Howard Hayes Bankruptcy Cambridge Ontario Blog

Economic Slide

noreply@blogger.com (Howard) — Mon, 06 Jul 2009 19:47:00 +0000

More and more people are finding debt relief through Consumer Proposals or Personal Bankruptcy. Hoyes Michalos & Associates reported a record number of people filing proposals and bankruptcies for the company in June 2009. This is on the back of two consecutive record months here in our Cambridge office in April and May.

Some of the local real estate agents I've talked to recently have said the rate of home foreclosures has not slowed since the fall of last year and property values in the Cambridge area continue to slide.

Equifax have just released new figures last week highlighting a record increase in the number of accounts they report as being 90 days late. This is often a sign that as pressure to service debt loads mounts, people either prioritise whatever cash they do have to making sure secured loans, such as a mortgage or car loan get paid first, before the credit cards. After paying secured loans, if no money is left over, then the credit card gets left behind.

The amount of people claiming EI benefits is contributing to a backlog of claims with Service Canada. We've also had a lot of comments from people we've met this last month saying that the applications they've submitted in April for employment insurance claims, have not yet been processed and here we are in July.

The theme of this blog, in light of all the depressing news, is to have a plan B. If you were to be laid off tomorrow, or if you broke you leg and could not work, or if some other unforeseen event interrupted your cash flow, would you have a plan B in place?

Our article on hoyes.com has lots of good advice to help take steps to either prepare or get through.

We're also here to talk to you. If you already have debt you can't service, and cutting expenses won't help? You need professional advice, so e-mail us or give our debt help line a call at 310-PLAN and ask us whether a consumer proposal or a personal bankruptcy is necessary to deal with your debts.

Twitter

noreply@blogger.com (Howard) — Mon, 29 Jun 2009 19:50:00 +0000

To help the Cambridge area residents experiencing financial difficulties, I will be posting some musings on Twitter as well as regular contributions to this blog.

I can answer bankruptcy and other debt management related questions. So, if you have bankruptcy questions submit them anonymously to this Blog or, if you prefer a confidential and direct answer, email them to me or our Cambridge bankruptcy trustees.

You can now follow my thoughts on personal bankruptcy via my Twitter page at https://twitter.com/howardmhayes

Also, we are open for consultations: call our Cambridge office today to arrange for your initial consultation at no charge at 519 622 3773 or 310-PLAN.

How to be prepared for your first meeting with a trustee

noreply@blogger.com (Howard) — Wed, 27 May 2009 18:12:00 +0000

Meeting with a bankruptcy trustee for the first time is a new experience which makes a lot of people really nervous. You may be wondering what to expect. What are you going to be asked? Is there anything I should ask? What should I bring with me? There really is nothing to worry about when you first meet with us and we will be happy to answer any questions you think of during the process of filing your bankruptcy or consumer proposal.

I met with a lady yesterday that came to us after talking to an unlicensed "counsellor" from a debt settlement company. She said she did not call us initially because she had heard on the radio and on newspaper ads that "a trustee works for your creditors". Assuming that to be true, she thought she'd look elsewhere for help with her debts. I was happy to advise her that the statement she heard is very misleading. A trustee does not work for your creditors, nor is a trustee paid by creditors. A trustee is licenced by the government and appointed to ensure bankruptcy and proposal proceedings are followed by the rules.

There are a few things you need to have prepared before you come to our first meeting. We are going to need to know exactly what you owe, to whom and how much. The best thing to do is to bring in the most recent statements you have from your creditors. We will also need to know about your assets- what you own and how much they are worth. Finally, we will be using your monthly budget to determine what your best option is so you should have that prepared when you come. A simple list of your income and expenses will do. If you are planning to keep any assets such as your house or car, include these payments in the budget.

Having all of these things prepared will make our first meeting go smoothly and will make the process of planning your fresh start as efficient as possible.

If you have done your part by being prepared, it is also important to know that the trustee will do his or her part too. When you leave the office after your first meeting you should have a full understanding of your options, what effect they will have on your situation and which one is best for you. After we've explained all your options to you, including both a consumer proposal and personal bankruptcy, we can also give a recommendation as to which one would be best for you and why - In fact, we're often able to find a solution for around half of the people that contact us that avoids having to file a proposal or a bankruptcy.

If we have explained it well enough, you should agree. If there is anything you do not understand or are unsure about, do not hesitate to ask. We understand that the decision to file bankruptcy or a proposal is an important one and you want to ensure you are doing the right thing.

If you would like to book your first meeting with myself or if you have already and have any concerns about what you need to bring, send me an email or call me at 519-622-3773 and I will be happy to answer any questions you may have or book an appointment with you. Using all of the information you give us, I am confident that I will be able to help you find the best plan to get you back on top of your finances!

What about tax debt? Is there any way to get rid of it?

noreply@blogger.com (Howard) — Mon, 06 Apr 2009 21:16:00 +0000

There are a lot of ways that people can end up in financial trouble and one is when they are charged more taxes than they expect and don't have the money available to pay them. This happens for lots of reasons.

The main thing to remember at this time of year - is to file your taxes. CRA will be more willing to work with you on paying arrears if you are up to date with your returns.

