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. Their 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 counsellor about a debt management plan. Filing a consumer proposal is another option.
Of course personal bankruptcy is also an option, but in many cases it is not legally necessary and here’s why:
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 e-mail us, and we will set up a no cost meeting to review your options in more detail.