Benny Mendlowitz

Every person that files bankruptcy in Toronto with me asks the same question: What’s involved? What do I have to do to make sure my bankruptcy finishes as quickly as possible.

I realize how nerve wracking and stressful bankruptcy can be, so I try to simplify the process by giving every person who files bankruptcy a sheet that lists their duties and responsibilities. Here’s a quick summary:

1. In a bankruptcy, the individual must report their family income to their trustee for us to determine how much, if any, must be paid to their creditors as part of the bankruptcy process. These rules are referred to as “Surplus Income” rules. Simply put, the more you earn, the more you pay while you are bankrupt in Toronto. Each month you will send my office copies of your pay stubs, and based on your actual earnings we will calculate your required payment.
2. There are two mandatory financial counselling sessions to attend. They last about an hour and focus on budgeting and credit repair. Most people tell me these are great sessions, and help them learn how to budget so they don’t get into financial problems in the future. That’s why I call bankruptcy a "fresh start".
3. It is a requirement that the Trustee file the tax returns for the year of bankruptcy and the previous year, if it has not already been filed.
4. Each month the bankrupt person will also make a contribution to their estate to cover basic administration costs. The cost of your bankruptcy will depend on a number of factors, including what you earn, and the size of your family.

This is a quick summary of your duties as a bankrupt in Toronto. For a more detailed explanation, and to find out what would happen in your specific situation, please call our office in Toronto at 310-PLAN, or e-mail us for more information.

As a bankruptcy trustee here in Toronto, I see many people throughout the week who have different types of financial difficulties. My goal is help each person I meet find a solution to their money problems. How much I can help often depends on the seriousness of the debt problems. I know from experience that if a person’s debts include payday loans, the situation is pretty bad.

Payday loans are an easy fix; too easy. Here’s what I see, all too often: Something happens in your life; the car breaks down, a bill has to be paid, or something else you consider urgent. You don’t have any savings to draw on. You say to yourself "all I need is a small advance on my next pay cheque to cover this, and then everything will be ok". You go to a payday loan shop, the paperwork is simple to complete, you get your cash, problem solved. And that’s when the real problem starts. Your payday comes and you find your pay cheque going to pay off your payday loan. Now you don’t have enough money for rent, groceries or other basics.

So, how do you fix this problem? Wait; how about another payday loan? Get the picture? I haven’t even started to talk about the fees and interest rates that are charged. They border on the criminal.

So what advice do I have for you? The same thing that we were told years ago when we were lectured on drugs by our parents and teachers: “JUST SAY NO”.

Sounds pretty simple, doesn’t it? The best advice I can give you is if you find yourself in this type of financial crisis, gets some help from a professional. There are solutions, including debt consolidation loans, debt management plans, consumer proposals and, finally, bankruptcy. I know that a payday loan is not the solution for your money problems; to find out which solution is right for you, call our office in Toronto at 310-PLAN, or e-mail us for more information.

I would like to share with you my day spent with a client who came in thinking she might be filing for bankruptcy in my Toronto office.

She had taken the day off work to meet with me to discuss her financial predicament. I’m not sure why she took the whole day off. We tell prospective clients that this consultation will generally run 30 to 45 minutes. Anyhow, after 30 minutes, it was clear that bankruptcy was not her best option. She had enough cash flow to offer her creditors a meaningful settlement; she just could not pay them in full.

At this point, I would normally have sent the client home with a homework project, namely assemble all the documents I needed to start her file. Well, she had actually brought all her documents with her, and since she had taken the day off..

I had my assistant, Britney, sit down with her and go through all her paperwork. Everything was in order. At this point, we would schedule the client to come back in a few days to sign all the documents which take some time to prepare, but since she had taken the day off..

We asked her if she would like to kill a few hours in the mall across the street while we prepared her package. (We took all her credit cards, so I knew she wouldn’t be getting into any trouble.)

She was back in our office in 2 hours, I reviewed all the paperwork with her, had her sign it, efiled her proposal with the federal government and sent her home with a document confirming that her proposal was filed. In at 10:30, out at 3:00. My dry cleaners can’t even work that fast.

So what’s my point? Well, files don’t often unfold as this one did. But in this case, the client was organized, we had an opening, and the client was prepared to wait. She met with a real live trustee (me), not a manager or clerk; we made the time to service her and sent her home happy. If one of these clients came along every day, I would make the time for them. She left my office with the weight of the world off her shoulders. Did I tell you that when I asked her how much she owed to some of her creditors she said she didn’t know? I looked at the pile of bills in front of her and asked her why they were unopened. She said that it made her sick every time she opened a new bill to see how much it had grown to. This lady needed help and I was happy to help her. And that made me smile.

Today I gave a presentation to the Law Society of Upper Canada. The subject of the day was Bankruptcy and Insolvency Law for General Practitioners, and my topic was Personal Bankruptcy, as that is what we specialize in at Hoyes Michalos. I think my presentation was “amazing” for a couple of reasons, and let me tell you why.

