Bankruptcy Kitchener Blog by Scott Schaefer

Earlier this week in my Kitchener office, I met with Jane and Tom (for privacy reasons, I have changed their names). Jane and Tom were referred by a family member who had previously filed a bankruptcy with me. They were very nervous and concerned about meeting a “trustee in bankruptcy” but knew that the meeting was necessary since the pressure of their debts was causing great stress and strain on their family unit. It was obvious to them that they needed to do something to deal with their debts, but really did not know what options were available to them. They thought that I (as a trustee in bankruptcy) would only talk to them about personal bankruptcy – they did not realize that there were other options. I understand this is a common misconception people have and so I thought this would be a good time to share with you what a meeting with me involves.

The initial role of a first consultation is to review both the financial and personal situation in detail and discuss how all the options available apply. I remain completely unbiased during the meeting and do not make judgement on anyone. The options available are the same for everyone I meet with however, they will not apply the same for each individual case and the key during our meetings is to find the right solution to deal with the debts and develop a plan for a desirable future.

The meeting typically begins with open conversation, which then leads to a review of the specifics with respect to debts, assets, and income. Once I understand the exact situation we discuss in detail how the options work and review the pros and cons of each. At that point the meeting opens for other unanswered questions. We often also discuss future plans and goals. At the end of the meeting, I encourage the individual to go home and consider what they want to achieve going forward and which option they feel will work best for them to obtain these goals.

I feel it is about making the right plan for each situation. Just because one option works for one person/family does not mean it will work for everyone. As for Jane and Thom’s case, they went home and thought about the details of our meeting and gave me a call back today to let me know they thought a consumer proposal is the option for them. They realized that they needed control of their debts. They wanted to protect their house. They felt they had enough money to pay some of the debts back through one monthly payment and did not what to file bankruptcy. Their misconception of the intimidating meeting with a Trustee in Bankruptcy was dissolved. They already feel better about their situation and they have only had one meeting with me.

You too can review your situation with me in a private environment. Please do not hesitate to contact me. I will sit down with you free of charge to explore the options and help you develop a plan for the future. I can be reached via e-mail or at 519-747-0660.

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Over the years in Kitchener-Waterloo, many significant business stories have made the news. When business such as Budd Canada, Labatts, Uniroyal Goodrich, Electrohome and Kaufman Footwear first opened their doors they became a huge contributor to the earnings of Kitchener-Waterloo residents but they also became a big news story when they downsized and eventually closed. The impact of this on local families resulted in difficult times for many as they worked to recover from job loss and to find new employment at comparable income levels.

Today, we are experiencing different success stories of companies in the high-tech and insurance industries. With large companies like RIM, Sunlife, Manulife, come many good jobs. These companies are playing key roles in our local economy.

Large companies in their best years offer large amounts of jobs and bring in significant revenue to the community. These jobs allow people to settle into Kitchener-Waterloo by spending their income at local retailers, buying homes, raising families, and participating in the community. It could be said that large companies have helped shape the city into what we have today.

With the business world constantly changing, people have to adapt; change in employment is almost inevitable. The idea of “life-long” employment at one place is a thing of the past. This greatly affects individuals and their families as they try to maintain a secure lifestyle through changes in jobs. When you add a change in employment or a period of time without employment, with the amount of debt that families are carrying, it can be devastating to the family. In fact, job loss or reduction of income is one of the common causes of someone filing a consumer proposal or personal bankruptcy in my Kitchener bankruptcy office.

With RIM’s lay-off announcements over the past week, we are likely going to see people in our community experience job loss and may leave others stressing over future uncertainties. Not to mention the impact on the investments and shares people are holding in RIM stock.

Good, steady paying jobs are vital to keeping a budget balanced. If you are struggling financially due to changes in your employment, periods of time off work, wage cuts, etc and want to discuss options to deal with your debts, give me a call at 519-747-0660 or send me an e-mail.

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The Office of the Superintendent of Bankruptcy (OSB) released their 2010 statistics yesterday. The reports detail the number of bankruptcies and consumer proposals filed in all of Canada. The report breaks down the numbers by province and even by Census Metropolitan Area which includes Kitchener. The OSB is the governing body that oversees the insolvency process in Canada – it is part of Industry Canada. All consumer proposals and personal bankruptcies are filed directly with the OSB as they are legal options available to Canadians to obtain a fresh financial start.

