Bankruptcy Kitchener Blog by Scott Schaefer

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 519-747-0660 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 519-747-0660 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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Since the last snowfall, the government has been issuing warnings to consumers to reduce debts as interest rates will be rising in the future. This of course is in despite of the government not listening to their own advice as the government debts are rising too, but that is another issue. We just witnessed the Bank of Canada make their first increase, so when are we going to see interest rates increase again and how fast? What do these warnings mean to consumers?

Consumer debts are reaching new levels and as all debts are tied to interest rates, any increase will have a significant affect. I have an economic degree from Wilfrid Laurier University so analyzing trends and effects is quite interesting to me, but one does not need this degree to see the impact interest rates will have on the people from Kitchener Waterloo. Every increase in an interest rate will affect everyone’s amount they have to pay. Let’s consider some of the following areas:

- First through the debts that they pay as interest rates are tied to prime – for example, line of credits, overdrafts, new loans, etc.
- Second, the cost of items we buy will have to rise over time due to businesses carrying debt. If the costs to a business go up, then they will have to pass these on to the consumer in order to maintain their profits.
- Third, higher interest rates could affect government debts as well, which are paid through taxes.

Overall, we have seen very low interest rates for a long time. People are not talking today about how mortgages used to be at 20% back in the early 1980s. That is like paying your mortgage on a visa card today. I am not saying we are going to see these high rates again, but the government is warning us to be ready for rates to increase.

The hard part is, as consumers we need to spend to help us recover from the recession, so if we are paying off our debts verses spending the money on consumer goods our economy could take longer to recover. With rising debts and costs, the question people are asking is how do we reduce our debts and still afford to live. Everyone’s situation is different so the same solution is not always available to everyone.

If you are from the Kitchener Waterloo area and feel that your situation is too tight now, then it may be time to consider a plan to deal with your debts. A debt management plan to pay 100% of your debts without interest may be one solution or a consumer proposal where you make one monthly payment to pay back part of your debts may be another. We can arrange a free consultation in my Kitchener office to review your situation and gain an understanding of how the various options would work in your situation. I can be reached at 519-747-0660 or by e-mail.

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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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