Sometimes, pensions are not taxed at the source and so the government comes to the person later asking for money. People who are self-employed or working multiple jobs also often get charged more taxes than they anticipate. Unfortunately, when people cash out their RRSPs (possibly to pay-off other debts), they are then required to pay tax on that money. It is easy to see how many people can wind up in debt with the Canada Revenue Agency (CRA).

A common misconception that people have is that the Canada Revenue Agency is special and that there is no way to solve debt problems with them. In reality, the only thing special about the CRA is that it has more power than other creditors. While other creditors may call you or garnish your wages, the CRA can do these things and also withhold any government benefits (income tax returns, child tax benefits) until you pay the money you owe them.

Many people I speak with are surprised to learn that in the case of a personal bankruptcy or a consumer proposal, the CRA is treated just like any other creditor. So, the consumer proposal is legally binding on them if the majority of creditors agree and in the case of bankruptcy, tax debts are wiped clean when you file.

By filing your taxes on time each year, at least we ten have a clear understanding of the problems you face with how much you owe to CRA and we can then give you options to deal with those debts accordingly.

If you have many debts including tax debt and you would like to find a way to get rid of them, I would be happy to help. Call 519-622-3773 or send me an e-mail and I would be happy to discuss your options of filing a consumer proposal or personal bankruptcy. Together, we can find the best plan for you to get rid of your tax debt and have a fresh start!

Mortgage After Bankruptcy and Proposals

noreply@blogger.com (Howard) — Thu, 26 Feb 2009 19:07:00 +0000

I met with Karen Monteiro from the Mortgage Alliance at Melvilles Cafe last Friday in Cambridge, Ontario for a coffee; and one of the questions I put to her was one that we get asked frequently here at Hoyes, Michalos & Associates.

Will I qualify for a mortgage in the future if I file for a personal bankruptcy or a Consumer Proposal now?

It is something that is far from impossible but does take some work and patience to achieve. After chatting with Karen, the kind of information she was able to tell me was that each lender is different of course with their own set of qualification criteria, however, if you've filed for a bankruptcy or have filed a consumer proposal in the past, here is what a typical lender might look for:

You have been discharged (your bankruptcy/proposal ended) for a period of around 2 to 3 years minimum.
You have saved up for a down payment of at least 5% that came from your own savings (ie, you did not have to borrow from someone else or used a gift)
You have re-established good credit on two new trade credit accounts with a period of 2 years payments that have been made on time. (No glitches or late payments).
You have started further savings, perhaps into an RRSP.
You make a joint application with someone who has not filed insolvency proceedings

Karen also mentioned that as usual, it all depends on your individual circumstances and the market/lending conditions at the time you apply, but as a good starting point, its helps to know what a lender might be looking for. Its reassuring to know that lenders are willing to keep the door open and that their is life after bankruptcy.

If your goal is to have your own home in the future but don't know where to start, give Karen a call at 519 624 9222 and she'd be happy to help.

If you feel your current debt load is preventing you from starting on your way to saving for a down payment or establishing a good credit score then give our office a call at 519 622 3773 or send me an email and we can talk about solutions that will help to get you started on the path to achieving your goals.

noreply@blogger.com (Howard) — Tue, 10 Feb 2009 18:33:00 +0000

Today, Doug Hoyes and myself delivered a presentation to mortgage brokers from around the around the local Cambridge area.

We were invited to speak at the presentation by David Gyurits from the Mortgage Allicance and Interglobe. David's Interglobe Financial Services company helps people to build financial security and independence. The Interglobe website has many interesting articles ranging from topics from dealing with debt, tax and investment advice along with on products such as RRSP's and Life Insurance. Visit the website at totalqualityfinancial.

Some of the mortgage brokers we met from the area such as Karen Monteiro, Madelia Almeida and Dale Dyer were telling us that have noticed an increase in the number of people calling them concerned about the falling house prices in the Cambridge area and people asking for advice on re-financing their homes.

With mortgage lenders and banks tightening the requirements people need to meet in order to be able to borrow money against property they own, its important that you understand all your options when considering a financial strategy for you and your family.

If you're looking to re-finance your mortgage and you have debts you need to bring under control, it's important to look into all your options before making a decision on how to deal with the debts.

Here at Hoyes, Michalos & Associates, we're firmly of this belief and we'll often suggest to help clear up your debts with honest impartial advice. For example, even in light of today's falling house prices, if you have some equity in your home that has built up over the years and you want to look at borrowing money against the property you own, to put towards credit card/credit lines, maybe contacting a mortgage broker is the right step for you to take first.

If a mortgage broker is unable to help you secure the financing you need, you still have options that we provide here at Hoyes, Michalos & Associates, here in Cambridge such as a Consumer Proposal or even personal bankruptcy. A Consumer Proposal would be a logical option to consider if you have equity in your home and are afraid you'd lose it if you filed for Bankruptcy. A Consumer Proposal would allow you to keep the equity in your home, whilst at the same time paying down you unsecured debts at a rate that is more manageable for you to handle.

Please contact us for more information, and to determine if a proposal is the correct option for you.

