Are you in financial difficulty?  Following are some common warning signs.

• Your credit cards are at their limits
• You are using one credit card to make payments on another credit card
• You missed the last payment on your car loan
• You missed the last rent or mortgage payment
• You are behind on property taxes or utilities
• Collection agencies are calling you

Naturally, things like this cause people a great deal of stress.   When I meet with people in our Kitchener bankruptcy offices, my role is to help people understand all of their options for dealing with their debts.   

That means that we will probably talk about personal bankruptcy, but only as a last resort.  Sometimes, we can identify ways to modify the household budget to be able to pay your debts in full.  Sometimes, people are good candidates for a consolidation loan, turning payments on multiple high-interest credit cards into one low-interest payment.  If I don’t think that personal bankruptcy is a good choice for you, I will tell you so.

Another alternative that many residents of Waterloo region are turning to is a consumer proposal.  A consumer proposal in Kitchener-Waterloo is often a good choice for people who are unable to pay their debts in full, but want to avoid the negative consequences of bankruptcy.  Sometimes, bankruptcy means losing some of your possessions  and paying surplus income each month.  A consumer proposal is a way of protecting what you own and paying back a portion of your debts, usually over a 4 or 5 year period.

The bottom line is that if you are in financial difficulty, you need a plan for you and your family.

To set up a free consultation in our Kitchener bankruptcy offices, you can call me at 310-PLAN (that’s 310-7526 with no area code).   You can also send me your questions by e-mail.

I was reading in the Waterloo Region Record this past weekend about changes to the Ontario student loan system that are designed to adjust a person’s student loan payments to his or her ability to pay.    Here is a link to the article in the Waterloo Region Record.

This change is touted by John Milloy, MPP for Kitchener Centre and Minister of Training, Colleges and Universities, as “part of a wider plan to have as many people as possible take advantage of college, university and apprenticeship programs.”

The idea is that the government will assess your finances after you have graduated and determine how much you are able to pay on a monthly basis.  Furthermore, the interest will be paid by the government for low income students and the entire loan can be forgiven after 15 years.

This is potentially very good news for young people starting on their post-secondary education, or people who are looking to go back to school for re-training.  However, like many things associated with government, the announcement is short on details. 

I had a variety of questions.  Here are a few:

• When will this change be implemented? 
• Does it apply to existing loans? 
• What is considered “low income?” 
• How will this government assessment process work? 

I scanned through the announcement on the website for the Ontario Ministry of Training, Colleges and Universities.  The part about repayment appears in three short lines part way down the page.  No answers there.  I poked through the links provided, still no luck.  I think that this is the official news release.  I don’t see any mention of the repayment plans at all.

What does this all mean?  Unfortunately, the answer is I don’t know (yet).   

Student loans are unique.  The government lends you money at a time when you have no ability to repay it.  The idea is that you increase your education, find employment in your field and are able to repay the loans.  Unfortunately, it does not work out that way for many people.

My job is to provide information to people who find themselves in financial difficulty.  If you find yourself struggling with your student debts, feel free to give me a call at 310-PLAN (that’s 310-7526 with no area code) to review your options.  You can also send me your questions by e-mail.

My point is that managing a balanced budget is not always about the obvious big expenses like houses, cars and vacations.  Sometimes the day-to-day things, the things that seem inconsequential, can actually have a major impact.

Buying your lunch, even the most economical choices (food courts, burger places, sub shops, etc.), is approaching $10 a day.  Places like that are all about convenience.   What if I told you that you could make a great sandwich at home for about $1?  I’ve measured out the ingredients and done the math. 

Let’s do some more math together.  If you are spending, say $9 a day on lunch, you could save $8 each day.  If you are working a regular 5 day week and buy your lunch every day, that’s $40 each week.  Over the course of a year, that’s going to be about $2,000.  What could you do with $2,000?

Don’t like sandwiches?  Here are some recipe ideas I read online the other day.  The key, like so many aspects of life, is planning. 

Maybe you’re thinking that you won’t really see that $40, that it will get spent some other way.  Here’s another idea.  Set up a savings account at your bank and schedule a weekly transfer of $40 from your main account.  Now you’re setting up an emergency fund for unexpected car repairs, dental expenses, etc.

I meet with people every day in our Kitchener bankruptcy office to discuss their financial problems.  Sometimes it’s a question of finding ways to reduce expenses and balance the budget.  Sometimes it’s more serious than that and we talk about consumer proposals and personal bankruptcy.