A week ago, I had a major fall. I banged my head on some rocks, resulting in 3 sets of stitches, 2 black eyes, a broken nose, and a concussion, along with many other aches and pains. (The picture you see here was taken before the accident). While I lay in the hospital emergency room, many thoughts went through my head, including how am I going to be able to make my presentation next week. I should have been worrying about a lot of other things, but I guess that is just my nature.

As the week went by, I started to heal. The swelling went down (not totally yet), the bruising started to fade and the stitches came out. I went so far as calling one of my colleagues to give them the heads up that I might need him to pinch hit for me. He tentatively rearranged his schedule to help me out, but with two days to go before the presentation, I felt well enough and strong enough to go it on my own. And that is amazing, Part 1.

So here I am in Toronto today, giving a presentation on Personal Bankruptcy to 100 or so lawyers. These are lawyers, trained professionals, who have gone to law school, and I am filling them in on how bankruptcy works. Then I think to myself, if these people need help in figuring out what I do, how does that average person on the street with financial difficulties, the type of people I meet everyday in my office, figure it out? Amazing, isn’t it? Let’s just call that amazing, Part 2.

And what did I have to say to these lawyers? The same message I try to get across to the average person: identify a problem situation early enough, get expert advice, and come up with a plan. When the creditors are calling, the bills are piling up on the kitchen table, sleep is not easy and family ties are strained, it is time to get some expert advice. My job is to help people review their finances, their income, assets and debts, and come up with a plan. That plan may involve filing a consumer proposal, especially in light of the fact the our bankruptcy rules changed last week to make consumer proposals more attractive than filing for bankruptcy. A consumer proposal is not a viable option for everyone; for some personal bankruptcy is the only logical option.

If you would like some expert advice, feel free to call us at 310-PLAN, or your can e-mail us a question, and we will give you some “amazing” advice.

On Saturday February 7, Richard Quinney and I (Benny Mendlowitz, on the left in the picture) appeared on AM 640 in Toronto to talk about consumer proposals. Rick, on the right in the picture, is the trustee in charge of our Vaughan (Woodbridge) and Barrie offices, and I am the trustee in charge of our offices in North York and Scarborough.

The timing of this show couldn’t have been more appropriate. Unemployment statistics for January, 2009 were just announced: 129,000 jobs were lost in Canada last month. This means that 213,000 jobs have been lost since October. January’s jobless rate in Toronto was 8.5%. The U.S. government reported that 598,000 jobs were lost in January in that country, so we are truly in a North American wide recession.

These numbers don’t even take into consideration some recent announcements. Bombardier, Canada’s only aircraft manufacturer, has announced 1,360 job cuts. Chrysler announced that 4 plants, including 1 in Brampton, will shut down for 1 full week because demand for vehicles is weak.

What does all this mean? It means the average Canadian will somehow be affected by these job losses. Whether it is the double income family, or worse, single income family, they will be faced with getting by and paying their bills with less money.

This became clear as our show went on. A lot of our discussion focused on people being pro-active and tackling their financial problems before it became too late. The time to act and get advice is when you hear and see the train coming, not after it has past. Too many people call us for help after the unpaid bills stack up on the kitchen table and after they have spent many a stressful evening, and sleepless night, at home ignoring the telephone calls for fear that they are bill collectors.

One of our calls came from a lady named Cathy. Now she is the type of client I like to meet with. She had already done her homework; she identified the options available to her as a debt management plan, a consumer proposal and a bankruptcy (though she didn’t get the terminology perfect, she did understand the big picture). The next step was for her to meet with a professional to review her specific financial situation and come up with a plan that was right for her. I invited her to call our office and schedule a no cost consultation, which she said she would do.

The idea behind a consumer proposal is fairly simple: the individual, or family, do not have enough cash at the end of the month to make all their minimum payments in full, but they do have the ability to make some payments to their creditors, and settle their debts without filing for bankruptcy.

For anyone finding themselves in this situation, I invite you to call us at 310-PLAN (310-7526), no area code required, or email us to schedule an initial consultation. There is no charge for this meeting, and I am sure that we can develop a plan to deal with your finances.

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.

Many of the people who come into my office are experiencing financial problems due to recent, dramatic life events. Marital separation is a major common thread that we see in bankruptcies in Toronto. It is not too hard to see how a couple splitting up can lead to personal bankruptcy.

When you are married, you have two incomes combined to support the household. Together, you pay for your mortgage, your utilities, food, your children’s care and making any debt payments you may have. When you get a divorce, suddenly these incomes are no longer combined to take care of one household, but they are separated and need to pay for running two households.

There will be two homes to pay for each with their own bills and depending on custody arrangements both homes may need to have all of the things the kids need and somebody may be making child or spousal support payments. This, combined with the fact that getting a divorce incurs significant costs on its own with legal fees, means that the lifestyle that was once manageable no longer is because the two separate incomes cannot cover the costs.

When a marriage breaks up, the entire family needs to be prepared to make adjustments in their lifestyle in order to keep financially stable. What happens is that when the separated couple cannot afford things, they begin to use credit cards to get by for the short-term. Eventually the credit will run out and they will have raised a huge debt load that they cannot pay off. This is when a divorcee might come to meet with a bankruptcy trustee and begin making a plan for them to get back on track financially without their former partner.