Holiday debts again... Can I file for bankruptcy more than once?

noreply@blogger.com (Howard) — Thu, 15 Jan 2009 23:58:00 +0000

You have filed for bankruptcy once before and hoped that by using the skills you learned in your two credit counselling sessions, you would not find yourself in financial trouble again. Then something happened. Unexpected life circumstances often lead people to fall behind in their monthly payments and for someone who has had debt problems in the past, they are incredibly disappointed to find themselves in this situation again and may think that this time, there is nothing they can do because they have filed bankruptcy already.

In our corner of Ontario, one problem many local people here in Cambridge are facing are lay-offs from work. Both permanent or temporary. An unexpected event like this can catch many people unaware, especially at a time like the recent holiday season when we are more susceptible to the lure of using credit to make purchases for gifts to friends and family. Even having been through a previous bankruptcy, something as drastic as being laid off from work can put you right back into the thick of financial problems again.

It is absolutely possible to file bankruptcy more than once as long as your previous bankruptcy was discharged. If you did everything you were supposed to, handing in your monthly statements and expense reports and attending your two credit counselling sessions then there should not be a problem. When you arrange for your first meeting with the trustee, they will make sure that you have no outstanding filings that have not been discharged.

Although it is possible to file bankruptcy numerous times, the process gets more and more difficult. In your first bankruptcy, you were probably eligible for an automatic discharge which meant that after nine months, as long as you fulfilled your duties, your bankruptcy was over. For your second, third or fourth bankruptcy, you will no longer be eligible for automatic discharge and instead, will need to appear in court and they will decide what the conditions of the discharge will be.

You will be asked questions about the circumstances leading up to each bankruptcy and the amount of time between them and then will decide if you will have to wait a longer period of time or make some more payments in order for you to be discharged.

When you go bankrupt a second time, it will stay on your credit report for fourteen years instead of the seven your first bankruptcy did. For this reason and others, you might want to consider whether you can afford to file a consumer proposal instead.

If you are having debt trouble again and would like to find out more about your options, give me a call at 519-622-3773 or send me an e-mail and I can set up a meeting for an initial consultation at my office in Cambridge.

Do I really need to make a budget for the holiday season?

noreply@blogger.com (Howard) — Tue, 02 Dec 2008 16:32:00 +0000

So many people have a very hard time making and sticking to a budget.

Sometimes, it's because they don't know how to start or maybe we would rather spend our time with the kids or sitting by the tv rather than punching numbers into a calculator.

The key to motivating yourself to do anything is to look at the potential benefits of doing so. Making a budget really is one of the most important activities you could do and its usually something we all start to think of more around this time of the year.

A budget is basically a list of your income and your expenses. It is a way for you to ensure that you know where all of your money is going and to help you save enough to meet your financial goals. A budget is the foundation of any financial plan. Your plan could involve long term plans such as saving for your childs education or something more short term, such as how do I get through the holidays?

There are a number of good things that can come out of making your budget. First of all, if you involve your partner and family members, it will bring up important conversations about values, priorities and everyone will feel a sense of responsibility toward the family's finances. When you look over your budget, you will be able to determine whether you are spending more than you make. If this is the case, you need to figure out areas where you can cut-back in order to avoid getting into serious financial trouble. At this time of year, one way to avoid the temptation of going over your budget would be to make a determined effort to leave the credit cards at home when going on a shopping trip.

The people who I see in the Cambridge office are unable to service their debts because they do not have enough money left over after covering other expenses. I use their budget to determine whether they are a candidate for a consumer proposal or personal bankruptcy and which of these would be best to get them out of financial trouble.

It is sometimes the case that people simply lack the budgeting skills necessary to stay on top of their finances. When you file bankruptcy, you are required to take part in two credit counselling sessions where you will learn the necessary skills to fix your budget so that hopefully, you will not get into financial trouble again. If you have realized that you are spending more than you make and cannot service your debts, call me at 519-622-3773 or send me an e-mail. Together, we can look over your financial situation and find a way for you to get a fresh start free from debt.

Why settle for less? What are the chances my creditors will actually accept my consumer proposal?

noreply@blogger.com (Howard) — Fri, 07 Nov 2008 20:17:00 +0000

Often when I tell people about consumer proposals; that they can offer to pay their creditors only part of their debt, they are very skeptical. It seems too good to be true that just by paying what you can afford over a period of time, your debts will be erased. People often wonder, why would my creditors go for this? Especially if they have spent a lot of time harassing you with collection calls and perhaps even garnishing your wages. It seems the creditors would stop at nothing to get the money you owe, why would they now agree to take any less?

A well-designed proposal administered by a licensed bankruptcy trustee ensures that it is fair for both the debtor and the creditors. The fact is, creditors know when you are in financial trouble because you are not making your payments to them and when you approach them with a proposal they know that if they don’t accept it, you will probably need to file bankruptcy.

A consumer proposal offers the creditors more money than they would receive if you filed bankruptcy. So for them, it does not make good financial or common sense to refuse the proposal because they will end up getting far less money when you are forced to go bankrupt.

When you file a proposal here in Cambridge with a trustee from Hoyes, Michalos & Associates, we will make sure that you can afford it but that it is also fair and resonable to both you and the creditors. If the proposal is well-designed, the chances of the creditors accepting it are very high. The creditors do not want you to go bankrupt anymore than you want to.

