Archives for March, 2010

Over the last five weeks I have written about how to overcome the most common fears about filing bankruptcy in Toronto. I think the biggest and most common fear for many people is the idea that they will have to wait an entire seven years for the bankruptcy “damage” to clear.

Let me clarify so that you understand how the credit reporting system really works. During your bankruptcy, while it is “active” – we call this “undischarged” – the bankruptcy is reported on your credit report as an R9 rating – this is the end of the rating scale. After the bankruptcy is over and you are “discharged”, your credit report is updated to reflect the change and the bankruptcy notation moves to the legal section of your report. At this point the credit report indicates when you started your bankruptcy and your discharge date and will typically remain there for about six more years for a total of seven years on your credit report.

However, it does not mean that you will not be able to obtain new credit; it does mean that potential lenders will know you did file and complete a bankruptcy. It will be up to the lender to determine your suitability for new credit. They will base this decision on many factors, including job stability, income, and household size, to name a few. The notation is not as much of a roadblock for most people as you might think it would be. We do hear from people who filed bankruptcy with us in the past and they have turned their lives around after bankruptcy and purchased new homes, and started new businesses.

I hope that the past five weeks have helped you to overcome some of your reservations and fears about contacting us at Hoyes Michalos to review your financial situation and come up with a plan that will work for you. Our goal is to make the process as easy and comfortable for you as we can. We are here to help you come up with a plan today, so don’t hesitate to call us at (416) 730-8060 or 310-PLAN (7526), or send us an e-mail to feed your knowledge by calling us with your bankruptcy questions today and your fears will starve to death while you digest the truth about filing for bankruptcy in Toronto.

An old French proverb says that if you fear suffering you will suffer from fear itself – sometimes fear of a thing is much worse than the reality of it. This is definitely the case with my next common fear about filing bankruptcy in Toronto – the fear of criminal consequences. Many times I have had a person in my office asking me if they will go to jail for not repaying their debts, or if they will lose their passport or citizenship and not be permitted to exit or re-enter the country. Unfortunately, many people put off calling our office because they are afraid that being proactive about their debts will result in losing their status to live as a free Canadian citizen.

The reality is this: debtor’s prison may have a place in the history books but in our society there is no such thing. Not paying your debts or filing for bankruptcy will not put you into to jail. But more importantly, most creditors do not want you in jail because they would prefer that you are working so that they can recover some of the money you owe to them. Likewise, not paying your debts or filing for bankruptcy will not stop you from traveling to visit friends or family abroad – there is no notation on your passport or citizenship that you have filed for bankruptcy. So you should be able to travel outside of Canada and within Canada without any issues.

If you have been putting off dealing with your debt problems because you fear legal consequences like the ones I have illustrated above, please call us to discuss it and we will let you know if you have any real cause for concern or if it is another common myth holding you back that we can chase away for you. Call us today at (416) 730-8060 or 310-PLAN (7526), or send us an e-mail to develop a plan to deal with your debts.

Next week I will finish this series by discussing the most common fear of all: Bankruptcy means that my credit rating will be destroyed for seven years.

What a privilege it was to watch our Canadian athletes excel at this year’s winter games in Vancouver – especially hockey. Now that the Olympics are over and I’ve had some time to reflect on the successes that we have experienced as a country; I can see the connection between determined athleticism and personal finance – in either case, if you have achievable goals and the skills to make them happen – anything is possible. We can help you with the skills if you have the goals!

What have our athletes taught us about financial hardship? I think the best example can be found in our bronze winner Joannie Rochette – a figure skater who suffered a devastating personal loss days before winning a bronze medal. Joanie came to the games to win and the passing of her mother did not stop her from securing a place on the podium. While financial hardship is not even in the same league as losing a family member – for most people it is still a pretty crushing blow to how they feel about themselves. Bankruptcy may not be the only or best option for you – you may want to consider a consumer proposal – an option where you repay a portion of your debt over time and work towards the goal of paying back some of the money you borrowed.

If you are experiencing financial difficulty and are wondering about your options call us today to schedule free consultation.

Robert Louis Stevenson said that (except for the part about bankruptcy in Toronto) – and as I am about to discuss joint debt and married couples I thought it was relevant to the topic at hand! Today is my third article in an ongoing series about the five most common bankruptcy fears.

Many married couples share – and don’t share. How much you share financially with your spouse varies from couple to couple. Sometimes this includes debt and sometimes it is more of an assumption of debt – meaning that there is a big difference between everything is “ours” and the legal obligation of being “joint and severally liable” for a debt.

I cannot even begin to count the number of times couples visit me and asked me “If I have debts and I am married, will my spouse will be responsible for the debts if I go bankrupt in Toronto?” The answer is no, the only time someone else is responsible for your debts is if they are joint on the debt with you or have co-signed the debt for you. This is what we commonly refer to as joint and several liability. In this case, if you do not repay the debt than the other person who signed with you will be required to do so. Being married does not automatically make you joint or financially responsible for the other person’s debts. There must be a legal financial responsibility outlined in the cardholder or loan agreement. More information can be found in our article on how bankruptcy will affect your spouse.

If you are unsure if a debt is joint or not, you can ask the lender or look for the original agreement that you signed. If this fear has been holding you back, don’t let it! Call us today at (416) 730-8060 or 310-PLAN (7526), or send us an e-mail and get started on your path to financial recovery. Don’t share your fear with your spouse, share your confidence – by dealing with your debt problems you and your family will be well on your way to a fresh start.

Next Week’s Fear: Will I go to jail if I don’t repay my debts?