Consumer Proposals in Toronto

In Toronto I meet with many single parent families to discuss their financial situation. Many single parents in financial trouble seem to have one common issue –they are the sole source of income for their families. For most single parents, the first issue after separating from their significant other is adjusting to life with only one pay cheque to cover their household expenses. Downsizing and the lack of reliable support payments from the other parent are also common reasons for financial trouble as a single parent.

I met with a single parent recently who realized that their finances were out of control, and that they were unable to repay the debts that had accumulated over time since their divorce. Feeling a lot of financial pressure, with approximately $65,000 in credit card and payday loan debts, two children ready to start college and no financial support from the absent parent – all of the educational costs would fall to them. No savings were left; all retirement plans and savings had been drained to pay for legal costs during a custody battle 6 years ago. A solution was needed and quickly because one of the credit card companies had commenced legal action and wanted to garnishee wages. On limited income the single parent was not going to be able to meet household expenses if garnisheed.

I reviewed the family budget and the expenses were typical for a family of three living in Toronto. The family was not living beyond their means, but the credit card interest was simply too much to manage with $3,400 take home pay per month and $2,900 in household expenses. At the end of our meeting, we were able to come up with a consumer proposal to offer the creditors with payment terms the family felt that they could manage of $375 per month for 5 years.

The creditors since accepted the deal and the family now has some breathing room to meet their basic living costs – the stress of worrying about how to pay for college is gone – thanks to the financial counselling sessions required during the consumer proposal. During these sessions the parent was able to develop a new household budget that will allow for installment payments for tuition, and the kids plan to take part-time jobs when they start college to help pay for books and supplies.

If you are a single parent living in Toronto and think that you need some help dealing with your debts please call us at 310-PLAN (310-7526), or e-mail us, to discuss your options. Being a single parent does not mean that you have to deal with your debts alone!

I recently met with a young couple in my Toronto office who were struggling with debt and having a hard time planning for their future together. Initially, I spoke with the wife and she told me that she was the only one having financial trouble but she would bring her husband to our meeting for moral support.

At the meeting, we reviewed her financial situation and it was clear that even though most of the household credit cards were originally in her name, there were extra cards issued to her spouse and he had used the cards. She brought in her credit card statements and his name appeared after her name on almost every bill and where his name did not appear on the statement I suggested they call the lenders to verify if he were also a cardholder and responsible for the debts.

Since I knew that we were discussing debt for both husband and wife, we reviewed all of the options for them as individuals, and as a couple. In total they had about $56,000 in debt and $38,000 of that was debt they were both responsible for together. As a young married couple with a future to plan for, they really wanted to get the debts behind them before starting a family. They also wanted to be sure that whichever option they chose, it would not prevent them from owning a house some day.

They liked the idea of a consumer proposal – together – and I let them know that I have met other couples in similar financial situations who were able to purchase a house towards the end of their consumer proposal, but that purchasing a home while in a proposal would likely require a bigger down payment. It made the most sense to them do this together so that they would have one easy monthly payment. As a family with two incomes, they could afford to make a proposal, or deal with all of their creditors, and the monthly proposal payment worked out to be $400.00 – an amount that was significantly less then what they were paying to juggle all of the debts on their own.

We signed the proposal paperwork together and all of the creditors were given a chance to vote on the deal, and the creditors asked that the monthly payment be increased to $425.00 to which the couple agreed. The consumer proposal was a success and the phone calls stopped, they are well on their way to financial stability, home ownership and starting a family together.

To find out more about filing a consumer proposal in Toronto please contact us at 310-PLAN (310-7526), or e-mail us, to learn more about your options. Don’t lose hope, and don’t let debt stand in the way of planning for your dreams!

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.

While growing up my parents always reminded me that knowledge is powerful and not to fear what I don’t understand. I am fortunate to have had parents to teach me this lesson early in life but many people who I meet have a lot of misguided fears about personal bankruptcy in Toronto.

I meet with many people in Toronto to discuss their financial options and at the end of each meeting, the majority of people say things like “I should have come to see you sooner, this was not as scary as I thought it would be.” Your trip to my office should not be scary – I want to help you to determine what the best solution is for you and your debts. Should you try a consumer proposal where you repay a portion of your debts over a maximum period of five years? Or is bankruptcy a better solution for your budget?