A bankruptcy trustee can help you figure out what you can afford to give your creditors and if a proposal would be a good option for you. If you would like to set up a free-of-charge initial consultation to learn more about consumer proposals, please call the Cambridge office today at 519-622-3773 or send us an e-mail. We look forward to meeting with you!

If I go bankrupt, will my spouse also have to go bankrupt?

noreply@blogger.com (Howard) — Thu, 30 Oct 2008 17:24:00 +0000

This is one of the most common questions I come accross here in our Cambridge office when somebody is considering filing a bankruptcy. People seem to think that because you are married, you must go bankrupt together. However, whether or not your spouse will need to file bankruptcy with you depends on your individual situation.

In general, when you get married whatever debts you had to your name remain yours and yours only, so if you file bankruptcy in order to have them cleared it will have no effect on your spouse.
In the event that your spouse has co-signed or guaranteed any of your debts or if they hold a supplementary credit card on your account, they may need to file for bankruptcy also.

When the creditors find that they are unable to get the money you owe to them from you, they will go to your spouse to get if their name is also on the debt. If your spouse cannot make the payments either, then they too will have to look at options to deal with the debt including filing for personal bankruptcy.

Be careful for credit card companies that say supplementary card holders are responsible only for the charges that they put on the card. It is often too difficult for them to tell who made what charges and so they will try to make your spouse pay the entire amount.

If neither you nor your spouse can make the payments on debts which have both your names on them, you may need to file a joint bankruptcy. If you would like to learn more about filing a joint bankruptcy or would like information on alternatives to bankruptcy such as a consumer proposal or credit counselling and if you are unsure whether your spouse is going to be affected by your debt troubles, call me today at 519-622-3773 or send an email and I will be happy to answer any of your questions.

Living in Cambridge and surviving the global economic crisis

noreply@blogger.com (Howard) — Mon, 06 Oct 2008 20:40:00 +0000

The past few months have been one of increased turmoil in the financial markets.
As each day passes we continue to read reports and see on the news and Internet, changing developments in the world markets.
In the United States, it seems every week we are hearing about one financial institution after another filing bankruptcy proceedings, being nationalized or being taken over. The latest of these was Washington Mutual, one of America's biggest mortgage lenders which had assets valued at over $300bn. It was sold to rival JP Morgan Chase for $1.9bn.

What does this all mean for me in Cambridge?

If you're currently investing in the stock markets around the world, you'll be seeing the value of your investments tumble as uncertainty around the world is leading to sale after sale of shares.

Even if you're not investing in the stock markets, the effects that today's problems will cause might not be immediate but will be felt over the coming months/years as leading Canadian economists are predicting we may be heading for a recession. Even if Canada escapes the worst of the worlds economic problems, our biggest trading partner, the United States likely won't. So therefore if people in America are not buying Canadian products, then Canadian companies won't be selling. If they are not selling, they don't need as may staff members and layoffs may be imminent. The more Canadians that then get laid off will result in more local business suffering as Canadians tighten their purse strings.

Another impact on Canada could result from the credit freeze the banks have imposed on each other. Again local business that used to rely on a $100,000 credit line from their friendly bank might be surprised later this year or next year when the banks cut or reduce credit facilities to companies. If the business cannot borrow money to buy products, and no products are in the stores to sell... again, more potential for layoffs or closures.

I don't know if it was coincidence or not but I was walking around the Cambridge mall last Saturday and noticed at least three stores had closing down sale signs in the windows.

One other area for concern would be if the banks decide to lower personal credit limits. If you have a $10,000 credit line, the banks (as they have the right to increase your credit limit) have rights in some situations to cut the limit to say $8000. If this happens to you, is the balance on your credit line less than the new limit of $8000? If not, can you afford to pay the extra interest the bank will likely charge you for now being over your new limit?

Eliminating debt worries by filing a consumer proposal or personal bankruptcy might be a way to regain some control over your finances as well as having a plan to help prepare for potential 'worse case' scenarios.

If you are worried about how these uncertain times might be effecting you now or in the future, get professional advice and call us here at Hoyes, Michalos & Associates. On thing we can all count on in these uncertain times is the need to be prepared and the need to have a plan.
Call me at 519 622 3773 or email me with your questions

Credit Repair After Insolvency

noreply@blogger.com (Howard) — Tue, 09 Sep 2008 19:23:00 +0000

A lot of people I meet in Cambridge who are considering filing for bankruptcy have one major concern - What effect will it have on their credit report and whether they will be able to get credit again in the future?

A bankruptcy will stay on your record for approximately six years after it is discharged and will make it more difficult for you to borrow money. Despite this, there are things that you can do to gradually rebuild your credit after the bankruptcy is over.

You need to show financial institutions that you are a responsible and effective money manager. Most importantly, make sure you make your regular bill payments on time, don’t have any cheques bounce and do not overdraw your bank account even if you have overdraft protection.

Having a stable job history also helps so if you can, try to stay in the same job for at least a year. Even with the bankruptcy on your credit report, many banks will lend you money that is secured so that there is no risk to them. The important thing is that if you are borrowing it is because you want to, not because you need to.