If you are divorced and the impact on your income has put you into financial trouble and you would like to discuss your options for bankruptcy and its alternatives, call call us today in Toronto at 310-PLAN (no area code required) or e-mail us to arrange a meeting with one of our professionals, and let’s get started.

We covered a lot of material: what are credit cards, what’s good and bad about them, tricks and traps you should look out for (such as low introductory rates, late payment fees, high interest rates, etc.), the number of credit cards out there, the balances carried by the average credit card holder, and how many credit cards you should have in your wallet or purse. 

It was clear from the callers coming in to the show that while credit cards are a problem today, people are faced with many, many other problems.  One of our callers told me that while he is current on his mortgage payment, he is starting to see his credit card balances slide; he is only able to make minimum monthly payments and can’t seem to take a bite out of his total balance owing. 

Now this is the type of situation I like.  Don’t get me wrong; I don’t envy the callers situation, but he has taken the first step to deal with his problem.  He is looking for a solution before the situation takes control of him.  Before the collection letters and calls come, before the legal papers from the lawyers arrive, before he finds out there is a garnishment against his wages, he is starting to deal with his problem.  And this is where I can help.  By reviewing his finances (income, assets and liabilities) we can come up with a PLAN to deal with the problem.  Based on his budget, his job, and his family situation, I can recommend the right option for dealing with his problem. 

When someone comes to meet me they usually say, “I live in Toronto and I don’t want to go bankrupt”.  Well, guess what? I don’t want you to go bankrupt either if it can be avoided.  Bankruptcy is the last option I recommend. There are several choices before we get to that point, including a consumer proposal.  This option gets your creditors off your back, allows you to repay a portion of your debts based on what you can afford AND avoid you filing for bankruptcy. 

If you think you are headed for problems with your finances (or are already there), call us 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. 

Getting a debt consolidation loan means that you go to a bank and borrow the amount of money you need to pay-off your other debts. With all those debts covered, now you just need to worry about paying back the bank loan. This sounds really easy and a lot of people think that debt consolidation loans are the answer to all of their financial problems. What these people need to know is that debt consolidation is not a magical cure, it is just another tool to use to help you deal with your debts.

A debt consolidation loan does just what it sounds like it does. It takes all of your debts and puts them into one big ball instead of a bunch of little ones. Here’s the problem: a debt consolidation loan does not actually save you money. You still owe the same amount and you often pay only slightly lower, or the same interest rate.

For example, if you have 6 credit cards with balances of $3,000 each, and you get a loan for $18,000, you still owe the same amount of money, except now you can focus your energy on paying off just one debt instead of having to figure out multiple monthly payments. For many people, the convenience and simplicity of only one monthly payment is exactly what they need to get their life back on track.

Before you get a debt consolidation loan, you really need to make sure that you can afford the monthly payments. If you can and think that having multiple debts to pay-off is confusing you and making it harder for you to get rid of them, then a debt consolidation loan may be for you. You will need to go to your bank or finance company to research your options and see if you can even qualify for a debt consolidation loan.

If you can’t, don’t worry, there are many other options to get you out of debt. If you would like to hear about some of them you can call us today in Toronto at 310-PLAN (no area code required) or e-mail us to speak with one of our professionals.

It is very hard to deal with any financial problem in isolation. If you are behind on your mortgage payments, you need to look at what the rest of your financial situation is like. If it is a mess, then you need advice on how to deal with your other liabilities and your finances as a whole. Being behind on your mortgage payments probably means you have a bigger problem than just your mortgage payments. You have probably missed your payments because you have been putting money toward other debts, or over-spending in other areas.

If you have only missed a couple of payments, mortgage lenders are usually fairly good to deal with as long as you communicate with them. They are in the power position because they have security over your home, butthey will probably be willing to make a deal with you to pay back your missed payments.

For example, if you have missed two monthly payments of $800, you might offer to make payments of $1000 for eight months until those missed payments are covered. Although this sounds easy, you need to ask yourself where the extra $200 per month is going to be coming from. Looking at your monthly budget, you need to figure out how much you earn and after covering your bills and what you need to pay for your mortgage, how much you have left over to pay off your other debts. If you cannot afford to pay them all off, you may need to sit down with a bankruptcy trustee and create a plan to deal with your debts and get back on financial track. It may be possible for you to file a proposal to your creditors to pay back what you can afford, even if it is less than what you owe.

If it is simply that you are not making your mortgage payments but all your other finances are fine, you need to look at your monthly budget and determine whether the place is realistically affordable for you. After you miss more than a couple of mortgage payments, the lender will not be as willing to cooperate with you so it is best to deal with the problem as soon as possible. If you are falling far behind on your mortgage payments, call us today in Toronto at 310-PLAN (no area code required) or e-mail us to arrange a meeting with one of our professionals so we can help you make a plan to deal with your mortgage and other debts.