Kitchener Ontario Personal Bankruptcy Blog

Unemployment Rate Up in Waterloo Region - What Does It Mean for You?

2010-02-07T10:36:00.002-05:00

I read in the Waterloo Region Record this past Saturday that the area's unemployment rate has increased to 9.9%. Across Canada, the average is down to 8.3%. Obviously, the national figures are not great news compared to historic levels, but it is showing a positive trend. That Waterloo Region would be lagging behind was a bit of a surprise, and somewhat concerning.

As I flipped through other sections of the paper, I came across a report on house sales for January 2010 for the region. The paper is already lining a hamster cage, so I don't have the precise numbers, but the headline was shouting all about the record highs for sales. I found myself even more confused. If so many people are out of work, who is buying these houses? The confusion of these mixed messages is a phenomenon that I have commented on before.

I meet with people in our Kitchener-Waterloo bankruptcy offices to discuss their finances. We talk about the state of their financial affairs and try to develop a plan to deal with their difficulties. What matters most to the people I meet with is not what is happening statistically across the country. What matters most is what is happening in their house. Period.

Here's my suggestion: SHUT OUT THE NOISE.

Yes, you need to be aware if your company is closing down. Yes, you should be looking for ways to develop skills to keep yourself employed. However, worrying about things that are beyond your control is useless if you do not have plan of action.

Sit down with your partner and take a long hard look at your finances. How much money is coming in each month? Where does the money go? Are there ways to reduce expenses? Do you need to save up money for going back to school?

Develop a plan together and hold each other accountable to it. A budget is not something you look at once and throw away. It is a tool for setting goals and measuring performance.

Here's one more thing to think about. The Office of the Superintendent of Bankruptcy publishes statistics on the rates of bankruptcies and proposals in Canada. The latest results, for November 2009, show rates above historic levels, but decreasing compared to recent months. No guarantees, but hopefully the worst is over.

If you want to talk about your situation, feel free to give us a call at 310-PLAN, or send us an e-mail.

The Super Bowl and Temptation to Spend Spend Spend

2010-02-01T15:39:00.004-05:00

In honour of the big game coming up this weekend, I present a special Super Bowl theme because I know there are lots of football fans in Waterloo region. For me, I am more a fan of crokinole than the pigskin.

Now that Christmas is becoming a more distant memory, businesses need a new angle to try to separate you from your hard earned money. Sure, Valentine's Day is coming up, but the Super Bowl will do just fine for now.

This week you will be bombarded with messages that may cause you to ask yourself questions like: How can I watch the big game on my little old TV? How can I enjoy the game in my tired little rec room? What would it cost for a last minute flight to Florida (and ticket) to catch the game in person?

Let's focus on the TV question. The answer retailers are looking for is that you need the biggest, latest high definition flat screen to appreciate the subtlety of the 350 pound linemen.

What it comes down to is temptation and separating wants from needs. I recently read a good article on this topic. Here's my two cents:

Having a new television is not going to change your life for the better. If you have the money saved up and want to indulge, suit yourself. If you have to put the purchase on a credit card, maybe you should stop and think twice. Maybe think about three or four times, maybe more.

In meeting with people in our Kitchener-Waterloo bankruptcy offices, I see too many people who were not able to control impulse spending on credit. We are all guilty of it to some extent. Most people survive just fine until something else happens like having reduced hours at work or being laid off entirely.

The bottom line is that CASH IS KING. Each of us is in the best position to analyze our own financial resources. Each of us should pause and reflect before parting ways with our money.

If you find your debt situation overwhelming, feel free to give us a call at 310-PLAN. You can also send us an e-mail. We will discuss your situation and talk about all the options, including consumer proposals and personal bankruptcy.

Strategy for Saving Money

2010-01-22T11:30:00.003-05:00

I heard a radio advertisement recently from one of the big banks regarding a service to help people save money. I think they called it "Bank the Rest." It works something like this:

You link a savings account to your credit card or chequing account
When you make purchases with your debit or credit card, the transaction is rounded up to the nearest dollar
The difference is deposited into the savings account\

The concept is simple. You set aside money for a rainy day in small, manageable pieces.

