Bankruptcy Kitchener Blog by Scott Schaefer

A personal bankruptcy or a consumer proposal is about giving an individual a fresh financial start. Many different life events happen which can result in someone falling into financial difficulty. A common first step on the road to a fresh start is to meet with me in my Kitchener Waterloo office. During our meeting we will review your situation and discuss your options to make a plan. Dealing with your debts helps take care of the past troubles, but next you need to focus on your future. Think to yourself – what are my plans, hopes, and wishes for the future?

A consumer proposal or a bankruptcy is a life changing event. Both options allow for restructuring of your debts and allow you to create a new future, free from being overwhelmed by current debts. This is why I recommend people first consider what they will (or can) do differently in the future. There are many different techniques and tools to help individuals and families through life’s financial challenges. I personally find books to be great resources to get you thinking and talking about ways to do things differently.

The most recent book that I have read is The Smart Canadian’s Guide to Saving Money: Pat Foran is On Your Side, Helping You to Stop Wasting Money, Start Saving It, and Build Your Wealth by Pat Foran. Foran is from CTV’s Consumer Alert and interestingly enough, he began his broadcasting career in Kitchener. I am recommending this book to individuals in their efforts to seek a fresh financial start. Foran covers many topics and helps Canadians through many financial situations. Doug Hoyes, who co-founded Hoyes Michalos in Kitchener Waterloo in 1999, provided information for the section in this book on personal bankruptcy.

If you are struggling with your debts and want to make a plan for your future, then call me at 310-PLAN or send me an e-mail.

Amie Carroll, one of my Kitchener office credit counsellors, wrote a book review on this book. To read her article please follow this link.

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This coming Saturday January 15, 2010, I will be a guest on the Ask the Experts radio show on AM 570 News as we focus on explaining consumer proposals to the listeners from Kitchener and Waterloo. The show starts at 12 noon and we will be discussing how consumer proposals work. We will answer your questions on air. Consumer proposals in my Kitchener Waterloo office have increased over the past several years as they have become the leading alternative to personal bankruptcy. A consumer proposal deals with your debts through a manageable monthly payment while protecting yours assets. If you are facing financial hardship and want to learn more about consumer proposals, then tune in to AM 570 News at noon this Saturday.

If you cannot wait until Saturday, call me at 310-PLAN or send me an e-mail. If you prefer to do more research, here are some available links:

consumerproposal.org – website specifically for consumer proposals

Hoyes, Michalos & Associates

Office of Superintentent of Bankruptcy – government that oversees all consumer proposals in Canada

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If your new year’s resolution was to deal with your debts then you are not alone. With Canadians carrying a record amount of consumer debts, it is time to deal with them before the interest rates rise. Are your credit card balances increasing and you seem to be stuck in overdraft? You need to make a plan to deal with your debts. The options available to deal with your debts are:

1. Sell assets to pay the debts: If your debts are less than the value of the assets you own, then one option is to sell or cash in your assets and simply pay off the debts. For example, if you have $50,000 in an RSP and $20,000 in credit card debt, then a solution for you would be to cash in the RSP’s to cover the debt. The key is to get rid of the credit cards once they are paid off. If needed, only keep one with a smaller, more manageable limit. If you choose to sell assets make sure you consider the tax implications.

2. Remortgage your house: If you own your own home and the value of the home is greater than the mortgage amount, you might be able to redo the mortgage and have enough to pay the mortgage as well as your other debts. Be aware, this will increase the length of time left on the mortgage. I suggest you work with your mortgage company or a mortgage broker to ensure you are getting the right mortgage for your situation.

3. Consolidate the debts into one loan: If your situation is one in which you can afford to pay all of your debts back, but just have too many creditors to pay each month, then a consolidation loan may work for you. A consolidation loan is where you get a loan from a bank to pay off all of your debts, leaving you with just one loan payment to make.

4. Credit Counselling: In this case, you work with a qualified credit counselor to make a budget aimed at paying down your debts over time. Following a budget takes discipline and you need to be 100% committed. It you do not follow the budget closely the debts will not get paid down. Credit counselling works great if you have enough income per month to deal with your monthly commitments, but have not been able to keep track of or stay on top of it in the past.

5. Debt Management Plan: A debt management plan is a voluntary agreement between you and your creditors to allow you to pay back all the debts but under set payment terms. It is like a consolidation loan; however it is not a loan. The interest is eliminated or reduced to a lower amount. This option works when someone’s debts are manageable, but they cannot get ahead with the interest charges.

6. Consumer Proposal: A consumer proposal is an offer to your creditors through a trustee in bankruptcy that allows you to make one affordable monthly payment to all of your unsecured creditors. Through the consumer proposal, you pay a portion of your debts back to allow you to rebuild your financial situation. A consumer proposal allows you to protect your assets and stop wage garnishments. A consumer proposal is done under federal law and is monitored by the government for your protection. The trustee is paid through the consumer proposal and not a direct cost to you.

7. Personal Bankruptcy: As a last option, a personal bankruptcy can be filed with a trustee to eliminate your debts so that you can have a fresh start. Personal bankruptcy is not what people plan for, but when debts become too much and you cannot afford the other options listed above; a bankruptcy is designed to give you this fresh start.

To take care of your debts, you need to have a plan. I talk and meet with thousands of people from Kitchener Waterloo to review their financial situation and help them develop a plan to deal with their debts. As a licensed trustee in bankruptcy and qualified credit counsellor, I serve the Kitchener Waterloo and surrounding area. My office is conveniently located on King Street between Kitchener and Waterloo. I can be reached at 310-PLAN or via e-mail. If you spent the holiday season worrying about your situation, then the start of a new year is a good time to take action.

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