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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As New Year’s is upon us again, it is time to look into 2010 and make our resolutions. If one of those resolutions is to get your finances in order, then let’s discuss some of the steps you need to take. A couple of major hurdles we have to overcome are; one – our spending habits do not change overnight and two – we are generally limited to the amount of money we bring in.

The first step is to take inventory. To take inventory we have to figure out where you are. You need to make lists of your:
a) debts, and
b) major assets (house, vehicles, investments)

Second, make a realistic personal budget. Making a personal budget can be overwhelming, but is very important. Simplify the budget to calculating what income you receive and where you spend money. Review old bank statements to see where money was spent. For assistance on making a budget, here is additional information.

Third, set goals. Think about what is important to you and your family, and consider where you want to be in the future. It is sometimes easy to be wrapped up in our day-to-day lives and not think about the future. News Years is a good time to reassess and think about the future, by setting your goals.

In order to deal with you debts, you need to understand the inventory of your debt load and assets, the personal budget, and what your goals are. Then you can evaluate the pros and cons of each option in your situation.

Options to deal with debts include:
a) Use your assets – house equity and investments,
b) Consolidation loan with a bank,
c) Credit Counselling/Debt Management Plan through a not-for-profit agency,
d) Consumer Proposal, and
e) Personal Bankruptcy

For a debt option calculator see this link.

If you are in the Kitchener-Waterloo area and want to sit down for a free consultation to discuss your situation and options in greater detail, call me at 310-PLAN or send an e-mail.

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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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Doug Hoyes and I aired on the hour long Ask the Experts show on 570 News in Kitchener. We discussed the options Personal Bankruptcy and Consumer Proposal for listeners in Kitchener area. We focused our discussion on the impact of the new rules that came into law on September 18th, 2009. Part of our role as Trustees is to inform individuals of their options when they are experiencing financial difficulty. The radio show allows us to share the information with people throughout Kitchener, Waterloo, and Cambridge.

Who are we? We are a licensed Trustee in Bankruptcy firm that focus on solutions for individuals. The firm, Hoyes, Michalos and Associates Inc. started in 1999 in Waterloo Town Square. Since then, we have moved to our Kitchener location at 607 King Street, on the second floor of the strip mall near Zeke’s Restaurant. We have helped thousands of people from the Kitchener-Waterloo region since then. We are the largest firm in Kitchener-Waterloo that only provides solutions for individuals.

My back ground consists of:
1997 – BA Economics and Accounting from Wilfrid Laurier University
1999 – Chartered Accountant (CA)
2002 – Insolvency Credit Counsellor Certification
2007 – Chartered Insolvency and Restructuring Professional (CIRP)
2007 – Licensed Trustee in Bankruptcy

If you are interested in a free consultation to review your situation and discuss your options to make a plan, call me at 519-747-0660 or e-mail me. My approach to our meetings is non-judgmental and my objective is to provide you with the information you need to understand the pros and cons to your options so that you can choose the right one for you.

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As of September 18, 2009, the new amendments to the Bankruptcy and Insolvency Act are now in effect. Under these new laws, many individuals will be facing 21 months of personal bankruptcy instead of 9 months. What this means is that personal bankruptcy has become longer and more expensive for many people.

A consumer proposal is an alternative to personal bankruptcy. With the current amendments, it is now more attractive than ever before for many people in financial difficulty. The debt limit for a consumer proposal is now $250,000 (up from $75,000). This limit is based on total debts excluding the mortgage on the debtor’s home.

A consumer proposal is an option pursuant to the Bankruptcy and Insolvency Act that allows a consumer debtor to make an offer to the unsecured creditors as a group. For example, if a person owes $80,000 in credit cards, lines of credits as well as some income taxes and is at a point where they can no longer pay in full, they could meet with a trustee (referred to as an “administrator” in a consumer proposal) and work out an affordable monthly amount to offer to the creditors. In this case, the debtor could offer a consumer proposal that the creditors with terms of $500 for 60 months = $30,000. Each unsecured creditor would receive a pro rata share of the amount offered. The maximum length of a consumer proposal is 60 months (5 years). This is just an example, and each case has to be considered separated based on person’s situation.

A consumer proposal is automatically accepted by the creditors after 45 days unless the creditor(s) ask for something different. In that case, the consumer debtor can accept the creditors counter offer. Each creditor receives one vote for each dollar they are owed. The majority vote decides.

In general, a consumer proposal is a fair and reasonable offer between the debtor and the creditors. The creditors receive more than in a personal bankruptcy and the debtor is able to protect his/her assets and make one manageable monthly payment. As for the costs to file a consumer proposal, they come out of the amount offered to the creditors and are not paid in addition to the proposal terms. The government has legislated the amount of fees involved and cannot be changed by the trustee.

To discuss the option of a consumer proposal, call me at 519-747-0660 or send me an e-mail.

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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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