Over the next few weeks I will write about the five most common bankruptcy fears that people ask me about at their first meeting – the fears that stop people from contacting us sooner – my hope is to help you overcome those fears and get started with your financial plan today.

One of the things that people fear is that when they go bankrupt someone will come to their home and take all of their stuff – allow me to dispel this myth for you. Ontario law states that some of your assets are exempt from seizure. This is the law. For example, your household items such as your television, dining set and bed are exempt up to a value of $11,300 and your personal items, such as clothing and shoes are exempt up to a limit of $5,650. You may also keep one vehicle if it is worth less than $5,650 (this exemption is not for cars that are financed or leased – those vehicles you may keep if you continue to honor your contract). The exemption limits are based on liquidation or "garage sale" values; most people do not exceed the limits unless they have valuable antiques or collectibles.

If fear is holding you back from calling us for advice, don’t let it! If there is something that you have questions about please call us at (416) 730-8060 or 310-PLAN (7526), or send us an e-mail.

Check back next week when I will discuss the common fear that bankruptcy means you will never have a credit card again.

When it rains, you bring an umbrella, when the economy is struggling and people are losing jobs -  best to be prepared

It has been a rather cold summer and now with a stormy fall and winter fast approaching, with the unpredictable weather we have been having in Toronto, it has crossed my mind that we may easily draw parallels to the ongoing economic storm that we are currently in. Each day brings a new challenge. How do you prepare for it? When you wake up in the morning and you see that there are clouds up above, you grab your umbrella and add it to your gear for the day – you prepare for the worst and hope for the best.

This is no different when you see the news regarding the economic issues of the day. It also does not help when you see colleagues, friends and family members losing their jobs. It’s a fact that the bankruptcy level in Canada is at record levels -  we are seeing the highest rate of bankruptcies and proposals since the 1980s and some of the major financial institutions are predicting that over the next two years this will only increase. Toronto is no exception; the bankruptcy rate in Toronto is also at record levels. If you are experiencing a minor debt crunch today, and you are still working, you may be able to avoid bankruptcy by simply picking up a financial umbrella. You have may have options depending on how prepared you are.

It’s easy to talk about being prepared but how do you prepare? What can you do?

Know your options. And to better understand how they will work in your situation, have a good family budget – this will require some planning and organization. However, it will be well worth it once it is done. Sometimes budgeting requires the assistance of another person. At Hoyes Michalos & Associates Inc., we would be glad to assist you and then the options you have available to you for dealing with your debt in Toronto.

Bankruptcy may not be the only option or the correct option. It may be that you would be better off doing a consumer proposal.

Your finances can feel like a tornado, but we will help you navigate through the storm and come up with a plan that will work for you and your family.

Be prepared and take the right steps now the same way you can arrive at work in a dry suit if you have the foresight to grab that umbrella on the way out. To find out more about bankruptcy or a consumer proposal in Toronto please contact us at 310-PLAN (no area code required), or e-mail us to discuss your options, and we will help you develop a plan that will help you survive these tough economic times.

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.

As we enter the second week of the strike between the City of Toronto and some of it’s workers, I’ve given some thought to the impact that strikes have on workers.

I don’t have enough knowledge of the facts to comment on whether the City is right, or whether the workers are right; in my experience disputes generally get settled when both sides see the other point of view, and reach a compromise.

My main concern is how a work interruption effects the average worker. Ask yourself this question: if I was to lose my paycheque for a week, or a month, how would I survive? Do I have enough cash in the bank to pay my rent, and to buy groceries, while I’m off work? For most people I meet, the answer is “no”. We all tend to live paycheque to paycheque, so missing one paycheque can cause significant financial stress.

When times are good, a missed paycheque is less of a problem. If I have access to credit, I can simply take a cash advance on my credit card, or my line of credit, to buy groceries and to pay the rent. But if you are already maxed out on your credit cards when an income interruption happens, you’ve got a big problem.