There are many ways that you can borrow secured money. If you can, get a car loan or a mortgage and make all of your payments on time. Make a deposit to a bank and use it as security on a credit card. Then, if you don’t make your payments, the bank will just take it from the money in the deposit. Some banks will loan you money but instead of giving it directly to you, they put it into an RRSP and ask you to pay it back over time. If you do not, they will report it to the government as income and you will be required to pay taxes.

If you are able to get a small line of credit, use it to pay your regular bills and then pay back the line of credit right away. All of these things show future lenders that you are responsible and know how to manage your finances.

Rebuilding your credit takes hard work, dedication and money management skills. The two credit counselling sessions you will be required to complete during your bankruptcy is a great place to learn these skills. There are many good credit counselling agencies in Cambridge where somebody would be happy to help you learn to stay on top of your finances.

If you would like to find out more about how bankruptcy will affect your credit rating, or how you can improve your credit please call me at 519-622-3773 or send me an e-mail and I would be happy to answer your questions.

Does a First Time Bankruptcy always end after 9 months?

noreply@blogger.com (Howard) — Tue, 22 Jul 2008 20:36:00 +0000

No. The minimum period of time a bankruptcy will take to be administered is 9 months. However, if you have performed your duties and paid the required contributions and surplus income and neither the court/trustee or creditors object to the discharge, then you could receive an automatic discharge after 9 months if it is the first time you've filed for bankruptcy.
Simply put, surplus income is the governments way of saying 'someone who makes $5000 per month will have to pay more to file for bankruptcy than someone that makes $3000 per month'. The thresholds that determine if surplus income would be required are based on the size of your family.

The trustee has an obligation to inform the court of substantial surplus income during the bankruptcy. The typical line of reasoning is that if you have substantial surplus income payments to make during bankruptcy, you probably would have been in a position to avoid a bankruptcy by at least offering a proposal. So typically, if no surplus income was required during the bankruptcy the trustee reports as such and in that regard and the bankrupt could receive the automatic discharge if all the other bankrupts duties were performed.

On the other hand - an extreme example however would be that, if you make $10,000 and you choose to go bankrupt, the courts could decide that at the time of filing the bankruptcy, you had the income to file a viable proposal or avoid bankruptcy by paying for the debts. As such the courts could keep the bankruptcy open for as long as needed to be in order to repay all the debt.
There is no technical limit for which the court can impose an extension to the 9 month period.

So, although typically many bankrupts qualify for an automatic discharge at the end of 9 months, in our experience, with that kind of income, there is a more than small chance that your bankruptcy would be extended for a longer period of time.

If you have questions regarding this article, bankruptcy or surplus income, please call me at 519 622 3773 or email me your questions.

New Bankruptcy Laws

noreply@blogger.com (Howard) — Tue, 08 Jul 2008 19:16:00 +0000

New laws were brought into effect this week regarding filing personal bankruptcy.

The changes that have been introduced this week include the following main points.

* Student Loans - A student loan debt can now be discharged in a bankruptcy if 7 years has passed since you ceased to be a student.
* RRSPs - Under new legislation, all RRSPs and RRIFs (as defined in the income tax act) will be exempt from seizure in a bankruptcy. The only exemption to this, is, contributions you've made to your RRSP's in the 12 months leading up to the filing of the bankruptcy can still be seized.

If you have any questions, or would like to arrange for a free, no obligation consultation in our Cambridge office, please call me on 519-622-3773 or email me your question.

Thanks

noreply@blogger.com (Howard) — Mon, 16 Jun 2008 14:46:00 +0000

Thanks to the following companies with the help and services provided in helping with our Cambridge office renovations.

Budgeting - Stick with it

noreply@blogger.com (Howard) — Thu, 22 May 2008 15:25:00 +0000

For many people, the hardest part about budgeting is trying to stick with it. Like trying to quit smoking, if you don't stick with it, the old habits will come back.

It does not matter what method of budgeting you use in your household, the most important thing to remember is that your budget should be SMART.

Are you being Specific? (are you considering ALL expenses, like saving for a vacation, gifts)
Is it Measurable? (are you tracking your expenses)
Is it Achievable? (do you enough money coming in to cover your expenses)
Is it Realistic? (are your expenses taking you beyond your means)
Is it Timely? (are you budgeting with a goal in mind - saving for a new car?)

No matter if you keep receipts, track expenses, use computer programs or spreadsheets to help you track expenses, remember to try and budget for rainy day expenses - a new muffler, vets bills. The easy thing is to remember the regular items such as rent, hydro, groceries, but we forget to budget for the $20 we might need to buy the brother or sister a birthday gift.

When thinking about your grocery budget, don't forget the extra trips to the corner store halfway through the week to top up with milk and bread... and don't forget the extra $5 you spend on a lottery ticket while you're there!

If you draw up a budget and there is simply more going out than there is coming in, you have to look into other options.

Recognize The Danger Signals - You may have a debt problem, or are going to have one, if:
you continually go over your spending limit or you use your credit cards as a necessity rather than a convenience;
you are always borrowing money to make it from one payday to the next;
your wages have been garnisheed to pay for outstanding debts;
you pay only interest or service charges monthly and do not reduce your total debt over many months;
creditors pressure you for payment, threaten to sue or repossess your car, furniture or television, or hire a collection agency to recover the money for them; or
utility companies cut off service because your bills have gone unpaid.

