Bankruptcy Kitchener Blog

There is a very simple budgeting system that has been around for a long time, but today, with the use of credit, this system is used less every day. This is a system of understanding our “needs” and our “wants”. After taxes, we are all constrained by how much money we have available to us to spend. We live in an expensive society. For example, our housing costs are a significant percentage of our income. The issue then is, how do we allocate the rest of our income?

In theory, it is easy to understand the needs verses wants principle, but is much harder to practice.

The first step is to know which items are needs and how much they cost. Once we have totaled the need items, we can calculate how much we have available (or left over) for the want items.

Over spending on wants is where we tend to accumulate too much debt. Most times, if we are using a credit card for want items, we likely do not have the full amount of cash available to pay back the credit card for this item. Therefore, debts accumulate. The problem is compounded by high interest rates on those credit cards.

We consume more “stuff” then prior generations. Instead of fixing, we buy new. Every few years we need to replace the old computers and electronics as they may no longer be in style, etc. There are huge marketing campaigns out there to ensure we keep spending.

The availability of credit in today’s world has made it easy to make spontaneous purchases on “want” items. Before you purchase a “want” item, save up for it and then wait a couple of days or weeks to ensure that is truly how you want to spend your money. You may find that you change your mind during that waiting period.

Once you are on the need and want system, you need to determine the appropriate plan for dealing with your debts. These include bank consolidation loans, liquidating assets, doing a debt management plan, filing a consumer proposal or a personal bankruptcy. If you are in Kitchener Waterloo and want to understand your options to deal with your debts give us a call at 519-747-0660 or send me an e-mail.

In order to succeed in any plan, you need to know how to spend your hard earned funds in the future. Use the system that existed well before credit was in play, the needs and wants system. Save up for the want items and do not use credit.

No Comments »

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.

No Comments »

Here’s today’s trivia question:

Which city in Ontario had the biggest increase in the number of consumer proposals filed in the first six months of 2007?

Since you are reading this on the bankruptcykithchener.org web site, you have probably already guessed the answer: The number of consumer proposals filed in Kitchener, Ontario increased by 45% in the first six months of 2007, the largest increase of any city in Ontario, and significantly larger than the increase of 22% in the entire province of Ontario.

Douglas Hoyes, CA

So, is this good news or bad news?

Some will say it’s bad news, because an increasing number of people in Kitchener are experiencing debt problems, and need a way to deal with their debts.

I prefer to think that this is good news. Many people still believe that the only solution to debt problems is personal bankruptcy; I’m glad that the word is getting out that there are other alternatives.

(I’ve done my part to get the word out; Ted Michalos and I appeared on Ask the Experts on 570 News in Kitchener back on March 3, and we discussed how consumer proposals can be used to deal with credit card debt. We also talked about consumer proposals when we returned again on April 2).

I think the increase in consumer proposals in Kitchener is also good news because most residents of Kitchener who file proposals have a job and are earning an income, because without an income it’s hard to make a proposal. An increase in proposals shows that debt levels are increasing in Kitchener, but it also shows that people in our area have jobs, which is good news.

It’s also good news that many Kitchener residents want to repay their debts, and when given the chance they are happy to make a deal with their creditors.

In a consumer proposal we negotiate a settlement with your creditors; in most cases you pay less than the full amount owing. Your debts are taken care of, and you only have one monthly payement.

Would you like to find a way to stop collection calls? Wouldn’t it be great to only have to worry about making one payment each month? Then a consumer proposal may be right for you. To find out if a consumer proposal is right for you, call our Kitchener office at 310-PLAN (310-7526, no area code required) or e-mail us to arrange a free initial consultation. There is help available, so give us a call, and let’s get started.

No Comments »

I received a phone call recently from Lynda (not her real name).  In 2002 Lynda and her spouse were filing for a divorce.  This life altering event caused a number of problems in her financial life as well as her personal life and Lynda filed for personal bankruptcy.  She received a discharge from her bankruptcy in 2003 and started over as a single person. Lynda was telling me that after to her discharge from bankruptcy she was able to save some money and purchase a home, which has grown in value to the point where it now has about $30,000 equity.  She also leases a vehicle.  She has been careful with her finances, heeded the advice she received in her debt counseling sessions and now feels confident that she is “in control” of her own life.

Jane Merling

She was telling me that she would like to obtain a credit card for the purpose of ordering from the web, purchasing theatre tickets and other commodities that seem to require one.  She was apprehensive about applying for a credit card as this would be her first attempt at venturing back into unsecured credit, she wasn’t sure if she would qualify and did not want to have a number of “hits” on her credit report.      

I suggested the following:

1. Obtain a credit report from Equifax and examine it thoroughly.  If there are any discrepancies make Equifax aware of them immediately.  It is critical that this report be as accurate as possible as lenders rely on the information provided.
2. Meet with an officer in person (not just on the phone) with her home bank and explain her situation.  If the bank is unwilling to grant her unsecured credit ask how she can improve her situation to meet their qualifications and then follow their advice.
3. Get a secured Visa card as a way to rebuild credit, and to have a credit card available for internet and other purchases.

Lynda told me that filing for bankruptcy gave her a fresh start and that the changes she has made in her life have enabled her to move in a positive direction.

If you feel that you need  Fresh Start call us in Kitchener at 310-PLAN (310-7526, no area code required) or 519-747-0660 or e-mail us to arrange a free initial consultation.

No Comments »

Today Ted Michalos and I appeared on Ask the Experts on 570 News in Kitchener. We spent the hour discussing credit cards, and how to deal with credit card debt. I added that they can help you earn rewards and air miles, and you get a nice summary of your spending at the end of each month.

Ted started the show by explaining that credit cards are a convenient way to make purchases so you don’t have to carry a lot of cash.

Douglas Hoyes on 570 News

Unfortunately, there is a very big negative with credit cards: the high interest rate. That’s why we made the following point two or three times on today’s show:Credit cards should be a substitute for cash, not a substitute for borrowing.

In other words, if you have the cash to make a purchase, using credit cards is fine; just be sure to pay off your balance at the end of the month. If you don’t have the cash, try to get a loan at the bank, or a line of credit, to keep the interest you are paying as low as possible.

Beware of the “low introductory rate” offers that get you to transfer your balances on other cards, only to increase your interest rate six months later.

Ted then talked about one of his “pet peeves”: people who have two many credit cards.We both believe that having one or two credit cards is fine, but if you have more than two credit cards, you run the risk of spending too much, and even worse, carrying a balance and paying a very high interest rate.

Ted Michalos on 570 News

When you consider that there are over 50 million credit cards in use in Canada today, that’s a lot of credit cards! Even worse, 32% of Canadian carry a balance on their credit cards, so that’s a lot of interest being paid each month.

What’s the solution?

If you have more credit card debt than you can handle, take action now.

Start by working out a monthly budget to determine how much you can afford to pay on your debts each month. By cutting some expenses you may be able to pay your credit cards off yourself. If you need some help, the credit counsellors at Catholic Family Counselling Centre in Kitchener can help you work out a budget, and even negotiate with your credit cards on your behalf.

On today’s show we discussed consumer proposals, a great alternative to bankruptcy where professionals such as Ted and I work out a plan where you repay a portion of what you owe, based on your income.

Of course if your credit card debt is overwhelming, a personal bankruptcy may be necessary to stop the collection calls and help you get your life back.

As we said on the show, if you have too much credit card debt, give our office a call in Kitchener at 519-747-0660 or 310-PLAN (310-7526, no area code required) or E-mail us to arrange a free initial consultation.

No Comments »

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.

 

No Comments »