke’s restaurant) and discuss her options.  At this meeting, we will review her financial situation, immediate concerns in more detail and discuss various items such as garnishment, co-signers, credit rating, legal action, payments required, windfalls, tax returns, etc.  Some of these may or may not pertain to her personally. 

We will also discuss the various ways to deal with her debts, including the formal options of a debt management plan, a consumer proposal, and a personal bankruptcy.
The impact of each option is reviewed through an analysis of the pros and cons to each, based on her situation.  At that point, we would need to look at the future, as a decision will be made based on the idea of obtaining a fresh start.  Therefore, by combining the solution to the debts with an overview of her future, we will arrive at a plan suitable for her.

If you are experiencing some form of financial hardship and want arrange a free consultation to review your situation and develop a plan for your future, email me or call me at 310-PLAN.

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I was meeting with a couple today in Kitchener and they decided that they are going to file for personal bankruptcy to deal with their overwhelming debts.  They are in their mid-thirties and have two young children. The personal bankruptcy will clear their debts, but only after they complete certain duties or conditions, including two credit counselling sessions, which will assist with their situation today and in the future.
 
The credit counselling sessions are required in all personal bankruptcy and consumer proposal filings. The sessions are conducted by a qualified credit counsellor and are generally done on a one on one basis, or in the case of a couple, attended together. 

The credit counselling sessions must be completed within a certain period of time – the first session in between 10 and 60 days after filing, and the second session within 30 days after the first session, but before the 210-day mark, or 7 months after the filing.

The sessions are designed to help people understand how they got into their financial trouble and teach them how to make a plan for the future.  In the first session, money management, spending and shopping habits, warning signs of financial difficulties, and obtaining and using credit are all discussed.  The second session is more personalized, looking at the  causes of the person’s financial situation and reviewing information from the first session.  If necessary, the counsellor will also provide more information or resources for future help.

The couple I met with today will find the credit counselling sessions valuable because they will help them understand their situation better and provide insight on how to handle future situations.  The couple has two children and their next goal is to own a house.  By filing for bankruptcy, they get a financial fresh start and the credit counselling sessions can help them work on budgeting and a plan to save for a house.

If you are experiencing financial difficulty and need some additional guidance, call me at  310-PLAN for a free consultation, or e-mail me any questions you might have. Let me help you get your financial fresh start.

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Today Ted Michalos and I appeared on Ask the Experts on 570 News in Kitchener. We spent the hour discussing credit cards, and how to deal with credit card debt. I added that they can help you earn rewards and air miles, and you get a nice summary of your spending at the end of each month.

Ted started the show by explaining that credit cards are a convenient way to make purchases so you don’t have to carry a lot of cash.

Douglas Hoyes on 570 News

Unfortunately, there is a very big negative with credit cards: the high interest rate. That’s why we made the following point two or three times on today’s show:Credit cards should be a substitute for cash, not a substitute for borrowing.

In other words, if you have the cash to make a purchase, using credit cards is fine; just be sure to pay off your balance at the end of the month. If you don’t have the cash, try to get a loan at the bank, or a line of credit, to keep the interest you are paying as low as possible.

Beware of the “low introductory rate” offers that get you to transfer your balances on other cards, only to increase your interest rate six months later.

Ted then talked about one of his “pet peeves”: people who have two many credit cards.We both believe that having one or two credit cards is fine, but if you have more than two credit cards, you run the risk of spending too much, and even worse, carrying a balance and paying a very high interest rate.

Ted Michalos on 570 News

When you consider that there are over 50 million credit cards in use in Canada today, that’s a lot of credit cards! Even worse, 32% of Canadian carry a balance on their credit cards, so that’s a lot of interest being paid each month.

What’s the solution?

If you have more credit card debt than you can handle, take action now.

Start by working out a monthly budget to determine how much you can afford to pay on your debts each month. By cutting some expenses you may be able to pay your credit cards off yourself. If you need some help, the credit counsellors at Catholic Family Counselling Centre in Kitchener can help you work out a budget, and even negotiate with your credit cards on your behalf.

On today’s show we discussed consumer proposals, a great alternative to bankruptcy where professionals such as Ted and I work out a plan where you repay a portion of what you owe, based on your income.

Of course if your credit card debt is overwhelming, a personal bankruptcy may be necessary to stop the collection calls and help you get your life back.

As we said on the show, if you have too much credit card debt, give our office a call in Kitchener at 519-747-0660 or 310-PLAN (310-7526, no area code required) or E-mail us to arrange a free initial consultation.

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