How many times have you seen coins on the ground and just walked by, thinking that it wasn't worth your time. Think of this as an easy way to bank those coins without getting your fingers dirty.

Unfortunately, some people find themselves in situations where saving some money or changing spending habits is not enough to get out from under their debt load.

If you find yourself swimming in debt, feel free to give us a call at 310-PLAN or send me an e-mail. We'll review all of the options, including personal bankruptcy and consumer proposals

Take Time to Smell the Roses

2010-01-14T17:38:00.001-05:00

Many people these days feel overwhelmed by the challenges of day-to-day life: work, finances, family, and so on and so forth. Human beings have a limited amount of energy, mental and physical, to deal with these stresses.

My advice is to take time to do things that make you happy, whatever that may be. For me, it's reading a book, playing with my children, or going for a jog. To point out the obvious, reading a book is not going to solve all of your problems. However, removing yourself from the stress, if only for a little while, can help you put your challenges in the proper perspective. It can help you re-focus your energy where it will be most effective.

Accumulating Wealth Easier Said Than Done

2010-01-08T11:10:00.002-05:00

Accumulating wealth is a simple formula of spending less than you take in. However, making that happen can be much more difficult.

Are there ways to increase your income? Maybe you can find a second job. Maybe you can rent out the basement of your house. Maybe you can share an apartment with a roommate.

What about ways to reduce expenses? Here it is a question of separating wants from needs. Pack a lunch instead of eating out. Make your coffee at home instead of going to Tim Horton's once or twice a day. Skip the deluxe cable package and go basic.

These probably seem like small ideas. To that I say, think about how a trickle of water becomes a stream, a stream becomes a river and a river can, sometimes, become a raging waterfall.

There are definitely situations where increasing income and/or reducing expenses are not enough to fix a bad financial situation. If your debts are accumulating, it may be time to talk about other options like a consumer proposal or personal bankruptcy. Feel free to call us at 310-PLAN or to contact us by e-mail to review these and other options in more detail.

Financial Goals and Resolutions

2009-12-31T12:06:00.002-05:00

As the year draws to a close, it is customary for people to make resolutions for the New Year. Most resolutions have something to do with health and well being. One of the most common New Year's resolutions is to lose weight. As a society, we tend to neglect our financial health. Keep that in mind as you are making your resolutions.

The first step in making a resolution is to establish goals. Do you want to buy a house? Find a new job? Pay down your credit cards? Go back to school?

A resolution should be a specific statement of action to help you achieve your goals. A resolution "to lose weight" is too vague. Losing weight is the goal. A resolution "to join the local gym and go Monday, Wednesday and Saturday" is more specific and helps you achieve the goal of losing weight. There might be multiple resolutions that work together in achieving a specific goal. In addition to going to the gym, you might resolve "to eat fast food only once per month."

Many people talk about making resolutions and setting goals, but fail to follow through. Write your goals down on a piece of paper. Discuss your goals with family and friends. It sounds simple, but expressing your goals to yourself and others helps to ensure that you are being realistic. It also makes you more accountable, if only to yourself.

That's all for now. I will be back in the New Year to discuss strategies for achieving your financial goals.

Transfer of Assets Prior to Bankruptcy

2009-11-22T12:01:00.004-05:00

I want to talk about a specific part of what happens when you sit down with a trustee to discuss bankruptcy as an option for dealing with a difficult financial situation.

There is a variety of questions that a trustee will ask anyone in understanding his or her predicament. Most people know that there is the potential for losing some of his or her assets by filing for bankruptcy protection. I won't go into detail on that. You can read here for a summary of the most common questions people have about bankruptcy and losing assets.

