Toronto Bankruptcy Court Changes

In a surprise move, The Honourable Edward Then, Regional Senior Justice, Superior Court of Justice, announced that all Bankruptcy Court Registrars in Toronto will cease performing their duties, to be replaced by Case Management Masters.  A copy of his letter is reproduced here (click to enlarge). What does this mean to people who file for bankruptcy in Toronto?  Allow me to explain.

Most bankrupts are eligible for an automatic discharge from bankruptcy in Canada after a set number of months (9, 21, 24 or 36, depending on whether or not you were previously bankrupt, and whether or not you had surplus income during your bankruptcy).  However, if you don’t complete your duties, or if anyone objects to your discharge, a court hearing is required.

Prior to February 4, 2012, the vast majority of discharge hearings in Toronto bankruptcy court were heard before Bankruptcy Registrars, some of whom had many years of bankruptcy experience.  As a bankruptcy trustee, the most important qualifications I look for in a Registrar or a Judge are fairness and consistency.  It is critically important that I can give bankrupts an idea of what to expect in court.

Imagine what it would be like to be appearing in bankruptcy court with no idea what is going to happen.  That’s a very scary situation.  With an experienced group of Registrars, who act consistently, we are most able to provide some warning to bankrupts about what to expect in court.  We can tell them how they should dress, how they should address the court, what documents they should bring to court, and what questions they are likely to be asked.  By understanding these expectations, the court process can work more smoothly.

However, it now appears that due to an “internal re-alignment of judicial duties”, Registrars will no longer be hearing bankruptcy matters in Toronto.  All matters will now be heard by Case Management Masters.

What does this mean?  At the moment, no-one knows.

We know that to be appointed a Case Management Master you must have ten years experience as a lawyer or judge.  We know that as of January 24, 2012 in the Toronto region there are 13 Case Management Masters.  It appears that only one of those Case Management Masters has previous bankruptcy court experience (Case Management Master May J. Sproat was formerly a Bankruptcy Registrar).  In December, 2011 there were four Bankruptcy Registrars in Toronto.  Now there are none.  It is unclear if the 13 existing Case Management Masters will be able to absorb the workload of the four former Registrars, or if new court officers will be hired.

So what’s the take-away message:

The Toronto Bankruptcy Court is entering a period of uncertainty.  We don’t know what will happen at bankruptcy discharge hearings.  So, if you are currently bankrupt in Toronto, you should do everything in your power to complete your duties so that a court discharge hearing is not necessary, so you can receive an automatic discharge.

We also don’t know if the elimination of all of the bankruptcy Registrars will create a significant backlog in the court system.  It’s quite possible that bankrupts will be waiting many extra months to receive their discharges, which is bad news if it delays the rehabilitation process.

If you want to avoid a discharge hearing, avoid bankruptcy, perhaps by filing a consumer proposal.

Stay tuned to this space; we will post more information as it becomes available.  If you currently have debt problems, feel free to contact us for more information.

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Post Holiday Blues

Here it is, we are staring February in the face, The warm glow of the Holiday Season has faded, and the December credit card bills are coming in.

Maybe, you really tried to keep spending under control, maybe you did not quite succeed. But the fact is now, you have to figure out what to do about the bills.

My name is Brian McIlmoyle, I’m an articling Trustee with Hoyes Michalos & Associates Inc. in our Mississauga office and I’ve seen the “Post Holiday Blues” every years at this time for the past few years.

It’s not that you over spent, it’s not that you were out of control, it’s just that you were already a bit overextended before the Holidays, and now finances are really starting to pinch.

You are probably looking at your credit card bills and seeing things like, “if you continue to make minimum payments your balance will be paid off in 18 years”
18 years… that is a long time, it’s time to take care of your debt now, but how do you do it?

The first thing you do is get informed, find out what options are available and how you can go about getting yourself debt free. Our website www.hoyes.com contains a wealth of information on all options.

