Bankruptcy Kitchener Blog by Scott Schaefer

The Office of the Superintendent of Bankruptcy released their report on the 2010 second quarter statistics on personal bankruptcy and consumer proposal filings in Kitchener Waterloo. The results show a decrease in the number of filings for the first 6 months of 2010 compared to the same period in 2009. This is something we all expected, as 2009 saw a record increase in personal bankruptcy and consumer proposal filings due to the economic recession, especially in Kitchener Waterloo. Comparing the 2010 second quarter number to the same period in 2008, we see the number of filings in Kitchener Waterloo are up over 14% for the same period.

Based on the situations I see in my Kitchener office, residents in Kitchener Waterloo are still feeling the effects of 2009 and the burden of carrying too much debt. Most people have found employment but at reduced incomes and debts may have risen in 2009 due to the financial strain the recession had.

Looking more at the statistics, consumer proposal filings grew over 32% in the first 6 months over that in 2009, and further grew 65% higher than that in the same period in 2008. This is mostly due to the new bankruptcy rules that came into effect on September 18, 2009. These changes have increased the length of time and costs for some bankruptcy filings. For more information on this, please see this blog link.

The fact is that if someone is struggling with their debts and they need relief, the government has provided the option of a consumer proposal as an alternative to the last resort option of personal bankruptcy. For the people that file with me, about 60% have filed a personal bankruptcy with 40% filing a consumer proposal. To sit down and review your situation and options in a free no obligation meeting, please send me an e-mail or call me at 310-PLAN.

No Comments »

A consumer proposal is an option that the government created in 1992 and has since grown in popularity. A consumer proposal is a legal settlement a debtor can make to their creditors as an alternative to personal bankruptcy. The Consumer Proposal is paid through one monthly payment to an administrator of consumer proposals, which in Ontario is only a licensed Trustee in Bankruptcy. There are no direct fees that are paid to the administrator as the government approves the fees to be paid from the consumer proposal offer. A consumer proposal is not the same as bankruptcy.

In my Kitchener office, we see people from Kitchener Waterloo and surrounding area, to review their options when they are having trouble making their debt payments. When debt levels become too large, monthly commitments can be too much for people to afford while still paying their living expenses. There are many different reasons for people to be facing financial hardship but they all have one issue in common – they need a plan to deal with their debts. A consumer proposal can be the option people need for financial recovery. They pay a portion of their debts while maintaining a balanced budget going forward.

A consumer proposal protects assets and avoids personal bankruptcy. A consumer proposal includes unsecured debts, which excludes secured debts like mortgages and car loans. All of the unsecured creditors are put together and they receive a pro-rata share of the consumer proposal offer. Payments on a consumer proposal are made over a period of time, not exceeding 5 years. The creditors generally prefer a consumer proposal as they will receive more than they would in a personal bankruptcy.

To review a consumer proposal option for your situation, please call me at 310-PLAN or send me an e-mail. My office is located at 607 King Street West, between Kitchener and Waterloo. To read more on consumer proposals, please see this link for a website dedicated to consumer proposals.

No Comments »

As debts levels rise in Canada, people at retirement age are facing the challenge of retiring with debts. Retirement is seen as a rite of passage – we work hard our whole lives and are to be rewarded with an extended vacation in our senior years. Problems arise if one retires with debts and their monthly pension income has decreased, making it difficult to keep up with debt payments and living expenses.

In my Kitchener office, we see several seniors who are struggling financially and are looking for relief from the collections and overwhelming stress of carrying these debts. Seniors are very proud people and are upset about their situation, but they also realize that the stress of the situation is affecting them too much.

Sometimes we see the adult children coming into meetings with their parents who are having financial difficultly. This is a good sign for me as I see the children acting as a support network for the retired parent. It is hard for anyone to admit they are struggling financially, but when they do, those around them can help to seek financial advice with someone who will talk with them about the situation and alleviate some of the stress.

Personal bankruptcy is a last resort for anyone, including pension earners. But if someone cannot handle their debts and collections calls, then a personal bankruptcy will be available to give the debtor relief. Personal bankruptcy still has costs and is handled over a period of time not less than 9 months, so it is not simply walking away from debts. When someone files for personal bankruptcy, a note is put on their credit rating which affects their future ability to obtain new credit. I believe that seniors should be debt free and therefore not applying for new credit as they are on a fixed pension income.

Last week, Doug Hoyes, was interviewed by the Financial Post on the question “Do Senior Citizens Need to File for Bankruptcy?”. There any many cases in which a senior does not have to file for bankruptcy and several cases where bankruptcy may be the relief they need. The fact of the matter is, if a senior is struggling with their debts, they can talk to someone about the options available. If you are from the Kitchener Waterloo surrounding area and want to talk with me about a senior’s options to manage financial debt load, please call me at 310-PLAN or send me an e-mail.

No Comments »

Student loans are a special type of debt in that they are intended to pay for some of a student’s costs of post secondary education. Further, student loans are intended to be given to students who do not have the ability to pay for school expenses. A student generally does not have much income while obtaining post secondary education and the costs of schooling has been increasing, so the loans can grow to sizeable amounts during this period. This becomes an issue when someone needs to repay the student loans and are unable to do so. There are many reasons why someone cannot pay their student loans, including periods of unemployment, the inability to obtain a job in the field of study thereby lowering projected income, and/or by not getting the benefit of the loans if studies go unfinished.

As previously mentioned, student loans are unique. Some of the theory behind student loans is that they are considered a life-long investment. There are several repayment options and programs for student loan holders, but if they simply cannot repay the loans, issues can arise. The government law is that student loans are not discharged (eliminated) in a personal bankruptcy unless the person has been out of school for 7 years from the date their studies were completed. This is referred as the “End of Study Date” and can be obtained by contacting the Canadian National Student Loan Centre or the Ontario Ministry of Colleges and Universities.

Within Kitchener and Waterloo, we have 3 great post secondary schools: Wilfrid Laurier University, University of Waterloo, and Conestoga College. Therefore, I see many people with student loan debts and understand how these student loans compiled with their other debts and financial pressures can be overwhelming.

If you are having trouble with your debts, including student loans and want to review your options with me in my Kitchener office so that you can gain a better understanding, call me at 310-PLAN or send me an e-mail.

Other sites of reference are:
student-loan-bankruptcy.ca
hoyes.com

No Comments »