Bankruptcy Kitchener Blog

Statistics Canada released the bankruptcy and consumer proposal rates today and Kitchener Waterloo was hit harder than the Ontario and Canadian averages. 2009 was a year marked by the recession, the downturn in the automotive sector and financial crisis. These all contributed to individuals falling on tough financial times.

In 2009, 151,712 individuals filed a consumer proposal or bankruptcy in Canada. This was an increase of 31.0% over the 2008 number of 115,789. For Kitchener Waterloo, the increase in personal bankruptcies and consumer proposals was 39.2% which was higher than the Canadian increase of 31.0% and the Ontario increase of 32.7%. The numbers with respect to just personal bankruptcies in Kitchener are even more drastic – Kitchener bankruptcies saw a 45.9% increase as compared to Ontario of 28.5% and Canada 28.4%.

For my Kitchener office, we met with many people from Kitchener Waterloo and as such personally understand how hard this year was on them as they saw the impact of the recession on them and their families.

In the past, Kitchener Waterloo may have fared better due to our diverse economy with the high tech sector, universities and college, hospitals, insurance, and manufacturing sectors, but 2009 had a deeper impact that spread to all areas and sectors.

Kitchener Waterloo is rebounding, but individuals are still feeling the long lasting impacts that 2009 brought to their situation and with increased debt levels, individuals still will need the assistance to get a fresh start through a consumer proposal or bankruptcy.

If you would like a free review your situation to make a plan to deal with your debts, call our Kitchener office at 519-747-0660 or send me an e-mail.

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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 519-747-0660 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 519-747-0660 or send us an e-mail. There is no cost in meeting with us.

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Based on the statistics that the government released last Friday, personal bankruptcies in Kitchener-Waterloo increased 60% for the 3rd quarter (July – September) in 2009 over 2008. This is a significant increase when you consider the Canadian average was an increase of 47%. Even for consumer proposal filings in the 3rd quarter, Kitchener-Waterloo increased 43% versus the Canadian average of 39%.

These are staggering increases. Working in the Kitchener office, I have met with many people that were facing the decision of how to deal with their debts. There is a variety of reasons that someone has to file, here are a few key factors; the economy downturn has caught up with the Waterloo Region, the debt levels of the average person has increased, as well as a result of the new bankruptcy rules that came into effect on September 18, 2009. These are average people who fell under tough financial times and needed to obtain a fresh financial start.

To discuss actual numbers, in the 12 month period ending September 2009, total consumer bankruptcies and proposals in Canada totaled 148,378. This is a 36% increase over the same 12 month period ending September 2008.

If you are experiencing financial difficult in 2009, you are not alone. Call us at 519-747-0660 and we will discuss your situation in detail to help make PLAN for the future.

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This Saturday, November 14th, Howard Hayes and I will be spending the hour between 12:00 and 1:00pm answering your questions live on air on the Ask the Expert Show on 570 News. If you have questions and want to hear them answered, please send us an e-mail at this e-mail address created for this show. We will attempt to answer all of your questions.

We receive many e-mails from people in the Waterloo Region. These e-mails are asking questions about garnishments, personal bankruptcy, consumer proposals, assets, creditors, or any debt related question to name a few. Personal finance problems are stressful and overwhelming, so hopefully our live radio show will help you understand your options and how specifics in your situation will be handled.

As a Trustee in Bankruptcy, I am responsible for our Kitchener Office. I can be reached at 519-747-0660 or at this e-mail if you would like to talk specifically about your situation.

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When someone files for personal bankruptcy, the amount they have to pay depends on the number of people in the family unit and how much income the family makes. This is called “surplus income”. The concept of surplus income can be relatively confusing, so let me try to explain it generally.

The government sets a threshold amount. This amount represents the level of income an individual can make before having to pay extra into their bankruptcy. That is, if you have more income, then some amount should be paid to the creditors.

The surplus threshold is based on net income or take-home pay. Each year, the government adjusts the amounts. The thresholds for 2009 are:

Family Size – Monthly Threshold
1 – $1,870
2 – $2,328
3 – $2,862
4 – $3,474
5 – $3,941
6 – $4,444
7 or more – $4,948

Any amount an individual makes above these thresholds represents surplus income and as a result an individual must pay 50% of that number into a personal bankruptcy. For example, if a single person brings home $2270 per month, they would have $400 of surplus income of which they would have to pay $200 extra into their bankruptcy. The amount of surplus income decides the length of the bankruptcy. If the surplus income is on average is $200 or more, the bankruptcy will go for 21 months (9 months if less than $200). To see the directive from the government, follow this link.