Once you have started working on your personal budget planning, you will realize that there are only two ways to increase your cash flow each month.
Method #1: Increase your income Method #2: Reduce your expenses
There are many ways to increase your income; consider some of the following suggestions:
1. Work more overtime
2. Get a second job
3. Start a home-based business
4. Take in a boarder or room-mate
5. Try to find a better paying job
Remember to always consider the consequences when you try to increase your income. More overtime may mean less family time which, in the long-run, may not help you at all.
For most people, reducing expenses is a more immediate way to increase cash flow and improve their budgeting than increasing income. How can you do it? Start by looking at every item on your personal budget that you spend money on each month. Can any of those items be reduced?

Consumer proposal
Under the Bankruptcy and Insolvency Act you may make a proposal to your creditors to reduce the amount of your debts, extend the time you have to pay off the debt, or provide some combination of both.

Personal bankruptcy
If none of the above methods solves your debt problem, you may choose to consider filing personal bankruptcy. Filing bankruptcy should be a last alternative if you cannot meet your financial responsibilities through affordable payments over a specific period of time.

If having looked at your budget you feel like you need to discuss it further, please contact me by email or by phone at 519 622 3773 for a free consulation. I'll review your budget and options with you and see if a consumer proposal or personal bankruptcy would help you to be able to budget each month.

The Good, The Bad & The Ugly

noreply@blogger.com (Howard) — Fri, 02 May 2008 20:13:00 +0000

We've all heard the old saying "if it sounds too good to be true, it probably is". There are many schemes and promotions out there promising us "get rich quick", some more logical ideas than others. There is a growing trend of adverts alongside these now promising to "get out of debt quick" too. I met with a couple this week, who approached an agency whose advert promised them freedom from debts, an easy solution to the growing debt load they had... or so they thought.

After attending a meeting with a representative from the agency, they were told about how good the agency was at making deals with credit card companies and how they could reduce their burden. They could make one monthly payment and all their problems would go away. Encouraged that this would be just the solution they were looking for they asked about the monthly payments and the fees. The agency wanted $3000 up front before filing the 'proposal'. Note: I put the word proposal in inverted comma's as the proposal they were offering is an informal proposal and is not a legally binding consumer proposal that only a licensed trustee or consumer proposal administrator can do.

Thankfully they told the agency they wanted more time to think about it. The idea of paying $3000 up front did not seem right to them. They found the phone number 310-PLAN for Hoyes, Michalos & Associates and called to book a meeting with myself for a second opinion. Here at Hoyes, Michalos & Associates, we offer a free consultation service to review your options, which is when they told me about the 'proposal' the agency was offering them as a solution. The first thing they told me was "If I had $3000 dollars, I'd use it pay the debt myself!"

I assured them that we charged no up-front fee for filing a consumer proposal and we proceeded to discuss the advantages and disadvantages of all the options they had to deal with their debts. They were relieved to know that their instincts to not hand over $3000 to the agency served them well. They were happy knowing that a consumer proposal filed with a trustee in bankruptcy was offering them legal protection from their creditors and reduced their debt load to a manageable payment that fit into their monthly budget. Most of all they were relieved that they had just saved themselves $3000!

If you'd like to meet me and discuss ways to help reduce your debt load, call us at 519-622-3773 to set up an appointment, or email me your questions. We offer a free, no obligation consultation service.

Community Support

noreply@blogger.com (Howard) — Tue, 22 Apr 2008 14:35:00 +0000

Once again this year, I'm pleased to announce that we'll be supporting the Cambridge Oldtimers Slo-Pitch League.

See the old guys play ball at Riverside Park or Saginaw Parkway Diamonds on Monday, Tuesday, Wednesday and Thursday evenings during the summer. The season begins this year on May 1^st and runs through to the end of September.

Changing Habits

noreply@blogger.com (Howard) — Thu, 17 Apr 2008 22:19:00 +0000

One expression I've heard a few times that I was reminded of today is "filing bankruptcy relieves you of your debt, it does not relieve you of your spending habits". It's certainly worth some thought. Filing a bankruptcy or a proposal can clear your debts and get you back on track, so it's important to maximize your chances of having a fresh start.

If you filed either a bankruptcy or consumer proposal, you'll be required to attend two counseling sessions with a qualified credit counselor. These sessions are provided for you under BIA (Bankruptcy & Insolvency Act) guidelines and have to be done with a qualified professional counselor that passed the CAIRP National Insolvency Counselors Qualification Course.

Here at Hoyes, Michalos & Associates in Cambridge, I'll help you to set up those appointments with either Glyn Bickford-Jones who works for Credit & Debt Services or Anthony Benedetto, who works for The Family Counseling Centre of Cambridge and North Dumfries or. Both are excellent counselors and highly experienced.

At the first session, they'll discuss money management, spending and shopping habits, warning signs of financial difficulties and, obtaining and using different types of credit. The second sessions expands on the first and also includes discussions on the causes of your insolvency and developing a future plan. At no extra charge, these sessions, we believe in very strongly are a vital part of the process of filing for personal bankruptcy or a consumer proposal.

The sessions with Anthony or Glyn are on an individual basis and they both take the time to ensure the sessions are valuable to you regardless of reasons that may have lead you to file a bankruptcy or proposal.