I am going to detail some of the information I saw in the statistical reports. I understand reviewing statistical information is not for everyone. I like to review these statistics for 2 reasons: First, I find it is important for us to look at the big picture every once in a while so that people can understand they are not alone in their financial struggles. And second, analyzing numbers is part of my formal education as I have a degree in Economics and Accounting from Wilfrid Laurier University in Waterloo.

In 2010, there were 135,008 consumer filings of personal bankruptcies or consumer proposals. This is down from the recession year of 2009 which saw 151,712 filings but is still up from the 2008 total of 115,789. In the 4 year period of 2007-2010 there has been more than 503,000 individuals who filed a personal bankruptcy or consumer proposal.

One trend that is showing steady increase is the number of consumer proposal filings. Consumer proposals saw increases of 17% in 2008, 40% in 2009, and 20% in 2010. With the new bankruptcy laws that the government introduced in September 2009, consumer proposals are becoming a more viable option for individuals to gain financial control again. This remains true for my Kitchener office. I am meeting with people that are more often choosing a consumer proposal over a personal bankruptcy.

From these numbers you can see that individuals in Canada are still facing hard financial times during the past years that have seen record low interest rates and smaller inflationary periods. Gaining control of personal finances is something we all try to accomplish, but changes in employment, relationships, families, health, and spending habits all play a vital role in this. If the debt load is too large, it will control the situation. There are options to restrict the debts. Of course the first option is to sit down with a bank and ask about a consolidation loan. If the bank is unable or unwilling to consolidate, there other options such as a debt management plan, consumer proposal, or as a last resort option of personal bankruptcy.

If it is time to make a plan for your future financial situation and want to sit down for a free no obligation review your situation and options please call me at 310-PLAN or send me an e-mail. As a licensed trustee, I offer you an unbiased assessment of your situation so that you can make the right decision for you and your family. There are no fees to see me and our discussion will be around you, your goals, and your situation. We will try to find the right option for you and focus on the future plan.

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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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This coming Saturday January 15, 2010, I will be a guest on the Ask the Experts radio show on AM 570 News as we focus on explaining consumer proposals to the listeners from Kitchener and Waterloo. The show starts at 12 noon and we will be discussing how consumer proposals work. We will answer your questions on air. Consumer proposals in my Kitchener Waterloo office have increased over the past several years as they have become the leading alternative to personal bankruptcy. A consumer proposal deals with your debts through a manageable monthly payment while protecting yours assets. If you are facing financial hardship and want to learn more about consumer proposals, then tune in to AM 570 News at noon this Saturday.

If you cannot wait until Saturday, call me at 310-PLAN or send me an e-mail. If you prefer to do more research, here are some available links:

consumerproposal.org – website specifically for consumer proposals

Hoyes, Michalos & Associates

Office of Superintentent of Bankruptcy – government that oversees all consumer proposals in Canada

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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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If you are receiving collection calls, you likely can place each of them into three categories: the good, the bad, and the really ugly. Regardless of which type they are, they all add stress to your situation. In most cases, collection calls are being received because you do not have the funds to pay your debts right now. It is not that you do not want to pay them, but rather your circumstances have changed and you cannot afford to make a payment. Collection agents are paid and monitored based on their collection totals and therefore can get very aggressive and will say anything to pressure you in hopes of a payment. For examples of collection call stories, see this link.

If you have collection calls, you need to make a plan to deal with them. I generally consider the following factors:
First: How much are they collecting for? Could you just pay it and be done?
Second: Do you have other debts that need to be dealt with as well? The collection call is just one issue; however, the complete debt situation needs to be considered.
Third: What is the cause of the collection calls? Has there been a change in your circumstances?

Collections will not just simply go away; you need to deal with them. A consumer proposal or a personal bankruptcy both give you a legal option to deal with you debts so you can get on with your life financial. Collection calls are not allowed to continue once a consumer proposal or a personal bankruptcy is in place. To review your situation and make a plan to deal with your debts, call me at 310-PLAN or send me an e-mail and we can arrange a free meeting in my Kitchener Waterloo office.

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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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