Let's take a detour and talk about some key principles underlying the bankruptcy system in Canada:
1. The honest but unfortunate debtor (i.e. the person who owes money) has a right to a fresh start.
2. The creditors (i.e. the people you owe money to) have the right to be treated fairly and equally.
3. The trustee acts as a referee in the process to ensure that everybody understands their rights and obligations. A referee's duty is to ensure that the rules are followed.

When somebody files for bankruptcy, his creditors have the right to know what he did with his assets prior to filing. The money that a trustee accumulates by disposing of a person's assets gets distributed to his creditors. Therefore, the concern is that the benefit to a person's creditors is reduced if an asset was given away or sold for something less than it was worth. The term used in bankruptcy law is "transfer at undervalue."

For transfers between people not related to each other, the trustee has a duty to apply to the courts to void a transfer if he believes the following conditions exist:
- the transfer was for inadequate value
- the transfer occurred within one year of the date of bankruptcy
- the debtor was insolvent at the time of the transfer
- the debtor intended to defraud, defeat or delay his creditors

If the courts agree with the trustee, the person receiving the asset will be required to pay to the trustee the difference between what was paid and what the asset was worth at the time of the transfer.

There are additional considerations for transfers between people who are related:
- if the transfer at undervalue was within one year of filing bankruptcy, there is no need to prove intent to defraud, defeat or delay the creditors
- if the debtor was insolvent at the time of the transfer and DID intend to defraud, defeat or delay his creditors, the review period is extended to FIVE years prior to the date of bankruptcy

If you are considering filing for bankruptcy and have any questions about what to do with your assets, my advice is to do nothing for now. You can call us at 310-PLAN or contact us by e-mail to discuss your situation. If you do end up having to file for bankruptcy, you can hopefully avoid inadvertently doing something with your assets that will cause further complications.

Answers to Kitchener Bankruptcy Questions on 570 News

2009-11-08T18:52:00.004-05:00

On Saturday November 14, Scott Schaefer and Howard Hayes of Hoyes, Michalos & Associates will be live on AM570 News at 12 noon for the "Ask the Experts" show. They will be using that time to answer some of the most common bankruptcy questions.

Even though everyone's financial situation is unique, there are several questions that we see on a regular basis. Here are a few examples:

How do I stop a wage garnishment?
Will I lose my house or car if I file for bankruptcy?
What debts are included in bankruptcy?
What is a consumer proposal?
How long will a bankruptcy or proposal show on my credit history?

If you want to have your questions answered on air, please submit them by e-mail to AsktheExperts@hoyes.com before November 14. Scott and Howard will respond to as many questions as possible in the hour long program.

As always, if you want to speak to someone directly about your particular situation, feel free to call us at 310-PLAN or send us a message by our regular e-mail.

How do I stop a wage garnishee?

2009-10-25T22:36:00.004-04:00

That is one of the most common questions that I hear in our Kitchener bankruptcy offices.

First off, let's make sure that we are speaking the same language. A garnishee is a court order to take a portion of your pay cheque. It happens when a creditor (someone you owe money to) takes you to court because you have not paid the money that you owe. A judge reviews the case and grants an order for your employer to withhold a portion of your pay cheque until the debt is paid in full. The normal amount is 20% of your gross wages, but the judge can order up to 50% to be taken. If your finances are already feeling strained, a wage garnishment can be the proverbial last straw.

Once a wage garnishment has started, it's probably too late to work out an informal payment plan. Think one in the hand compared to two in the bush.

Here are the three ways to stop a wage garnishment once it has started:

Pay the debt in full
File a consumer proposal
File a personal bankruptcy

When you file a consumer proposal or personal bankruptcy, you are protected by the laws of the Bankruptcy Insolvency Act. It's called a "stay of proceedings." That means that, in most cases, a wage garnishment would stop.

If you are concerned about a wage garnishment and want to better understand your options, your first step is to contact a licensed trustee in bankruptcy. You can contact us by telephone at 310-PLAN or 1-866-747-0660. You can also reach us by e-mail.