I believe that, not only are the sessions of great benefit to you, they form an essential part of the process of filing for a bankruptcy or proposal.

If you'd like to talk about credit counseling or ways to help reduce your debt load, call us at 519-622-3773 to set up an appointment to meet me, or email me your questions. We offer a free, no obligation consultation service.

Co-Signed Debts

noreply@blogger.com (Howard) — Fri, 04 Apr 2008 14:46:00 +0000

What does it mean to co-sign a debt? Make sure you understand before you take on the responsibility. By co-signing, you are being asked by the lender to guarantee repayment of the debt. The same reasoning applies to applying for a joint loan/credit line/credit card too. Be sure to think it through before going ahead. If the primary borrower does not pay back the debt, you will assume responsibility to have to. Be sure you want to have this responsibility and that you could afford to pay it back if you had to.

In most cases you'd have to pay back the full amount including any interest and penalties if the primary borrower does not pay. Being joint on a debt does not mean you're only responsible for paying half the debt as the other co-signer has to pay the other half, this is not true, you're both 100% responsible to pay back 100% of the debt. You may also find that the lender will report the status of the loan on the credit reports of both the primary lender and co-signer and as such you'll both be affected negatively if payments are not maintained.

The lender will collect this debt from you. In some cases, the lender can request payment from the co-signer, without first trying to collect from the primary lender. If in default, the lender can and most likely will collect the debt from you using the same methods that they'd use against the primary borrower, such as taking you to court, repossessing pledged collateral and, garnishing your wages.

Filing a consumer proposal or an assignment in bankruptcy will relieve the person who files of the obligation to pay the debt. The co-signer, if not filing a proposal or bankruptcy would still be responsible to maintain payments. That is one reason why a lender would be reluctant to remove a co-signer from responsibility for the loan as they know if one of the two borrowers files for bankruptcy, the other would still be responsible for the debt – they double their chances of having the debt repaid. If neither borrower could pay for the debt, both would have to file separate bankruptcies or proposals in order to be relieved from the debt.

I you are unable to meet your debt repayments, including and debts you have co-signed for, please call us at 310-PLAN or email me your questions.

Common Traps

noreply@blogger.com (Howard) — Mon, 24 Mar 2008 20:44:00 +0000

Having a credit card in today's society can be very useful, however, beware of the common traps. Two of the main ways credit card companies make money is by charging the merchant a fee every time you use the card and by charging you an interest rate on your cards balance. If they can persuade you to use the card they will. We have a common saying here at Hoyes, Michalos & Associates, "use the card as a substitute for cash, not a substitute for borrowing".

Credit Card companies use a variety of ways to encourage you to use the card or open a new account with them. They like to target students and people in their early twenties with advertising campaigns. They are all to aware of the fact that being young and on a low wage, you'll feel more pressure in today's consumer society to use credit to finance purchases your pay cheque can't cash.

One of the first ways is to offer you a "low introductory rate". The envelope will come in the mail with a big colorful 0.9% on the front. Read the small print carefully! The 0.9% will usually only apply for a limited time, and may also only apply to balance transfers. After the limited time is up, the interest rate will jump up to the cards regular rate.

"No annual fee". If you're planning on paying on your balance in full every month, then a card with no annual fees probably makes sense, if not, choose the card with the lowest interest rate. Beware of the wording too, just because you have no annual fee might not necessarily mean you don't have to pay a renewal fee!

"Bonus points". Spending more money on a credit card might allow you to accumulate points towards a holiday or a purchase of a vehicle. Again, beware, the points may only be valid for certain purchases and might only be valid for a certain period of time. The points you accumulate may have an expiry date so if you don't redeem them before they expire, they're useless.

"10% off". More commonly seen in superstores/big box stores, retail outlets will invite you to apply for their credit card when you make a purchase with the offer of 10% off your purchase. Sure, the 10% saving sounds great, but consider if you don't pay off the card within the next couple of weeks, you'll be paying 20-25% interest.

"Win your spending". Another advertising campaign encourages you to spend more in the hope of winning it all at no charge. The odds of winning are slim as the campaign encourages you to go out and spend more money.

These are just some of the ways you're being encouraged to spend money on credit. Try to avoid overwhelming yourself with debt by falling for the traps. Always consider the following questions when applying for a credit card too.

Can I pay for the purchase with cash, or if I buy on credit, can I pay the full balance within 30 days?

Is this a need or a want?

Are you using credit with the belief you'll be able to pay it off by landing the big job soon or winning the lottery?

When the limit on your credit increases it's usually because the credit card company is enjoying making lots of money from you and they want to encourage you to spend more by raising your limit. The interest they make on a $10,000 balance is higher than a card with a $2,000 balance.

If you'd like to talk about credit card debt and ways to help reduce your debt load, call us at 519-622-3773 or email us your questions. We offer a free, no obligation consultation service.

Repossessions to Increase?

noreply@blogger.com (Howard) — Tue, 11 Mar 2008 16:02:00 +0000

Today I met with Greg Matthews from Domus Select. Greg works in the Mortgage business in Cambridge. His company helps people to buy and sell real estate, re-finance 1^st and 2^nd mortgages. They can also help with other products such as secured credit cards and home equity visa's.

