Earlier this week, the Office of the Superintendent of Bankruptcy released its statistics on bankruptcy and consumer proposal filings for April to June of 2010. There are lots of different ways to dissect the numbers. If you are interested, you can find the complete report here on their website.
Let me share with you my observations for the Kitchener-Waterloo area.
Compared to the same 3-month period in 2009, there was approximately 22% fewer bankruptcies and consumer proposals filed in Kitchener-Waterloo in the second quarter of 2010. That sounds like good news. However, the biggest reason for this decline is that 2009 saw a record high number of bankruptcy and consumer proposal filings. This was a direct result of the economic meltdown that was felt in Waterloo Region and around the world.
If we go back in time to 2008, bankruptcies and consumer proposals have actually increased by approximately 14%. I don’t want to overwhelm you with numbers. I have commented recently and often about the limited usefulness of statistics.
In comparing to 2008, what intrigued me was that bankruptcies are basically at the same level (actually slightly down), but consumer proposals have increased significantly.
What does this all mean? Here is what I think has happened. A lot of people were out of work or had reduced hours over the last two years. Yes, that meant that a record number of people filed for bankruptcy last year. BUT, a lot of people were able to weather the storm. Now, those people are back to work (many at lower wages), but the debts have accumulated and they don’t see a way to pay it all back. Because they are working, more people are turning to consumer proposals instead of bankruptcy.
A consumer proposal is a good choice for people who are able to repay a portion of their debts. It is designed to be a win/win situation for both you and your creditors. Your creditors would prefer a consumer proposal because they receive more money than if you had filed for bankruptcy. It’s a good deal for you because bankruptcy could mean losing some of your assets and/or paying surplus income each month. Because the payments in a consumer proposal are spread out over a longer period than bankruptcy, the monthly cost is also more manageable.
The bottom line is that if you are reading this, you or somebody you know has some financial questions. Feel free to call me at 310-PLAN (that’s 310-7526 with no area code) to go over your situation and review your options. You can also send me your questions by e-mail.
Hoyes, Michalos and Associates Inc. has offices throughout southern Ontario, including Kitchener, Cambridge and Guelph.
You must log in to post a comment.