Payday Loans in Bankruptcy

2009-10-22T14:35:00.003-04:00

Question from a reader: I have been looking at your website and all the valuable info on it, considering contacting you. I have bad credit, outstanding debt and am caught up in the vicious payday loan cycle. Are payday loans something you deal with?

Answer: The short answer is yes; now here's the explanation.

When somebody contacts our office because they are having difficulty handling their debt load, there are a number of options that we will review. The two options that you need a trustee for are a consumer proposal and personal bankruptcy. Either of these is a way of dealing with all of your unsecured debt. Unsecured debt includes credit cards, personal loans, lines of credit, income taxes AND payday loans.

Consumer proposals and personal bankruptcies follow the laws of the Bankruptcy Insolvency Act. One of the principles of this system is to give the honest but unfortunate debtor a fresh start. One of the other key principles is to ensure that the creditors are treated fairly and equally. That means that for you to get a fresh start, your creditors can't choose not to participate.

Name Change for Waterloo Region Credit Counselling Agency

2009-10-07T18:24:00.003-04:00

Mosaic Counselling and Family Services offers counselling services for a wide variety of issues including stress, anxiety, grief, depression, troubled relationships and family violence. Until very recently, it was known as the Catholic Family Counselling Centre. It is an organization rich in history and tradition of community service and support.

In meeting with citizens of Kitchener-Waterloo regarding their bankruptcy questions, it is the credit counselling services of Mosaic that I have become most familiar with. One of the options that I discuss with people as an alternative to personal bankruptcy or a consumer proposal is called a debt management plan, for which you would require the services of a credit counsellor licensed by the Ontario Association of Credit Counselling Services.

If you are experiencing financial difficulty and are not sure where to turn, please feel free to call me at 310-PLAN or 519-747-0660. I can also be reached by e-mail. We will talk about your options, including, perhaps, a visit with the credit counsellors at Mosaic Counselling and Family Services.

Your Financial Questions Not Answered by Economic Statistics

2009-10-03T20:06:00.006-04:00

Over breakfast earlier this week, a Canadian Press article in the business section of the Waterloo Region Record caught my eye. The article was reporting on the results of a survey conducted by TD Canada Trust regarding personal finances: saving, budgeting, etc. I won't get into all the statistics. Look here for the complete story.

Here are some general comments. The Record article notes that 19% of respondents age 18 to 34 save 10% to 25% of their monthly income. However, 54% of the respondents from the same age group report that they have a "rainy day fund." My immediate thought was to question just what these people consider a "rainy day fund" if most are saving less than 10% of their income.

What really struck me, though, was how this simple story was adding to the seemingly endless stream of conflicting statistics being reported in the media regarding personal finances and the economy. Here's a sample:

- Recession is over
- Unemployment is up
- Inflation rate is down
- Personal bankruptcies are being filed at a record rate
- Stock exchanges are up, now they're down, now they're back up again (you can check any paper over the span of a few days to see this one)

What does all of this mean to you if you are struggling to make ends meet? I always say to people that the financial questions that matter most are your own. Statistics don't pay the rent, buy groceries or clothe your children.

If your head is swimming with facts and figures, sit down and take a deep breath. In uncertain times, we are all forced to examine our priorities. If you have considered filing a personal bankruptcy or consumer proposal, feel free to give me a call at 310-PLAN or 519-747-0660 to review your options. You can also contact me by e-mail with your Kitchener bankruptcy questions.

407 ETR Debts and Bankruptcy

2009-09-28T11:45:00.004-04:00

In meeting with people to discuss their Kitchener bankruptcy concerns, there is a question that has been popping up with increased frequency of late. The question is this: Do my 407 ETR debts go away as part of a personal bankruptcy or consumer proposal?