If you are struggling under a mountain of debt, you can all me a call at 310-PLAN to schedule a free consultation.  We will take the time to understand your problems and review all of your options.  You can also send me your questions by e-mail.

Hoyes, Michalos & Associates Inc. has offices throughout southern Ontario and the GTA. 

If you are facing a wage garnishee, or a wage garnishee has already started, you have the following options to stop it:

• Work out a deal with the creditor
• File a consumer proposal
• File for bankruptcy

A first step is trying to negotiate a settlement or a payment plan.  If you are unable to reach an agreement on a deal with the creditor, you will likely have to file a consumer proposal or bankruptcy to stop a wage garnishee.  It is important to understand that your creditors are not obligated to negotiate with you.  In many cases, they may not even be interested in talking to you. 

In Canada, you are protected by the laws of the Bankruptcy Insolvency Act when you file a consumer proposal or bankruptcy.  In virtually all situations, your creditors no longer have the right to take anything from you. 

Wage garnishees is a topic that I discuss and write about on a regular basis.  Why is that?  The biggest single reason is that with the global economic meltdown of the last few years, it has happened to a lot of people.  Though there are some signs of recovery, Waterloo Region was hit harder than most.  Many people are struggling under a mountain of debt that accumulated while they were out of work. 

Having said all that, your focus has to be on the future.  Where do you want to be in a year?  Five years?  Ten years?   You can’t change the past and neither can I.  My role is to help you develop a PLAN to build a brighter future for you and your family.

If you want to talk about a plan to stop a wage garnishment and deal with your debts, my advice is to give us a call at 310-PLAN (that’s 310-7526 with no area code required).  We will take the time to understand your situation and review all of your options.  We want you to make the best choice possible for your future. 

To serve you better, Hoyes, Michalos & Associates Inc. has offices throughout southern Ontario, including Kitchener, Cambridge and Guelph.

A final word: I recently came across a Q&A forum dealing specifically with garnishee related issues.  If you are concerned about a garnishment on your wages, you should consider checking it out.  You might find answers to questions you haven’t even thought of asking yet.

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.

At the end of the meeting, the woman breathed a sigh of relief and told me that she felt like she could finally afford new brakes on the family car.  That made me think of an article I read just this morning in the Waterloo Region Record.

This article quotes some statistic that Canadians are spending less on car repairs compared to a year ago.  Nothing earth shattering there.  What caught my attention is that the geniuses collecting the data think that the reduction in spending is because cars are more reliable than they were a year ago.

What do you think?  Does something smell funny here?

My strong suspicion is that people are not spending money because they simply don’t have it to spend.  Obviously, I do not have fancy statistical analysis to directly back that up.  What I do know is that 2009 was a record high for bankruptcy and consumer proposals filings in Canada.  Though there are signs of recovery, a lot of citizens of Waterloo Region still find themselves on shaky financial ground.

The point I come back to over and over is that most statistics are pretty meaningless.  What matters the most to you is planning a stable future for your family.

If you are struggling with your finances, feel free to give me a call at 310-PLAN (310-7526 with no area code).  I will review all of your options when you are having trouble making your payments.  You can also send me your questions by e-mail.

My job is to provide people with information.  We’ll talk about your situation and then review the options available to deal with your debts.  One of those options is bankruptcy, but it is important to recognize that bankruptcy is not your only option.  I will help you understand all of your choices and then you can make an informed decision of the solution that is best for you and your family.    We don’t focus on the past – it is all about having a plan for your future.

In almost every consultation, the question comes up: HOW WILL BANKRUPTCTY AFFECT MY CREDIT RATING?

The reality is that anything short of paying back 100% of your debts, including all of the interest, is going to create a blemish on your credit report.  A bankruptcy will show up on your credit report the same way that having a debt in collections is displayed.  For that matter, it’s also the same way lawsuits appear. 

Once the bankruptcy has been completed, the debts will be cleared.  However, there will be a footnote for up to 6 years afterward showing that you had filed for bankruptcy.

Does this mean you can’t get any credit for at least 6 years?  Not necessarily.  A credit report is one of the tools that banks use to determine the risk of people not being able to repay their loans.  Having a bankruptcy on your record is one of the factors that a bank will consider if you ask for a new loan, but it is not a clear cut black and white or yes/no decision.