For individuals that would expect to have a higher amount of surplus during their bankruptcy, a consumer proposal is an alternative plan to deal with debts through one manageable monthly payment.

If you are from Kitchener Waterloo area and are considering your options in dealing with your debts, I suggest that you call our Kitchener office at 310-PLAN or 519-747-0660 or e-mail me. We will review your options in detail and explain the concept of surplus income further. We can make a plan for your situation so that you can get a fresh financial start.

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Hoyes, Michalos & Associates Inc. has been helping the residents of Kitchener-Waterloo since we opened our doors on January 1, 1999. As a firm, our focus is on individuals and their families. We assist with helping develop a PLAN to deal with individuals or families debts. We are non-judgmental as we understand that there are many different factors for financial difficulty.

When someone calls us, we try to gain an understanding of the situation so we can advise on all options. It is important that people understand how all options work so that they can make the best decision for themselves after evaluating the pros and cons of each.

This coming Saturday, Doug Hoyes and myself will spend the noon hour on the 570 News radio show called Ask the Experts. We are going to discuss the new bankruptcy rules, the economy, and answer caller’s questions. We go on this show to help Kitchener-Waterloo residents understand personal bankruptcy and consumer proposals in more detail.  Please tune in to 570 News at noon on Saturday for our one hour live broadcast, or go to the 570 News web site to listen live.

If you have a question that you would like answers to and do not want to call into the show, send me an e-mail or call me at 519-747-0660 and I will try to answer it on the air.

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I am hearing on the news that we are getting out of this recession that we have been in. They say that we are to be seeing improvements. I am not sure how they calculate their statistics, but people in Kitchener-Waterloo are still feeling the impacts of the recession and financial crisis.

In our Kitchener office in August 2009, we opened more personal bankruptcy and consumer proposal files than any other month in our firm history. There are several reasons for this fact, but it can primarily linked to the impact of economy.

My personal feeling is that residents of Kitchener-Waterloo will continue to feel a financial squeeze for several months. Coming out of a recession sounds good on paper, but the reality is that people have to rebuild their personal financial situation. Changes in employment, reduced income, increase credit, playing catch-up, banks not as helpful, etc are all areas one must now deal with.

To complicate the situation, in August the government announced that they are implementing the new bankruptcy laws on September 18, 2009. People will still have the options of consumer proposals and personal bankruptcy but there will be changes from how they were in the past.

If you are still feeling the impact of the recession and want to discuss you options, call our Kitchener office at 519-747-0660 or e-mail us.

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Bankruptcy Reform – legislation referred to as Chapter 47 was passed in 2005, but was never fully implemented. In August 2008, there were parts of the law implemented with respects to student loans and RRSP – see details here but last week, it was announced that on September 18, 2009, the remaining changes will be put into force.

What does this mean to people from Kitchener-Waterloo, Ontario? Like any change, there are pros and cons. Overall, personal bankruptcies will cost an individual more money and time than they did under the current law. On the other hand, the government made the option of a consumer proposal more available.

Given the state of the economy right now, Kitchener residents are facing hard times and these reforms are going to affect each person differently. People now have a month’s time to consider their options under different laws. One could file now and use the current laws, or wait till the new laws are in place. Either way, I feel it is important for individuals facing difficult times to talk to a professional, understand their options, and make a plan for the future.

For more details of the changes, click here for an article posted on hoyes.com.

Our professionals along with myself in the Kitchener office can sit down and review the situation and discuss the laws in detail. We are located at 204-607 King Street West, Kitchener, Ontario. The office is on the second floor of the plaza by Zekes restaurant. Send us an e-mail or call us at 310-PLAN(7526).

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Individuals across Canada are struggling in this economic recession as evident by the increase in Personal Bankruptcies. The Office of the Superintendant of Bankruptcy released statistics for the 12 month period ending March 31, 2009 and in Ontario, consumer filings (personal bankruptcies and consumer proposals) are up 25.2% over the prior 12 month period. Despite the diverse economy we have in Kitchener-Waterloo, the city’s increase is at 24.4%. When comparing the first 3 months of 2009 to 2008, the increase in the Kitchener market is 36%, which is mostly lead by personal bankruptcies which increased 48.6%.

In Canada, the Bankruptcy and Insolvency Act was established to give the honest but unfortunate debtor a fresh start. A recession limits an individual’s ability to deal with their debts. What is making this year even more difficult is that it appears the banks are not able to help as many people restructure as they had in the past.

If you are felling overwhelmed do to your situation during this recessionary time, know that you are not alone and there are options available to you. You can e-mail us or call our Kitchener office at 310-PLAN (7526).

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