If you are like most people I talk to daily in my Mississauga office, bankruptcy is the farthest thing from your mind, fortunately for most people dealing with debt, bankruptcy is not the best option.
In fact most people who deal with us at Hoyes Michalos & Associates Inc. file a Consumer Proposal to deal with their debts. They can settle their debt for a fraction of what they owe and make a single affordable monthly payment. Getting free of your debt does not have to take 18 years of payments. It can take much less time and cost much less money than you ever thought possible with a Consumer Proposal.

Don’t let the “Post Holiday Blues” get you down, take control, Click on www.hoyes.com or call 310-PLAN ( 7526) and lets get started

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This is a common question we are asked when we meet with individuals.

My name is Adam Rauf and I’m an articling student with Hoyes, Michalos & Associates Inc. and I work out of our Brampton Location.

A blemished credit rating is an unfortunate consequence when an individual decides they need to explore debt management options (whether it’s a credit counselling program, a consumer proposal or filing a personal bankruptcy)

When an individual files a personal bankruptcy, they are rated at an R9 – which is the lowest possible rating. If you’re already in collections, than those debts are already rated at an R9 (so bankruptcy won’t make it any worse).

While an individual is bankrupt, they will not qualify for any unsecured credit (bank loans, traditional credit cards, mortgages etc). Once an individual receives their discharge from bankruptcy (which could be 9 months for people who have never been bankrupt before), the bankruptcy stays on your credit report for 6 years from your discharge date.

If an individual works consistently (showing stable employment), continues car payments, mortgage payments etc. then rebuilding the credit rating is definitely possible before the 6 years are up.

There are other solutions to help resolve your debt issues that are less “damaging” on your credit report.
More than 50% of the clients I meet in Brampton choose to utilize a consumer proposal to manage their debts.

A consumer proposal will put your credit rating at an R7 (which is essentially the same) from any potential creditors.

If you think your debts are becoming too unmanageable and you need some relief from harassing and threatening phone calls, contact us right away 866-747-0660 to book a free consultation so we can discuss your options in person. Alternatively, feel free to e-mail us if you prefer

We hope to hear from you soon.

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Benny Mendlowitz: Bankruptcy Trustee and Consumer Proposal Administrator

As we expected, the overall number of Canadians filing for bankruptcy or a consumer proposal fell during this period by about 8%. The interesting twist is that during this same time period, the number of people using a consumer proposal to deal with their debt problems increased by 7%.

The numbers in Toronto are similar. Overall, filings are down 11% while consumer proposals are up 4%.

What does this all mean? A drop in the total numbers is good news. Unemployment seems to have steadied and the economy appears to be slowly improving. Canadians are turning to consumer proposals to settle their debts. It is an excellent alternative to bankruptcy.

For all the government’s bankruptcy and consumer proposal statistics, visit their website.

For more information about how we can help you with filing a consumer proposal or bankruptcy, contact Hoyes Michalos by visiting our Hoyes Michalos website or calling us at 310-PLAN (310-7526), no area code required.

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For some people, making the decision to file for bankruptcy is easy.  For others, the decision is not so easy.  One of the things that make this decision so difficult is the negative impact on your credit rating and whether or not you will ever be able to borrow again. 

Unfortunately the bankruptcy will be reported on your credit report for several years after your bankruptcy which can make borrowing difficult.  The good news is that the bankruptcy information does eventually purge from your credit report.

Whether or not you will be able to borrow again will depend on several things such as your credit score, whether or not you are employed, how much you earn and what you are borrowing for?

Once your bankruptcy is finished and you have been discharged you need to start working on rebuilding your credit.  Since it takes time for your credit score to improve, the quicker you start rebuilding the better your position will be when it is time to apply for credit.

So, yes, you will be able to re-establish your credit and borrow again after filing for bankruptcy. Visit our Hoyes.com website for tips on how to repair your credit rating.

