Bankruptcy Kitchener Blog

For the second straight year, the number of personal bankruptcy and consumer proposal filings in Kitchener decreased in 2006. In 2006 1,177 individuals in Kitchener and surrounding area filed personal bankruptcy, and 316 people filed a consumer proposal. That’s 1,493 people who filed, as compared to 1,529 people in 2005, a decline of 2.4%.

It appears that this decline is caused primarily by a strong labour market in Kitchener. The unemployment rate declined to 5.2%, and employment continued to increase (although not as fast as in 2005).

While a declining bankruptcy rate is good news, let’s not forget that Canadians are carrying a record level of debt. Household debt increased 9.8% in the first 10 months of 2006, and in September 2006 the ratio of debt to personal disposable income reached a record 122%. This means that for every $4 the average Canadian earns in a year, they now have $5 in debt.

If you live in Kitchener and are carrying a lot of debt, you may not be able to financially survive even a temporary job loss or reduction in your income.

If you have too much debt, give my office a call in Kitchener at 519-747-0660 or 310-PLAN, and let’s get to work on making a plan to deal with your debts.

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This Saturday Ted Michalos and I will be guests on Ask the Experts on 570 News, an hour long live call in show.  We will be talking about consumer proposals, an alternative to filing bankruptcy in Kitchener.

If you are near the radio between noon and 1:00 pm on Saturday call in with your questions.  If not, feel free to give our office a call during the week at 310-PLAN, or 519-747-0660 and we will help you decide whether or not a consumer proposal is the right option for you.

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As one of the bankruptcy trustees that meets with people in our Kitchener bankruptcy office, I am often asked: “what should I bring to my first meeting with the trustee”? Some people are worried that we will ask them to bring every scrap of paper in their house, and they are worried that they will not be able to provide all of the information we need. My response is to tell them not to worry, we can perform an initial assessment of your situation with very little paperwork up-front, although the more information you can provide, the easier it will be for us to help you make a plan to deal with your debts.

There are three significant items I need to understand about your situation:

First, I want to understand who you owe money to (your creditors). You can make a list of all of your credit cards, bank loans, and other debts, or you can bring in your most recent statements.

Second, I need to know what you and your spouse earn each month (your take home pay), and what it costs you to live (rent, food, and all other living expenses). This helps us determine what type of plan will work best for you, including perhaps a consumer proposal.

Third, I will ask what assets you own, such as a house, car, or RRSP. If you file for personal bankruptcy in Kitchener you may lose some or all of your assets, so it’s important that we review them before you make any decisions.

If you don’t have all necessary information when we first meet, we will review your situation based on what you have, and we can gather the remaining information later. We will work on the paperwork; initially, reviewing your situation and working out a plan is most important, so please e-mail us a question or give us a call in Kitchener at 519-747-0660, or 310-PLAN, and let’s get started.

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A consumer proposal is a deal that you make with your creditors as a way to avoid filing personal bankruptcy. A consumer proposal is a bankruptcy alternative.

In a typical consumer proposal filed in Kitchener you make a monthly payment, and that payment is distributed to each of your creditors (your credit cards, bank loans, and so on). This one monthly payment is perhaps the biggest advantage of a proposal, because now you know exactly what you are required to pay each month, and your creditors stop calling you, and they no longer can sue you or garnishee your wages.

The amount you pay each month in a proposal is based on your monthly income at the time you file the consumer proposal. Your family size and what assets you own are also factors in determining the amount you will pay each month (the more you own, the more you will be required to pay each month).

When is a consumer proposal a better option than a bankruptcy?

First, if you hope that your income will increase in the future, a consumer proposal is a great way to fix the amount you are required to pay, now, so that as your income increases your consumer proposal payment remains the same. In a bankruptcy, each month you report your income to the trustee, and as your income increases, your payment increases.

Second, in a bankruptcy you may lose your home, RRSP, or other assets, depending on their value. In a consumer proposal you can keep your assets, which makes proposals a great bankruptcy alternative.

Finally, many people I have met with in Kitchener over the years simply don’t want to go bankrupt. They know they owe the money, and simply want a solution to help them deal with their debts.

Each situation is different, so I recommend that you contact the trustee firm that has filed more consumer proposals in the last five years in Kitchener than any other firm: Hoyes Michalos & Associates. We can be reached in Kitchener at 519-747-0660, or e-mail your question, and let’s get started.

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