For some people, bankruptcy is the only way to get out from underneath the burden of their debts.  However, there are other choices.  Consumer proposals are an increasingly popular alternative to bankruptcy.  A consumer proposal is often a good choice for people who have the ability to repay a portion of their debts and want to protect assets that they would lose if they filed for bankruptcy.

To review your situation in detail, you can call us at 310-PLAN or send us your questions by e-mail.  Hoyes, Michalos & Associates has offices throughout southern Ontario, including Kitchener, Cambridge and Guelph.

Since we all know that back to school can mean a major dent in your bank account, my response is that it is always a good time to be saving money.

Here are some helpful tips to help you keep more money in your wallet this fall:

1. Shop at home

Before heading to the stores and overspending on items you might not need, take an inventory of what you already have and could make use of this school year. You might find that you have almost everything your child needs already.

2. Don’t buy everything all at once

Often times the lists of supplies that schools hand out contain unnecessary items.   Save your money by purchasing supplies your children absolutely need, and hold off on purchasing other items until they are required.

This is especially helpful for college students and text books.  Books are often listed as required, but helpful instructors will provide course notes or help save students money by not making all textbooks mandatory.  

3. Check out deals online

By searching online for deals at local stores, you may come across some great bargains. It is also quite common for retailers to price mach their competition. This helps make you life far more convenient as you can most likely get all your shopping done at one location, while getting the same deals.

4. Buy used

Most, if not all communities have thrift stores that have next to new clothing that can help outfit your children for less. These clothes are gently used, and you may even find brand new items at half the cost.

Purchasing used books will also cut costs. Many universities and colleges have used book stores that offer discounted texts. Checking out websites like Amazon and Chapters for used books is worthwhile too!

Looking for more financial advice?  Check out other great money saving tips and personal budgeting tools.

Answer:   That is a very common question, one I hear almost every day in meeting with people in our Kitchener bankruptcy offices. 

The general rule is that bankruptcy releases you from your obligation to repay your debts.   There are some exceptions to that general rule.  One of those exceptions is student loans if you have not been out of school for more than seven years on the day you file for bankruptcy.

There are a few points to clarify.

First, this applies only to government student loans.  It does not apply to a student line of credit offered through a bank.  That means that a student line of credit is included in bankruptcy.

Second, the starting point for measuring the seven year period is when you finished your studies.  It is not when you obtained the loan.  Sometimes, people restart that period by going back to school on a full-time or part-time basis.  If you are unsure of your end of study date, you can confirm it by contacting the National Student Loan Service Centre or the Ontario Ministry of Training, Colleges and Universities.

Third, even if your student loans are not included in bankruptcy, there may be good reason to talk to a professional about bankruptcy.  Maybe there are other debts like credit cards or income taxes.  Maybe a creditor is threatening legal action that would result in a garnishee on your wages.

If you are struggling to meet your financial obligations, it is important to understand the options that are available to you.  To review your options, you can call us at 310-PLAN or send us an e-mail. 

We will go over some more details about bankruptcy, but we will also review other alternatives like consumer proposals.  A consumer proposal is often a good choice for people who have the ability to repay a portion of their debts, allowing them to avoid some of the negative consequences of bankruptcy.

It’s a question that comes up on a pretty much daily basis.  After performing an assessment of the situation, a person decides that bankruptcy is the best option to deal with his or her debts.  Then the question, “How will my bankruptcy affect my spouse?

The answer is not the same in all situations.  Bankruptcy releases a person from the legal obligation to pay his or her debts.  If your spouse is not jointly responsible for your debts, your bankruptcy should have no effect on your husband or wife.  The most important thing to understand is that your spouse is not responsible for your debts because you are married. 

So the next question should be, how do I know if my spouse is jointly responsible for my debts?  First off, a joint debt means that two or more people are 100% responsible for that debt.  That means that if one person is unable to pay, the other person or people will be required to pay.

There are different ways that joint liability can be established.  If your spouse has co-signed or guaranteed your debt, it is clear cut: your spouse is also responsible for that debt and the bank will try to collect from them.

Another possibility is that your spouse has a supplementary credit card on an account that you opened.  In that situation, it is less clear.  It comes down to the fine print in your cardholder agreement. 

If you find yourself in a difficult financial situation and are unsure of how to proceed, you can give me a call at 310-PLAN.  You can also send me an e-mail with your questions.