Of course, there are also other options that can help you deal with your debts and have less of an impact on your future credit and borrowing ability.  If you are having a difficult time keeping up with your payments to your creditors or feel that your monthly payments are not reducing your debts, then now is the time to call us.  We would be happy to meet with you to discuss your options and design a plan that will eliminate your debts.  Our toll free telephone number is 310-PLAN (310-7526, no area code required). Or send us an email. Let’s get started!

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Benny Mendlowitz: Bankruptcy Trustee and Consumer Proposal Administrator

Lose weight and get fit
Eat healthier and diet
Quit smoking
Drink less
Get out of debt and save money / budgeting
Spend more time with family
Travel to new places
Learn something new
Be less stressed
Volunteer

Well, I don’t know about you, but I have tried most of these and have failed miserably at many of them. I think the biggest reasons may be that either my expectations are too high or I am not an expert in what I am trying to fix.

So let me focus on one item that I am an expert on: Get out of debt and save money / budgeting. My colleague, Doug Hoyes, has posted some very interesting material on budgeting. His basic message is “don’t” budget. It is hard. It is difficult. It requires discipline. So what does he suggest? Simple: pay your bills when you get paid. Weekly, bi-weekly, semi-monthly, whatever your pay cycle is, set up your bill payments to match your pay cycle. He presents his ideas in a 2 part video series which you can watch here:

The Secret to Budgeting – Part 1

The Secret to Budgeting – Part 2

After all of the above, if you feel like you are in over your head with your debts, give us a call to review your options, which could include a consumer proposal or personal bankruptcy.

If you want to meet with me, here is my standing invitation:

***** 310-PLAN *****

***** 310-7526 *****

***** No Area Code Required *****

It’s up to you now; Let’s get started

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It’s 2012 – a new year, and perhaps time for a fresh start? If you’ve been starting to think about a personal bankruptcy, you likely have lots of questions. Perhaps one of the most important things to understand before you even look further into whether a bankruptcy is the right option for you is what a trustee in bankruptcy is and how they will be part of the process for you.

What is a Trustee in Bankruptcy?

A trustee in bankruptcy is a person who has been licensed by the Superintendent of Bankruptcy to administer proposals and bankruptcies and manage assets held in trust. Trustee’s give debtors (people who owe money) information and advice about both the proposal and bankruptcy processes and make sure that both the debtor’s and creditor’s rights are respected. Almost all trustees have both an accounting designation and a university degree. In addition, all must complete and pass a rigorous three-year bankruptcy and law course and be investigated by the RCMP before being granted a trustee license. Ongoing professional development is mandatory.

Bankruptcy is a complex and confusing legal process and should not be attempted alone. There are numerous bankruptcy options available and selecting the appropriate one could be challenging. We strongly advise you to contact a bankruptcy trustee in your area, as he or she can point you in the right direction and help you determine which option is best for you and your family.

So who is Hoyes Michalos?

Hoyes, Michalos & Associates Inc. was founded by Doug Hoyes and Ted Michalos for one simple purpose: To give you a fresh financial start. Our team is committed to providing personalized service and we guarantee that you will meet with one of our trustees specializing in personal insolvency. We are proud to say that we have helped over 10,000 people just like you take control of their financial future. We are experts in bankruptcy, consumer proposal and all Ontario debt managemet options. We are 100% Canadian owned and our firm and all of our trustees are licensed by the federal government of Canada. You can read about our whole team here: http://www.hoyes.com/ontario-bankruptcy-trustees.htm

 So if one of your new year’s resolutions is to address the debts that have you losing sleep at night, send us an email or give us a call. The first consultation is always free. Let us help you take the first step to your fresh start.

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Well, here we are again. Another Christmas shopping season is upon us. I have been listening to the radio and watching the news, and the same reports are being made. Mark Carney, our Bank of Canada Governer, issued his warning. Credit counselors are also putting in their 2 cents.