To answer this question, I am first going to make some comments about bankruptcies and proposals in general. Give me a moment to put on my professor's spectacles. One of the principles behind personal bankruptcy and consumer proposals is to be released from your legal obligation to pay your unsecured debts. Call it a fresh start. Unsecured debts are things like credit cards, personal loans, income taxes, etc. It does not include debts like a mortgage or car loan where there is a physical asset attached. So, the general rule is that you get released from your unsecured debts, UNLESS there is a specific exception to the general rule. Some of the specific exceptions are alimony, child support and student loans less than seven years old. No where in bankruptcy law does it say that 407 ETR bills do not go away as part of a bankruptcy or proposal.

Here is where it gets a little tricky. The Highway 407 Act (yes, it has its own set of laws) says that you can have the renewal of your licence plates denied if you don't pay your bill. This covers renewal of existing or issuance of new plates. Further, the powers that be at the 407 ETR contend that they have the right to deny your plate renewal even if you have completed a bankruptcy or proposal. Here is their position on the matter.

I have not seen a court case that confirms this position specifically related to the 407 ETR. However, there have been several court cases that do confirm the plate denial aspects of other laws following bankruptcy. Therefore, my answer is that you will probably have to pay your 407 ETR debts if want to renew your licence plates.

Is that reason enough not to go ahead with filing a personal bankruptcy or consumer proposal? It's hard to say because no two situations are exactly alike. I suggest that you contact me by phone at 310-PLAN or 1-866-747-0660 or e-mail to review your options in more detail.

Rule Change Is A Head Scratcher

2009-09-14T16:22:00.012-04:00

As I was painting my kitchen this past weekend, my mind could not help but wander a bit. At times I could hear kids playing gleefully outside, making me yearn just a little for the carefree days of youth.

Coming back to the task at hand (i.e. painting), I found myself wondering about the seemingly endless variations on off-white; winter white, icicle, elephant tusk, and on and on. My favourite is "calm." Not sure when that became a colour.

At some point, I started reflecting on the past week at work. When people sit down with me to ask questions about personal bankruptcy in Kitchener, every situation is at least a little bit different. Some people with high-paying jobs, some people relatively lower. Many are with no job at all right now. Regardless, there has been an unfortunate and unforeseen series of events leading them to sitting down with me.

This is why one of the upcoming changes to personal bankruptcies and consumer proposals is so perplexing to me. There is an assortment of changes to insolvency laws that will be effective September 18. Here's a useful summary. However, you will not find in this commentary the change to which I am referring.

Here it is: if you file a personal bankruptcy or consumer proposal after September 18, you will be required to disclose your highest level of education. What purpose does that serve? Are you any more or less deserving of the legal protection provided by a personal bankruptcy or consumer proposal because of your education? I have not heard a good answer yet. When I learn the rational explanation, I will let you know.

Regardless of the intention, the expected result is, to put it mildly, unfortunate. It is already difficult enough to consult with a stranger about your financial problems. I suspect that many people will be flat out offended when I ask about their education.

If you are in financial difficulty and want to learn more about your options, I want to assure you that you will be treated with dignity and respect when you contact us. Sometimes, we ask uncomfortable questions. Please understand that it's part of our professional duty. To get started, you can contact me by phone at 310-PLAN or (519)747-0660, or by e-mail.

And Now Introducing...

2009-08-12T16:52:00.003-04:00

I joined the Hoyes Michalos team earlier this year, full of energy, looking for fresh challenges. So that we can get to know each other a little better, check here for a summary of my professional experience.

Lately, my colleagues have been talking about the power of the internet in reaching people. In that spirit, I will be using this space to answer your bankruptcy Kitchener questions. You can reach me in many different ways. The easiest are by phone at 310-PLAN or (519) 747-0660 and by e-mail.

Since I'm already here, let's chat about what happens after you contact us. First, you get to speak to me or another professional staff member about the nature of your financial problems. Next, if there something we can do to help, we will schedule an appointment for you to meet with us in one of our 20 offices in Ontario. During this meeting, we will review your finances in detail and explore the different options that you might consider in dealing with your debts. Sometimes bankruptcy is the right answer, but it should be considered a last resort. Often times there are alternatives to bankruptcy that make more sense.

