Sandra Sykora

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!

The Office of the Superintendent of Bankruptcy (“OSB”) regularly publishes statistics regarding the rate of bankruptcy and proposal filings both by province and for the country. The OSB has just released these statistics for June 2010 and as expected the rate of bankruptcies has dropped this year. For the three months ended in June, 2010 the number of consumer bankruptcy filings in Toronto dropped by almost 30% from the same period last year.

Has the doom and gloom of 2008 and 2009 passed? Is the worst behind us?

From my bankruptcy office here in Toronto at Yonge and Bloor, certainly the bankruptcy numbers have decreased this year. This was particularly evident from May to end of June. I attributed some of the slow down to the G20 Summit that was here in Toronto in June.

However, the implementation of the HST seems to be having an effect on peoples’ spending. There was a report late last week that it is believed the HST has impacted spending in Ontario and increased inflation.

It also appears that the US economy is not recovering as expected. House sales are down further than expected and unemployment remains high. The summary is the consumer’s confidence is low and this will impact spending. Thus the US may experience another recession or double dip as the experts refer to it. Given the US is our largest trading partner, it is hard to believe our economy will not be effected.

So we may not be out of the woods yet with respect to any recovery. It may be sometime before things are back on track and the result is there will be many ups and downs along the way. In Canada, we may not be affected as severely but we cannot be complacent. For the balance of 2010, I expect bankruptcies may decline but it maybe another thing for next year.

I would then say it is time to keep on top of our budgets and plan our spending wisely. It may be that you need to review your options for dealing with your debts and come up with a plan of action for the next 6 months to a year. One trend we are noting is many are not filing for bankruptcy but doing a consumer proposal whereby they are making a contract with their creditors to repay a portion of the debt.

We would be glad to meet with you to discuss all options including a consumer proposal an in our Toronto office of Hoyes Michalos & Associates, so please feel free to contact me via email or call us at 310-PLAN (310-7526, no area code required) to make an appointment for a free consultation.

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!

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.

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?

I would like to take credit for that quote, but it was Marie Curie, a very wise woman who said it first. Last week I started to discuss the five most common fears that people have about bankruptcy in Toronto – the fears that stop people from investigating their options with regard to debt.

Last week I discussed the common fear that filing for bankruptcy means you will lose all of your personal belongings and household furnishings – which of course is not true.

This week the topic is obtaining new credit. Many people visit my office and tell me that they have heard that if they claim bankruptcy they will NEVER have credit again. This is typically not true unless you do not want to apply for any new credit. But you will have a life after your bankruptcy ends and most people do eventually apply for new credit after bankruptcy.

Here are the facts: as part of the bankruptcy process, you are required to attend two credit counseling sessions. One of these sessions is about rebuilding your credit once you have finished your bankruptcy. Typically the minimum time to be in a bankruptcy is nine months. Once you are done, or discharged, from your bankruptcy, you can start to rebuild your credit and the counsellor will give you some tips for starting over. Rest assured, there is life after bankruptcy and that life will likely include new credit, be it a secured credit card, a car loan, or a mortgage on your first home – you will be able to start over.

So if you’ve been putting off that call because your fear of a credit-less future has been getting in the way – you don’t have to wait any longer. If you are ready to put a plan into place to deal with your debts please feel free to contact us today at (416) 730-8060 or 310-PLAN (7526), or send us an e-mail.

Next Week’s Fear: What happens to my spouse if I file for bankruptcy?

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.

It doesn’t matter if you’ve been naughty or nice – if you are feeling a pinch in your wallet this time of year you are no different from most residents of Toronto! Holiday shopping in the province’s capital can be both a blessing and a curse! We have the benefit of options – so many stores and so many discount sales – but we also have the burden of increased marketing. When I look out my office window (from our bankruptcy Toronto office at Yonge & Bloor) I see a lighted sign from a major retailer that flashes all of the ongoing seasonal deals!  With so much advertising in Toronto we have decided that our gift to you this season would be a helpful list to aid you in your shopping so that you can put up your best defense – you!

1. Create a shopping list – be clear about who and what you are shopping for and how much you want to spend.  Don’t be tempted. 
2. Window shop first – always look around for deals on specific items – if your father asked for a new microwave oven make sure you don’t just buy the first one you see – there is always a better deal!  Also consider bargaining for the item.  In many cases if you ask for discount or what is available you will be surprised at what can be offered. 
3. Leave the cards at home – shopping with cash will make it easier to stay within budget!
4. Be savvy and creative – think about who you want to give gifts to and if you can make that person happy with something that costs less but has a big impact on them you are really understanding the true spirit of the season – it’s not about how much you spend it really is the thought that counts!

For those of us have entered into this season with existing debts and who plan to deal with them in the new year, proceed with caution – if you are spending on your credit cards today and considering bankruptcy in the new year the credit card companies can ask that you repay a portion of the money spent!

If you already have more debt than you can handle, we are here to assist you so please feel free to call and request your free consultation today!

Happy Holidays Everyone!

Debt can be very frustrating – we all know this – and it doesn’t really matter how big the debt is – it doesn’t take much to upset the apple cart. Many people feel alone with their debts and do not know where to turn for advice – if you live in the downtown Toronto area you can turn to us!

I want to take a moment to introduce our team to you. My name is Sandra Sykora and I am a trustee in bankruptcy with Hoyes Michalos & Associates Inc. Our company has been in operation since 1999. I have been working in bankruptcy for over 20 years and have extensive experience working with people and dealing with their debt problems. I am available to meet with you to review your financial situation and come up with a plan that will work for you and your family.

In the past year, it has been busier than ever due the down turn in the economy. To assist with the increase in volume, in 2008, April Potter joined my office. April is a qualified Estate Administrator and Insolvency Counselor and she has worked in personal bankruptcy since 2004.

Together April and I form the team in the downtown Toronto area, but we also have a team of over 60 people supporting us in our head office, and throughout Ontario.

So if you are feeling overwhelmed by your debts, please contact our office at 310-PLAN(7526), no area code required in Toronto, or toll free at 1-800-472-7775, or e-mail us to ask a question or book your initial consultation. The meeting is a free consultation and takes about an hour and we will need a list of the people you owe money to. We will review all of your options; debt consolidation loans, debt management plans, consumer proposals and bankruptcy.

We look forward to meeting with you; together we will come up with a plan to deal with your debts. Just remember, you can always go downtown, where someone is always waiting to help you!