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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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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You would be surprised to hear how many times a week I meet with a new client and the first words out of their mouth is “I need to claim bankruptcy”. They haven’t told me about their work situation, what assets they own, or who or how much they owe. But they are sure that that they have to claim bankruptcy.

Well, at least they have done one thing right; they have contacted a professional. My job is to evaluate everyone’s situation when they come it to meet with me to make sure I have considered and explained all options. If all other options are ruled out, then bankruptcy may be the last resort.

So if we fast forward this a bit, assuming that bankruptcy is the best and only solution, I must gather a lot of information and paperwork, arrange to meet with the client one more time to explain all the documentation and have it signed, and then file it with the government.

The bankruptcy process is now underway. Getting to this point is usually more than half the battle. To make it this far, the person who needs help must acknowledge this and seek out advice. Next the advice giver, a bankruptcy trustee, must confirm that bankruptcy is the best solution. Once the process has started, the remainder of the bankruptcy is mostly administrative. The bankrupt has duties to perform, including attending counselling sessions, providing the trustee with their income information so that tax returns can be prepared, reporting their monthly income to the trustee to determine how much , if any, must be paid to the creditors, and making their payments.

All of these steps and more are detailed at our Bankruptcy Canada website. We also have a lot more resource material you can read at our Hoyes Michalos web site.

One last point. Starting a bankruptcy is the easy part. Finishing it is harder. If a bankrupt, has complied with all their duties and made all their payments, most of the time they will be eligible for and get their automatic discharge after 9 months. This is when the bankruptcy is over and all their debts are wiped out.

While I have tried to explain filing for bankruptcy here, the best way to learn about the process is by meeting with a trustee who will walk you through these steps. If you would like our help, give us a call. 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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I meet with many people during the course of my day. Everyone has their own reason for being in my office. There may have been a change in their work situation. They may have had a personal or family crisis. Their business may have suffered. Or it may simply have been a matter of letting their finances get out of control. After listening to their story, I ask them the same question: what would they like me to help them with? And without putting words into their mouths, they mostly say the same thing: they would like to get a fresh start. They would like the phone to stop ringing. They would like to sleep at night. They want to start over.

If a fresh start is what they are looking for, I can help. By digging deeper into their situation, I can help most people come up with a plan. Some people earn a decent wage, but their monthly payments on their credit cards and loans have gotten out of control. Their minimum payments drain them, and then they haven’t made a dent into the principal owing. These people fit perfectly into a consumer proposal.

Sometimes the situation is a little worse. Some people can cover their basic living expenses, but have nothing left over to offer their creditors. I will work with these people to take a closer look at their income and where they spend their money. There are many different reasons why the situation might me as bad as it is. It could be a loss of income. Or a family separation leaving a single income parent trying to raise their kids. In these cases, bankruptcy may be the only solution.

In any event, I can help these people get that fresh start. While I have mentioned a consumer proposal and bankruptcy, there are other options available to you. If you would like to do some reading, have a look at our Fresh Start Guide. Or better yet, contact us to schedule a no cost, no obligation consultation.

It’s up to you now. Let’s get started.

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When you are trying to handle a difficult financial situation, you are under a lot of pressure. It may be difficult to make the best decision if you don’t have all the information. Let me tell you a few things you should know before making that decision.

The most important point to know is that Consumer Proposal Administrators and Bankruptcy Trustees are licensed by the Federal Government. They both follow the rules and regulations that are contained in the Bankruptcy and Insolvency Act. They offer you protection from your creditors. Wage garnishments are stopped. Legal actions are stopped. Collection calls are stopped. Even if some of your creditors don’t agree and don’t like your choice, you are protected. That is the law.

None of this applies to a debt consultant. That is all I have to say about that. (Unless you would like to read some debt consultant horror stories.)

Still want to work with a debt consultant? Ask them how much their fee is for their advice. When you ask a Consumer Proposal Administrator or a Bankruptcy Trustee what they charge for advice the answer should be nothing. That is the answer you will get at Hoyes Michalos. Want to know more about your options? Check us out here.

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As the trustee responsible for the North York and Scarborough offices of Hoyes Michalos , I would like to report on the latest bankruptcy statistics released by the Office of the Superintendent of Bankruptcy for the first 6 months of 2011.

First of all, the big picture: total consumer insolvencies for the Greater Toronto Area, North York and Scarborough, for the 1st 6 months of 2011 were 9,568, 1,713 and 1,396, respectively. (All numbers I present will be in the order GTA, North York and then Scarborough). These numbers are down from last year by 11%, 13% and 8%.

What is interesting is that the number of personal bankruptcies dropped by 28%, 22% and 24%, and the change in consumer proposals filed were +4%, (-5%) and +7%. North York is a bit of a quirk, bucking the trend we have seen most elsewhere. Please see bankruptcy in Canada and consumer proposals sites for statistics outside of the GTA.

One final set of numbers. The percentage of consumer proposal filings as compared to total consumer filings (bankruptcies and proposals) were 60%, 57% and 61%.

So, what does all this mean? The trend we are seeing in pretty much all our offices at Hoyes Michalos is that fewer people are filing for bankruptcy and more are taking advantages of consumer proposal legislation. I believe this is the case because the bankruptcy laws which were changed in 2009 made it more harsh and punitive to choose the bankruptcy route. In addition, there are many benefits to filing a consumer proposal (check them out here) that people are taking advantage of. Whenever a prospective client meets with me and they are faced with the choice of bankruptcy vs. proposal, 99 times out of 100, I will recommend the proposal route.

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Yesterday, Global TV ran a consumer interest story on what happens when you hold gift cards from a store that is going out of business and declares bankruptcy in Toronto.

In a nutshell, Tabi, a ladies’ clothing retailer with 78 stores across Canada, and who have been in business for 30 years, is being liquidated by a bankruptcy trustee. Customers who hold Tabi gift cards are holding worthless prepaid plastic as the cards are not being honoured during the liquidation. This is not illegal; gift card holders are just another creditor of the company. They have to stand in line and wait to see if the liquidation results in them getting paid any portion of their claim.

Gift cards are easy; way too easy; both on the giving and receiving end. Come holiday time, or birthdays, the easy out is a gift card. Not much sentimental value, but easy. Also, when you receive them, they are too easy to lose or forget about them entirely.

While this is unfortunate, here is my advice:
- If you can’t think of a gift to buy, give cash. People who get cash will then be able to buy what they want, when they want, wherever they want. And they won’t lose it. When’s the last time you misplaced a $50 bill?
- If you have to give a gift card, buy them from a reliable retailer. That is not to say that Best Buy or Future Shop can’t go out of business, but they are more likely to be open in a few months than Bob’s Stereo TV and Skateboard Emporium.
- When you receive a gift card, spend it. Don’t hang on to it. If it’s still in your wallet in 2 weeks time, you will likely forget about it.

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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.

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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.

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