I talk all the time about options. What it's really all about is building a plan for a fresh start. My role is to help you understand the implications of the different options so that you can make the decision that is best for you. Until scientists master the intricacies of time travel, we will continue to be unable to change the past. The challenge is to make the right decisions now to move toward where you want to be in the future.

Taxes and the Economy

2009-03-18T22:08:00.009-04:00

This tax season may be a different time than ever before for many people in Kitchener-Waterloo. More people are losing their income through reduced hours or even lost employment is evident with the increase in the unemployment rate. The Kitchener unemployment rate is now over 9%. This global recession and financial crisis is affecting good hard working people. In our Kitchener office - located at 607 King Street, we are seeing a record number of people who are struggling to keep up with their basic household expenses, not to mention their debt payments.

Tax season could be a temporary relief for people receiving a large refund or alternatively it could compound the problem if people have to pay taxes. Either way, the stress of the current economy is affecting all of us. At Hoyes Michalos & Associates Inc. we are helping families make a PLAN to deal with their debts and focus on a fresh start financially. When someone calls us, typically they never thought they would have had to call us, but the harsh reality is that the economy has made it too difficult to pay their debts plus deal with the cost of living.

Sometimes a consumer proposal is the option that couples choose as it is a method of restructuring debts through a monthly payment plan. A consumer proposal allows the debtor to pay part of the debts back to their creditors at the same time protecting their assets. If that monthly payment is even too much for people, a personal bankruptcy is an option to discharge their debts. A personal bankruptcy is a process that runs for a minimum of nine months.

Last year in Canada, 115 789 of people filed a proposal or personal bankruptcy and this year it is predicted to be much higher due to the economy and financial crisis. These options are Federal laws that are established to give the unfortunate Canadians fresh starts financially.

This past Saturday, Ted Michalos and I spent an hour on the Ask the Expert Show on 570 News discussing the economy, taxes and the all important PLAN.

If you have had a reduction in your income and the stress is affecting your life, it may be time to explore the options available to you. For a free no obligation discussion, call us in Kitchener at 519-747-0660 (or 310-PLAN) or send me an e-mail.

Ask the Expert – Consumer Proposals

2009-02-12T21:00:00.002-05:00

This past Saturday, Doug Hoyes and I spent an hour doing an Ask the Expert show on AM 570 News. The hour focused on Consumer Proposals. In short, a Consumer Proposal is a legal process in which individuals offer to repay a portion of their unsecured debts. This is acheived by making one monthly payment over a period of time that does not exceed 60 months. At Hoyes, Michalos and Associates Inc in Kitchener, we file on average 1 consumer proposal for every 2 personal bankruptcies. A couple other key features of a consumer proposal are: an individual can keep his/her asset(s) and an individual receives the same protection from the creditors as that in which is available in a personal bankruptcy.

When a consumer proposal is offered to the creditors, it is automatically accepted unless the majority of the credito’s dollar value vote not to accept the proposal. This vote must be received by the 46th day. Generally if the creditor votes no, they will offer an alternative amount at which point the individual can accept. From our experience, almost every proposal offered gets accepted (either as filed or with a counter offer).

Let’s consider an example of a recent consumer proposal that we offered in our Kitchener office today:
· Married couple with 2 children;
· The family of 4 makes $4,500/month of take home income (no more overtime is available at their work);
· They own a home in Kitchener, with $8,000 of equity (estimated amount after selling costs);
· They have 57,000 of credit card and line of credit debts;
· They have 2 automobiles, one has a loan and the other is older and owned out right(without any liens against it);
· The debts were accumulated over the past 5 years since they purchased the home and started their family.
· We filed a consumer proposal to the unsecured creditors offering $400/month for 50 months = $20,000.
· After the proposal was filed, the couple’s monthly budget was balanced, they were able to keep their house and vehicles, and the financial pressure was eased.

If you would like to discuss a consumer proposal in more detail call me at 519-747-0660 or 310-PLAN or e-mail me.

