Bankruptcy Kitchener Blog by Scott Schaefer

One question we all consider in some form or another is “am I normal?” This question also applies when it comes to debts and financial difficulty. When I meet with people in my Kitchener office, several ask if they are the only ones experencing these difficulties. It is quite normal to ask this as the person did not plan to be overwhelmed by debts. Often a sequence of events in their life leads them to harder financial times. I have always believed part of this is due to the fact that many people will not discuss their finances with family and friends. We tend not to discuss our debts, income, or savings with others. People will discuss issues or concerns regarding health, marriage, relationships, and children, but rarely do they open up about personal finances.

Many people have the opinion that someone who files bankruptcy is not working or is just using the system. A recent study by Hoyes, Michalos & Associates Inc. took a deeper look at the average person who files a consumer proposal or personal bankruptcy. The results of this study put this myth to rest. The average Joe Debtor in Ontario is a person who resorts to a consumer proposal or a personal bankruptcy as a solution for a fresh financial start is:

• A 41 year old male
• Married
• Working and making slightly less than the Canadian average income
• Has debts of almost $60,000 (unsecured debts).

Does this meet your stereotype of the average insolvent person? Comparing Kitchener Waterloo to the Ontario results, the average is not that different. The average person who filed bankruptcy or a consumer proposal in Kitchener and Waterloo has over $48,000 in unsecured debts, but also has an average mortgage amount of $227,000.

These are interesting numbers to demonstrate how someone compares to the average. As in any situation, there are many cases in which people have higher or lower debts. As I noted in my previous blog post, with debt levels rising in Canada, problems can arise in any situation or age group. From the individuals and couples I meet with in my Kitchener office they range in age from 18 years old to 80 years old. Times have changed; credit is readily available and as a result, if someone is carrying debts and a few things go wrong, the pressures of debts can become too much.

The Canadian government has created both a consumer proposal and a personal bankruptcy as an option to give a person a fresh financial start. These are last resort options for when all the other options do not work.

If you are reading this blog and wonder about your options, give me a call at 310-PLAN or send me an e-mail. We will discuss your situation and can sit down to review the options and how they work in your situation. From there you will need to go home, plan out the future and find the right option for you. My role as licensed trustee in bankruptcy is to give you an unbiased and fair assessment of your options. There is no cost to see us and our fees are paid through a government tariff when someone files a consumer proposal or a personal bankruptcy.

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If you are feeling like you have too much debt, you are not alone. A report by The Vanier Institute of the Family released today indicates that the average family debt level is $100,000. Furthermore, the debt to income ratio has reached a record 150%. Since debt is up, you are correct in assuming that savings are down. For 2010, the average savings per household was only $2,500.

What is the future outlook given these facts? You will hear many views on this topic, as everyone’s situation is different the impact on your family can also be different. My concern – we have seen low interest rates for a relatively long period of time. Every small increase in interest rates will have a big impact on $100,000 in debts. The impact may be a short or even a long term impact on the family situation. Increased interest costs take more of the monthly budget to pay, and therefore less for savings and other items. Increased debt costs today, will decrease funds availabe to pay for future things like children’s schooling, repairs to the house or vehicle, retirement savings plans, etc.

The time to make a plan to deal with the debts is now. First take inventory of your situation. How much do you owe, what are the family income and expenses, and what are the family’s plans/hopes for the future. Look at your debt level, is it increasing, decreasing, or staying the same on a month by month basis.

You need to consider your ability to pay the existing debts. If your debt level is overwhelming and controlling you, then call me for a free meeting to review your situation and your options so that you can make the right plan for you and your family. I can be reached in Kitchener Waterloo at 310-PLAN or send me an e-mail. My Kitchener office is located at 607 King Street West between uptown Waterloo and downtown Kitchener. As a licensed trustee in bankruptcy, my duties are to explore all options with your including debt consolidation, credit counselling, debt management plans, consumer proposals and personal bankruptcy.

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