Greg was telling me that he is seeing an increase in industry regarding home repossessions. Some mortgage lenders are starting to take more note of the current housing problems being experienced in the United States and are taking steps to avoid similar problems in Canada. Your home could be at risk if you do not maintain your mortgage payments and some mortgage companies in the future may be a little quicker to 'pull the trigger' should you fall behind.

In turn, this could lead to an increase in personal bankruptcies and consumer proposals. Two things could drive this increase

An increasing pressure to try and keep up with mortgage payments may mean resorting to unsecured credit (credit cards) to pay for other day to day expenses such as groceries, leading to higher interest charges and higher monthly repayments.
If your home is repossessed and the sale by the bank does not generate enough monies to cover the outstanding mortgage balance and fees, you could still be liable to pay those expenses and shortfalls.

If you're experiencing financial difficulty, my suggestion would be to give our office a call at 519 623 3773 and talk to myself or one of my colleagues. We offer a free, no obligation consultation service. Everyone's situation is different and we can help to explain various helpful options for you to consider. From budgeting advise, credit counseling, consumer proposals, bankruptcy or referring you to a mortgage broker such as Greg, we can help you to understand the pro's and con's of each option so you may decide on what the best solution for you is.

Call 310-PLAN or email us your question today.

Bankruptcy with a mortgage

noreply@blogger.com (Questions) — Wed, 27 Feb 2008 09:49:00 +0000

Question: If I do need to declare myself bankrupt, I believe I may asked to pay some equity from my house. Would it be worth transferring the house over to my wife's name?

Answer: Unfortunately you can't transfer your house to your wife and then go bankrupt. When you file bankruptcy, one of the questions you must answer is "have you, in the last five years, transferred or disposed of any real estate". In your case the answer would be yes, so if you went bankrupt you would be required to pay back the equity.

We suggest that you get a house appraisal, and a confirmation of the balance owing on your mortgage, and then make an appointment to see us (call 519-622-3773 to set up an appointment) and we can calculate the equity in the house.

If the equity is large, another option may be to file a consumer proposal.

Should I Go Bankrupt in Cambridge?

noreply@blogger.com (J. Douglas Hoyes, CA, Trustee) — Sat, 23 Feb 2008 16:48:00 +0000

Each week Howard Hayes and I meet with lots of people in our Cambridge bankruptcy office who ask me the same question: "Should I go bankrupt in Cambridge?"

Everyone's situation is different, so for the answer for you, I suggest you give us a call at 519-622-3773, or send us an e-mail, so we can review your unique situation. It"s important that you don't let the stress of collection calls and letters pressure you into a decision until you have all of the facts.

I consider personal bankruptcy to be the last option to consider when dealing with financial problems. Before considering bankruptcy, I want to explain your other options, such as cutting your expenses so you can pay your debts off by yourself, debt consolidation, or credit counselling. If one of these options works for you, great, you won't need to go bankrupt.

If those options won't work, the next option we consider is a consumer proposal. You can read my comments on the cost of filing a consumer proposal . In a consumer proposal we contact your creditors (credit cards, banks, the government, etc.) and work out a plan where you pay a fixed amount each month, and in exchange your debts are eliminated. This is a great option if you have a stable income each month, and can afford to make payments, but have more debt than you can handle on your own.

If you don't have enough income to file a consumer proposal, then you may have to consider bankruptcy. Personal bankruptcy is also an option if your wages are being garnisheed by your creditors, since a bankruptcy will stop most garnishments.

To find out more, give us a call in Cambridge at 519-622-3773, or call us at 310-PLAN, or send us an e-mail, and we will set up a time to meet to review your options.

What does it cost to file a consumer proposal in Cambridge?

noreply@blogger.com (J. Douglas Hoyes, CA, Trustee) — Mon, 04 Dec 2006 19:19:00 +0000

Last month I discussed the advantages of filing a consumer proposal. A reader sent me an important question: what does it cost to file a consumer proposal?

The answer is simple to say, but harder to calculate. The simple answer is that a consumer proposal will cost you more than a bankruptcy, because we must offer more to the creditors than they would get in a bankruptcy in order to get them to accept the proposal.

In a bankruptcy you are required to make payments each month based on your income (the more you make, the more you are required to pay). You may also lose the equity in your house, and non-exempt RRSPs.

For example, if your bankruptcy payments would be $300 per month for nine months (based on your income), and you have $10,000 in equity in your house (the difference between the house value and the amount owing on the mortgage), and you have a non-locked in RRSP worth $5,000, the total amount you would pay, or lose, during your bankruptcy would be $17,700.

It may be possible to offer the creditors a proposal where you pay $500 per month for 50 months, or $25,000 in total. Since the $25,000 the creditors will receive in the proposal is larger than the $17,700 they may expect to receive in a bankruptcy, it is likely the creditors will accept the proposal. It's a good deal for the creditors, because they get more, but it's also a good deal for you, because you know exactly what you must pay each month, and you don't lose your house or your RRSP.

Feel free to e-mail me a question or call my office in Cambridge at 519-622-3773 and my staff will set up a meeting so that I can personally review your situation, and help you determine the cost of a proposal in your circumstances.