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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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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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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In rare cases, a creditor will oppose the discharge of a personal bankruptcy, so lets discuss what this means from a technical stand point. This can be confusing and it is important to note again that this does not happen very often in Kitchener Waterloo area. If you have any questions, please contact me.

An individual files for personal bankruptcy to receive a discharge from his or her debts. Bankruptcy laws are set up to allow a discharge to happen automatically after the bankruptcy is complete. A discharge from bankruptcy occurs when all bankruptcy duties are completed and as a result the debts are released. In some cases a creditor wants the courts to review the bankruptcy; this is referred to as a creditor opposition. The opposition is to the automatic discharge. The individual will still remain eligible for a discharge, however the terms will be decided by a registrar at a court hearing.

If a creditor wants to oppose a bankrupt’s discharge, they must serve notice to the trustee, the bankrupt, the court, and the government. The notice the creditor serves must list out reasons for their opposition. At this point, the creditor would have to appear at the court hearing to prove their facts such as fraud, gambling, speculation, etc. The bankrupt individual is entitled to respond to the items raised. From this point the court will decide on the type of discharge to be granted and whether conditions will be put in place outlining additional duties before the discharge is received. For example, the court may order that an extra amount is to be paid to the trustee for the benefit of the creditors as a condition to be met for the individual to receive an absolute discharge.

With respect to accepted consumer proposals, creditor oppositions do not apply.

To read more on creditor oppositions please see at this link.

In most cases, creditor oppositions do not happen as the bankruptcy laws are set up to provide a fresh start to the honest but unfortunate debtor. If you would like to discuss your financial situation and options, simply contact me today via e-mail me or call me at 310-PLAN.

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I moved to Waterloo in 1993 when I first attended Wilfrid Laurier University. Since then, I have made Kitchener Waterloo my home. I believe that in my profession, it is important to live and work in the same community. I feel a greater connection with my community knowing I am helping fellow residents of Kitchener Waterloo.

I try to support and participate in local activities and events. Just this past weekend, I ran the 10K Oktoberfest race in the Waterloo Running Series. Along with the other participants, I ran from Conestoga Mall down King Street to William Street, then looped around and ran by the University of Waterloo and Wilfrid Laurier University before finishing at the Waterloo Recreation Complex.

I find running can be a lot like budgeting. I started running a few years ago for general health reasons as well as for my personal enjoyment. Much like budgeting it started for financial health reasons. When a run goes successfully, it is very rewarding, much like when the budget you set works out and you end up with left over funds in your pocket. The hard part of both running and budgeting is that it takes a lot of practice to make it work. If you over spend one day, the budget will not balance without negatively affecting another area of the budget. With a run, if you over eat one day, your run will be slower than normal and hurt that much more. Further, it you stop running for a period of time, it takes some time to get back into it. Just like budgeting, by not tracking your expenses for a period of time it will be difficult to make sure you do not over spend and you may even need credit to help you out.

Therefore, to become good a budgeter, it takes a lot of practice. There will be good days and days not so good. Making a budget work, takes time and discipline. The better you can become at budgeting the more money you will have to save for the goals that matter to you. Just like in running, the more you run and train, the faster and better runner you can become.

Over the past year I have improved my 10K race time from 49:23 to 46:28 and helped hundreds of people from the Waterloo Region make their budget work again. If you want meet with me in my Kitchener Waterloo office located at 607 King Street West and review your options so that you can make your budget work, e-mail me or call me at 310-PLAN.

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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.

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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

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It is always important to remember the things that matter in life. Children and family tend to be number one on our list of importance. Some consider vehicles, homes, investments, trips, etc. as well, but ultimately these items are of lower importance. Sometimes it is easy to get caught up in the everyday grind of going to work and paying our bills, that we can lose focus on what matter most. Stress levels can rise and it seems we are just putting in time.

When I meet with people in my Kitchener office, I look at their financial situation and discuss the options to best deal with their debts. I always take into consideration the future and the values that matter most for each specific person before we come up with the best plan of action. With every plan of course, there are pros and cons. In order for the pros to outweigh the cons, personal values/objectives need to be met.

The people I meet with never planned to be sitting with a trustee in bankruptcy contemplating filing a consumer proposal or personal bankruptcy. The fact is however, that things happen and debts can become unmanageable sometimes to the point of consuming our lives. This is the time to re-focus and consider what matters most. Both a consumer proposal and a personal bankruptcy negatively impact your credit rating; however both options also allow an individual to look towards the future and start rebuilding their situation on a personal and financial level.

If you would like to sit down and have an honest, non-judgmental meeting to review your situation, then give me a call at 310-PLAN or send me an e-mail. My office is conveniently located between Kitchener and Waterloo at 607 King Street West.

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A wage garnishment by a creditor is stopped on the date that someone files a consumer proposal or personal bankruptcy. From my office in Kitchener, I e-file the consumer proposal or personal bankruptcy documents to the government right after they are signed. From that moment in time, there is a “Stay of Proceedings” that stops garnishment. This stay of proceedings is then faxed to the payroll department to advise them that the garnishment must stop.

Let’s talk about the process and timing to get to the point when the garnishment is stopped. The first thing we need to do is to arrange a free meeting in my Kitchener office to sit down and discuss the situation and options in detail. This meeting can take 30 minutes to 1 hour. From there, if a consumer proposal or personal bankruptcy is decided on, we need to complete an application with basic information. The application information is inputted into our computers and official government documents are printed – ones to be sent to the government and creditors. If there is a garnishment in place, we can complete the paperwork in a timely manner. The final step to make the procedure official is to come back into the office to sign all the paperwork.

Garnishments happen for many different reasons but the fact of the matter is that if someone is having part of their pay taken for an existing debt, it can really affect their ability to pay everyday living expenses. If you have a garnishment or are facing a garnishment and want to discuss your options with me in my Kitchener office, please call me at 310-PLAN or send me an e-mail.

Please note, that neither a personal bankruptcy nor a consumer proposal can stop or change family law support garnishments.

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