Archives for December, 2008

When you visit a Toronto bankruptcy trustee, they will see if it would be possible for you to file a consumer proposal instead of personal bankruptcy.

A consumer proposal may be an option if you have a job, some cash flow and some surplus cash after paying for your living expenses such as housing, food and transportation but you do not have enough to pay all of your creditors everything that you owe them each month.

For example, if when looking at your monthly income you find that after covering your necessary expenses you only have $600 left over, but the monthly payments on your credit cards add up to $1500, you obviously can’t afford to pay it all but you CAN give them something!

With a trustee in bankruptcy’s help, you can design a proposal using the funds you have available and offer it to the creditors over a period of 2-5 years. This way, you will pay back some but not all of what you owe. If the proposal is a good one, it will be fair for both you and your creditors and the bankruptcy trustee will ensure that this is the case before they present it. Once presented, the majority of your creditors need to agree to it. If the proposal has been well-designed, they should accept it, because they will be getting more from the proposal than they would if you needed to file bankruptcy.

As long as you keep up with the agreed-upon monthly payments for the period of the proposal, at the end of it you will be free from your debts and will have successfully avoided the need to file personal bankruptcy.

A consumer proposal is a classic win-win situation. You win because you can feel good knowing that you have not filed for bankruptcy and have been able to pay off some of your debts, and the creditors win because they are going to get more money from you than they would if you had filed bankruptcy. If you would like to learn more about filing a consumer proposal, contact us today in Toronto at 310-PLAN (no area code required) or e-mail us to arrange a meeting to talk about how a consumer proposal can give you a fresh start.

On December 4 I appeared on the Consumer Alert segment of the CTV Toronto News. I was interviewed by Pat Foran, a reporter who specializes in helping Toronto residents be informed consumers. (He’s also the author of The Smart Canadian’s Guide to Building Wealth; I think it’s a great book, but I’m somewhat biased since he interviewed me for the chapter on personal bankruptcy).

I made the comment that times are tough, and many Toronto residents are losing their jobs or having their hours reduced at work, and if they use credit to survive, debts can build up very quickly. If you are carrying lots of debt, your goal should be to reduce your debt by cutting expenses or increasing your income, and using that money to pay down your debt. If your debt is to large to manage on your own, you may need to consider a consumer proposal or personal bankruptcy.

I also recommended that everyone have a "Plan B". If you do lose your job, it helps to have a fresh resume, and perhaps to have a part time job or some savings to tide you over until you return to full time work. Ask yourself: "what would I do if I lost my job tomorrow?" I don’t want you to plan to lose your job, but you should be prepared in case it happens.

You can watch the interview on the CTV Toronto web site; click on the "Pat Foran on bankruptcy protection" or the "Protecting yourself from bankruptcy" link.

If you have more debt than you can handle and what to understand your options, or if you want advice on "Plan B", give us a call at 310-PLAN (310-7526), no area code required, or email us to schedule a free initial consultation. Financial problems won’t go away or get better by themselves; it’s up to you now, so let’s get started.