Bankruptcy Questions

2006-11-14T08:51:00.000-05:00

On Saturday November 18 at noon I will be appearing LIVE on Ask the Experts on 570 News to answer bankruptcy questions. My goal will be to answer the top 50 questions during the show. Since there is a newscast at noon and 12:30, the show lasts for about 50 minutes, so my goal will be to answer 50 questions in 50 minutes, so please tune in to get answers, or call in with your questions and I will answer them live on the air.

That's noon on November 18 on 570 News, or listen live on the internet at www.570news.com

Duties of a Bankrupt

2006-10-11T15:55:00.000-04:00

Before someone files bankruptcy they should ensure they understand their duties as a bankrupt as outlined in the Bankruptcy and Insolvency Act. These duties apply to both individuals and directors/officers of corporations. Below is a summary of the duties:

a) disclose and deliver all assets they own or are in control of - there are some assets (to certain dollar value depending on province - see Ontario limits here) that are exempt form seizure of a trustee, such as household goods, personal effects, vehicle, tools of the trade, and some insurance contracts;
a.1)deliver to trustee, for cancellation, all credit cards issued and have in possession;
b) deliver to trustee all required books, records, and documents relating to property and affairs; c) if specifically required, attend for an examination under oath to answer questions regarding conduct, cause of insolvency, and disposition of property;
d) prepare a statement of affairs detailing assets, liabilities and other prudent information, which then is sworn to be a true statement;
e) assist trustee with making a list of inventory of assets;
f) disclose to the trustee all property disposed of within the period of one year before the date of the initial bankrupt event;
g) disclose to the trustee all property disposed of by gift or settlement without adequate valuable consideration within 5 years prior to the date of the initial bankrupt event;
h) attend the first meeting of creditors if a meeting is called;
i) when required, attend other meetings with creditors or inspectors, or attend for trustee;
j) attend other examinations under oath with respect to property or affairs as required;
k) aid with trustee in realization of non-exempt property and the distributions of proceeds among creditors;
l) execute any powers of attorney, transfer, deeds and instruments or acts that may be required;
m) review creditors proof of claims if trustee requests;
n) if you are ware that someone filed a false claim, disclose this immediately to trustee;
n.1)inform the trustee of any material change in bankrupt's financial situation;
o) generally do all such things as a reasonable given situation with consideration for the law;
p) keep trustee appraised of the bankrupt's location at least until estate is completed.

This list may seem overwhelming, but in general, the Bankruptcy and Insolvency Act is there to give the honest but misfortunate debtor a fresh start, so this section ensures that someone acts honestly and in good faith.

More details can be obtained at the Office of Superintendent of Bankruptcy's website.

To discuss these duties and your financial situation, please call us at 310-PLAN or e-mail us.

Why it may be a bad idea for retired people to file for personal bankruptcy

2006-09-21T13:26:00.000-04:00

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.

Canada Revenue Agency Secured Claims

2006-09-14T13:36:00.000-04:00

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.

New and Improved Bankruptcy Kitchener Web Site

2006-09-09T08:11:00.000-04:00

Tax Debts More Widespread Than One May Think

2006-08-02T16:18:00.000-04:00

On Saturday July 29, 2006, Ted Michalos & myself were guests on the Ask the Expert Show on AM 570 News in Kitchener, Ontario. This one hour show was dedicated to talking about "Tax Debt: What Can You Do If You Owe Money to the Government" as part of Hoyes, Michalos & Associates' "Your Summer Survival Plan - A Radio Series on Dealing with Debt in Ontario". On the show we discussed the types of tax debt and the various plans to deal with tax debts.

As a result of the show, we have received various calls from individuals living in Kitchener, Waterloo, Guelph, Cambridge and other areas. Although each of their situations were different, they did have a common element - they all had tax debts and were having trouble dealing with them. Some examples of the calls are:

self-employed individuals owing GST, Source Deductions, and personal tax;
pensioners owing taxes for the first time in their lives as their pensions did not have enough taxes taken off resulting in tax debts too large to manage on a fixed income;
individuals who have cashed out their RRSP's as an attempt to get their other debts under control, only to find that not enough taxes were taken off and now they have a large tax debt; and
employees working more than one job just to make ends only to find out they have a tax debt at the end of the year due to working the multiple jobs.