People can go on and on about this topic. I am going to tell you all you need to know in 2 brief points:

Budget
Prepare a list of who you are going to buy for and what you are going to buy; budget an amount and stick to it. Count on spending less than last year; times are tough. Once you have a total, do not go over it.

Payment
Pay with cash or debt, NOT credit. You can’t get yourself into a credit problem if you pay with cash.

I also explained this in an interview I did for Global TV, if you care to watch:

If you need help with either of these points, give me a call. If you need help with the bigger picture, I would be pleased to sit down and go over your options. (Which may include a Consumer Proposal or Personal Bankruptcy.)

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A question that I get asked quite often is “how long will I be bankrupt?”.
The answer is, “ it depends”.

Here are the basic answers:
9 months, if you have less than average income and have never been bankrupt before.
21 months, if you have more than average income and have never been bankrupt before.
24 months, if you have less than average income and have never been bankrupt before.
36 months, if you have more than average income and have been bankrupt before.

These are very basic answers. They haven’t taken into account other factors which might extend your bankruptcy, such as gambling, drug addiction, failing to perform duties, or even a creditor challenging your bankruptcy.

My question to most of these people is why file a bankruptcy which will last 2 or 3 years when you have a better option: a consumer proposal.

This whole topic is complicated. If you want to read more, visit our Personal Bankruptcy in Ontario website which describes the Length of Bankruptcy in Canada: How Long Will You Be Bankrupt Under the New Rules? The best I can tell you is if you are worried about how long a bankruptcy will last, meet with a licensed trustee who will be able to assess your situation and provide you with the best advice tailored to your situation. That is what I do, day in and day out. So contact me so we can work on your situation. I assure you that I will give you the time of day and come up with a plan that is right for you and your family.

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Surplus Income: Oxymoron?

Enough ranting. Surplus income rules apply to anyone who is considering filing for bankruptcy. Basically, if you file for bankruptcy, you are allowed to earn a living. Our government determines the amount of that living. If you stay below that amount, there is nothing you have to pay your creditors during your bankruptcy. If you go over that amount, you must pay some of it to your creditors. And if you go over it by a lot, our friends at the government extend the basic 9 month bankruptcy period to 21 months. This is the simple version; if you really want the technical explanation of how surplus income works, you can read more on our Hoyes website. All you really have to know for now is “the more you make, the more you pay”.

So you might be wondering, isn’t this punitive? If you can’t afford to pay your debts and want to file for bankruptcy, how can you afford to make, in some cases, these hefty surplus income payments? I call this the “surplus income trap”; you are trying to get out from under your debts but you land in this sink hole that says you have to pay surplus income for 21 months, and it may be more than you can afford.

I trash talked the government earlier, so let me say something good about them. When they made these surplus income rules that seem to penalize people who make a decent wage but want to file for bankruptcy to get rid of their debts, they gave these people an out. And that out is called a consumer proposal. Basically, a consumer proposal allows you to pay less to your creditors on a monthly basis, but allows you to offer them more in total because the consumer proposal can run over 5 years. As an example, let’s say the surplus income rules require you to pay $500 per month over a 21 month period for a total of $10,500. You can’t afford $500 per month, but let’s say you can afford $250. In a consumer proposal, you would offer your creditors $250 per month for 60 months for a total of $15,000. Your creditors come out ahead because they get more money. And you come out ahead because: 1. you can afford $250 per month; 2. you have avoided filing for bankruptcy; and 3. you have stayed away from the surplus income trap. Your classic “win win” situation. (This was just an example. Everyone’s fact situation is different and these numbers may not apply to your case.) You can read more about the surplus income penalty at our consumer proposal information site.

If you’ve read this far and are interested in finding out whether or not you can avoid paying surplus income by filing a consumer proposal, contact us to schedule a consultation. And even if you think you want to file a bankruptcy because surplus income won’t affect you, call us as well. There is no charge for meeting with us. We will try and come up with a plan that works for you and your family.

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