Here’s my advice for anyone who is worried about losing some income due to a strike, a layoff, or any time of job loss:

First, make a plan NOW for how you will handle a loss of income if it happens. Pay down your debt so you are not maxed out. Even better, pay off your debt and save money so that you have cash to get your through the lean times. Read my article on Five Tips to Surviving the Economic Crisis for more details.

Second, if you already have more debt than you can handle, make a plan to deal with your debts. Perhaps you can qualify for a debt consolidation loan to reduce the interest you are paying, so you can repay your debts faster. Perhaps a debt management plan through a not for profit credit counsellor is the answer.

If you have the ability to repay some, but not all of your debts, a consumer proposal may be your best option. If that’s not affordable, you may have no choice but to join the thousands of people each month who file bankruptcy in Toronto.

Strikes happen, and innocent people suffer the financial consequences. There is help available, so consider your options, and feel free to call my office in Toronto at 310-PLAN, or e-mail us for more information or to set up a no charge initial consultation.

Over the last few weeks I have received many calls from the media, probably due to the fact that the rate of personal bankruptcy filing in Toronto, and in Ontario, is on the rise.

On February 5 I participated in an on-line bankruptcy discussion with the Globe and Mail. There were many questions about how bankruptcy works, and whether or not it was the correct option when you have financial trouble.

Then, on February 9, I answered questions on the John Oakley Show on AM 640 in Toronto. You can listen to my appearance on this bankruptcy radio link.

The first question John Oakley asked me was “what do we do when we meet with someone?” I explained that we start by finding out what you owe, and who you owe it to, and then we start discussing solutions.

In most cases the solution is NOT to file bankruptcy. We explore all other options first, including consumer proposals, and only after all other bankruptcy alternatives are exhausted will we consider bankruptcy.

As I discussed in the newspaper and on the radio, bankruptcy may be an option, but it’s not the only option, so call our office today at 310-PLAN (that’s 310-7526, no area code required) or e-mail us your question, and one of our professionals will meet with you, review all your options, and help you decide which option is right for you.

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.

On Saturday January 17 Ted Michalos and I appeared on AM 640 in Toronto to talk about how to deal with credit cards. In January and February of each year we get a lot of telephone calls from people with more credit card debt than they can handle, and this Saturday was no exception.

Our first call came from Wayne, who told us he had a secure job in law enforcement, but his wife works for a bank and earns commission. Unfortunately her commissions are not as high as they had hoped, and they have used lines of credit and credit cards to meet some of their living expenses as she has worked to increase her income. They are now faced with $70,000 in unsecured credit.

They own a house, but due to the soft real estate market in Toronto, they do not have enough equity to get a second mortgage, or to refinance. Wayne wanted our advice on how to deal with these debts.

I started by advising him to make a list of all of his debts, and to prepare a simple monthly budget. By making a list of everything you spend each month, it’s easier to see what expenses can be cut, which is the first step to getting back on track financially. Unfortunately for Wayne and his wife, even cutting their expenses will not free up enough cash to repay all of their debts, so we then talked about the next possible solution: credit counselling.

With credit counselling a not-for-profit credit counsellor takes all of your unsecured debts, like credit cards and lines of credit, and works out a plan where you repay them in full over a period of up to five years, often with no further interest. That’s a great solution for some people, but unfortunately for Wayne even a debt management plan through a credit counsellor is more than he can afford.

Wayne and his wifehave good jobs, so they did not want to file personal bankruptcy. They knew that bankruptcy may impact your job if you work in law enforcement or the banking industry, so they wanted other options.

We then talked about a consumer proposal, which may be the perfect solution for Wayne and his wife. A consumer proposal is a deal, or a settlement, that we make with your creditors. If you have $70,000 in debt, it may be possible to negotiate a settlement where the creditors accept 50 cents on the dollar, or $35,000, over up to a five year period. For example, a proposal of $700 per month for 50 months would be accepted in most cases by the creditors. In some cases it’s possible to get proposals accepted for 30 cents on the dollar, or even lower, depending on your ability to make payments.

The point is this: there are options for dealing with debt; you are not alone.

If you have more debt than you can handle and what to understand your options, 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.