Many individuals have the notion that tax debts are different from their other debts and have special rights - this is only partially true. Tax debt is governed by tax laws, there are special rules, and in addition, the Canada Revenue Agency (CRA - or formally Revenue Canada) has significant collection powers compared to other creditors. However, when it comes to a consumer proposal or personal bankruptcy, taxes are generally dischargeable debts (ie they go away upon completion of the procedure) just like your credit cards, bank loans, or other unsecured debts.

When it comes to tax related debts, your options for dealing with them remain the same. You can pay off the debts (through cash on hand, payment plan with CRA, sale of assets, borrowing, or other personal options available), file an notice of objection/appeal on the assessment, apply to the CRA's fairness program to reduce the penalties and interest, or file under the Bankruptcy and Insolvency Act for a consumer proposal or personal bankruptcy.

If you are experiencing financial difficulty with your tax related or other debts and would like to discuss your options in detail, please call Hoyes, Michalos & Associates at 310-PLAN or e-mail us a question. We have offices throughout Ontario that are available to work with you.

Avoiding Bankruptcy with a Mortgage in Kitchener

2006-07-22T17:42:00.000-04:00

As discussed in my previous post, this morning I appeared live on 570 News for a one hour Ask the Experts broadcast with Theresa Yates, a mortgage consultant with Mortgage Intelligence in Kitchener, Ontario who specializes in finding mortgages for people with less than perfect credit.

The title of the radio show was What Can You Do If You Own a Home and Have Money Problems, and Theresa made a number of good points on the show.

She commented that if you have a lot of high interest rate debt, like credit cards, but you also own a home that is worth more than is owing on the mortgage, it may be possible to borrow against the value of your home to reduce your monthly payments. This makes sense, because mortgage rates are a lot less than the 18% to 25% you might be paying on credit cards. Refinancing is obviously a better alternative than going bankrupt, which is why if you own a home with substantial equity we always suggest considering the re-financing option.

She also mentioned that it is possible to get a mortgage very soon after you have been discharged from personal bankruptcy, provided you have at least a 10% down payment (more is better) and a good source of income. That's good news for people who want to rebuild their credit as soon as possible.

She even discussed the possibility of re-financing a mortgage as part of a consumer proposal. There are a number of conditions that must be met, so a consultation with Theresa is necessary to see if you qualify.

We closed the show by commenting that there are many different solutions to financial problems. A consumer proposal or a personal bankruptcy may be a solution, but if you own your own home re-financing your mortgage may also be a step towards solving your financial problems.

For more information, you can e-mail Hoyes Michalos, or you can contact Theresa directly at www.mortgageintelligence.ca/theresayates.

Your Summer Survival Plan - A Special Six Part LIVE Radio Series

2006-07-13T13:18:00.000-04:00

I am pleased to announce that the professionals at Hoyes Michalos & Associates Inc. will be participating in a unique radio event: the Summer Survival Plan series.

We are constantly asked how to deal with collection agents, or what to do about tax debts, or how you can keep your home, even if you are having money problems. This special live radio series is designed to give you those answers.
This Saturday, July 14 at noon, we will be appearing live on 570 News in Kitchener for the first of this six part series. Tune in to 570 on your AM dial, or listen live to 570 News on the internet. The shows are live, so feel free to call in with your questions.

The shows will air live Saturday July 15, 22, 29 and August 12, 19, 26 from noon to 1:00 pm. For a list of show topics and full details, visit the Hoyes Michalos
radio schedule. If you don’t want to ask a question on the air, e-mail us a question and we will do our best to answer it on the air.

That's three Saturdays in July, and three Saturdays in August, live on 570 News.