Archive for September, 2006

Every month I meet with a number of people in Kitchener who are retired, and have more debt than they can handle, and they want to know if they should file for personal bankruptcy.

Retired residents of Kitchener on a fixed income are in a difficult position. They worked their entire lives, but now find themselves on a reduced income. The cost of living increases faster than their fixed income pensions, and they find it hard to keep up. They use their credit cards to pay the bills, and after a few years they have accumulated more debt than they can ever hope to repay.

I always start these meetings by explaining their options. They can start by asking family for help, which is usually a difficult decision. They can sell off any assets they no longer need, such as a car they don’t drive, or a house that is larger than they need.

If they have a large pension they could investigate a debt consolidation loan to reduce their monthly payments. If their income is not high enough to make debt repayments, they could investigate various bankruptcy alternatives, including talking to a local credit counselor about a debt management plan. A consumer proposal is another option.

Of course personal bankruptcy is also an option, but in many cases it is not legally necessary.

Personal bankruptcy is often referred to as bankruptcy protection because once you go bankrupt your credit card and bank loan lenders cannot garnishee your wages. But if you are retired and your income is from pensions, you don’t have any wages to garnishee, so a bankruptcy may not be necessary.

If you open a new bank account at a new bank, it is possible that the creditors will not take any further action.

Of course getting phone calls is very stressful, so many older people decide to declare bankruptcy in Kitchener anyway, just for stress relief. That’s fine, as long as your realize that you are going bankrupt more for stress relief than to receive legal protection from your creditors.

There are of course other factors to consider, both emotional and financial, so if you are someone you know is retired and having financial problems, please give our Kitchener bankruptcy office a call at 519-747-0660 or 310-PLAN, or e-mail us, and we will set up a no cost meeting to review your options in more detail.

At Hoyes, Michalos & Associates in Kitchener-Waterloo we meet with and help individuals that have a variety of financial difficulties. Sometimes, there are cases that have added technical issues that need to be resolved before we can put a solution in place to sort out their finances. For example, if the Canada Revenue Agency (CRA) has registered a lien on a person’s home this needs to be investigated before a plan is developed. Similarly, if a person has arrears with the Family Responsibility Office (FRO) we need to address this before creating a plan.

This blog will outline some of the issues involved with respect to CRA and liens (see next week’s blog to discuss FRO support arrears). General information is provided below – if you would like to discuss your specific situation please contact us via e-mail or at 519-747-0660.

CRA (formally Revenue Canada) has significant collections power legislated to them to collect tax related debts. They include simple collection calls, to garnishment of wages, to seizure of bank accounts, and even to registering on title on property. The method CRA selects to use to collect a debt varies depending on the type of debt, the amount owed, the nature of the situation, etc.

When it comes to tax related debts, understanding and dealing with them should always be a priority given the significant collection powers that CRA has. Do not ignore them, tax debts do not go away.

I have met with several individuals lately where CRA has registered a lien on their house. This effectively puts CRA right behind the mortgagor for the proceeds on the sale or refinancing of the house. Once a registration occurs, it cannot simply be removed through a personal bankruptcy (or proposal pursuant to the Bankruptcy & Insolvency Act).

If you have tax debts and having trouble dealing with them, we encourage you to seek help and understand your options. To book a free consultation call us at 519-747-0660 or e-mail us.

I am pleased to announce that we have added more information to the bankruptcy-kitchener.com web site. Check our our new articles on personal bankruptcy in Kitchener and Kitchener’s number one bankruptcy alternative, consumer proposals.

We also have information about the cost of bankruptcy in Kitchener, and how to choose a Kitchener Waterloo Bankruptcy Trustee.

If you want more information about bankruptcy in Kitchener, we encourage you to post an anonymous question to this Kitchener bankruptcy blog, or better yet, e-mail us a question directly for a personal answer. Thanks for reading.

Tagged as bankruptcy Kitchener, personal bankruptcy, and bankruptcy