Bankruptcy Kitchener Blog by Scott Schaefer

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 310-PLAN 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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My associate Ian Martin and I spent the noon hour this past Saturday on the Ask the Expert show on 570 News. During the show we discussed market trends, the significant increase in insolvency filings, and how consumer proposals and personal bankruptcy work. We consider the Ask the Expert radio talk show an important forum for providing the community of Kitchener Waterloo with information.

While preparing for the show, I looked at various statistics. Here is what I found; the current debt to income ratio is now at 145%. When we did a similar show in February 2006, the ratio was only 118%. That is a significant increase of 27%, but the fact that this number has increased to over 100% is of concern. This could be one of the leading causes that for the 12 months ending November 2009, there were more than 150,000 personal bankruptcy and consumer proposals filed in Canada. Further, when I compared previous data, I found that 2005 was the first time more than 100,000 people filed personal bankruptcy or consumer proposals. Seeing an increase on this scale is of concern because it can cause people to fall into financial hardship when they experience something unexpected in their life.

Kitchener Waterloo has been affected by the recession as well as unemployment rates which are now at 9.9%. This is above the current national average of 8.3%. Many people have gone back to work to be retrained, taken lower paying jobs, or have had over-time slashed. When you compare that to the demands for debt payments, people are overwhelmed.

As Trustees in Bankruptcy, we are available to help people obtain fresh financial starts through consumer proposals and personal bankruptcies. Ian and I meet with many people from Kitchener Waterloo who have faced tough times and were thankful for the options available. While a consumer proposal or personal bankruptcy is not the option people plan for, it does provide a safety net and allows these individuals to take control of their financial future.

If you are from Kitchener Waterloo and want to sit down and discuss your situation in detail so that we can make a plan to deal with your debts, call us at 310-PLAN or send us an e-mail. There is no cost in meeting with us.

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