Windsor Ontario Personal Bankruptcy Blog

Easy Steps to Teach Our Children about Money Management

2010-03-03T13:48:00.003-05:00

Every day I meet with clients whom have asked "How do I teach my children to manage
Their money?" It all begins with the GOLDEN RULE. The GOLDEN RULE is to pay ourselves first.

How we teach our kids about the GOLDEN RULE is of course to lead by example. I am a firm believer in tracking every penny that goes out of the pocket. Write down every penny you spend for a solid three months. That includes money going to child A, B or C. That way we are aware of where exactly our money is going. You will be shocked to see how much money you are handing over to your children for hot dog or pizza days at school. This can all be very costly on our budgets. This is why children have the magical thinking that money grows on trees.

Our job as parents is to teach our children the realities of life. Children usually have a sense of what money can do for them at about 5 or 6 years of age. A 5 year old would get $5 per week and $1 would go directly into the piggy bank. A child would get a $1 per year of their age for a weekly allowance. Therefore a 6 year old would get $6 per week and $2 would go into the piggy bank.

The GOLDEN RULE is to always pay yourself first. This money is a great investment in their future for college or university. Their wants and needs cost more as they grow older. Teenagers want to go to the movies, go bowling or go shopping which all adds up. The question to ask is do you have enough money in your budget to do all of those things? Or should you wait and save? Teenagers soon find they want more money and the only way to get more is to get a job.

These are very tough economic times and if you are having a difficult time maintaining your budget , please call 519-250-8060 or 310-PLAN for a no cost, no obligation meeting.

3 Traits you must have for maintaing financial fitness

2010-01-14T16:35:00.007-05:00

I am a big believer in keeping track of where you spend your money, because if you don't keep track of where you spend, it's very easy to spend more than you have.

Every day I meet with people in Windsor who are worried about preparing a budget, and I give them all the same advice: You must go into the budgeting process with a POSITIVE ATTITUDE. Don't think about the negative aspects of making a budget; concentrate on the rewards.

You may be able to pay down your debt or save for retirement. Your budget is the tool for you to reach your goals.

STAYING MOTIVATED happens over time and becomes routine. Staying motivated is hard no matter if your goals are to keep physically fit or financially fit. You may consider rewarding yourself or raising the bar a little higher and save more.

Finally you need to have REALISTIC GOALS. It is always best to choose short term goals such as paying off a bill or saving for a vacation. Attaining short term goals helps to build and maintain your motivation. Try these budgeting basics that work:

1. Write down every time a penny goes out of your pocket. Yes, every single penny. It really does add up. Do this for three solid months. Tracking your spending behavior actually works. You can't change it if you don't see it.

2. Add these numbers up and put them into your monthly budget along with your fixed monthly bills.

3. Ask yourself if you are happy with where your money is going or is there a yes with a condition? ie: Spending $60 a month at the coffee shop is making them rich. Try spending $30/month and putting the other $30/month in a separate savings account with no attached debit card access.

You may find your debts unmanageable and feel that you are getting nowhere fast. A consumer proposal will give you the fresh start you need. Please call me at 310-PLAN or 519 250-8060 or email me to book a no cost, no obligation meeting.

Start planning for the holidays

2010-01-06T11:57:00.000-05:00

Yes, I do realize the holidays are over, but now is the time to start planning for 2010. One of the most important things a person can do is to set a budget. Not just for gifts, but for everything. Our phone lines are quite busy in January as people start to receive their holiday credit card bills and are shocked to discover how much money they spent.

So here is the plan. Set a limit on how much you are going to spend and then set aside money each month in advance. For example, if you are planning on spending $500 on gifts, set aside $42 each money. If you start doing this in January, you will already have the $500 set aside. It is a lot easier to save a little bit each month than to try to come up with a large amount all at once.

I realize that many people have debt they can’t manage and that is where we can help. Sometimes bankruptcy or a consumer proposal is the best way to get a fresh start.

If you have having difficulty managing your debt, call us at 310-PLAN or 519-250-8060.

Record month for filings in September

2009-10-01T09:33:00.007-04:00

I hate to be the bearer of bad news, but September was a record month for filings for our fim in Windsor.

The first reason is obvious to anyone living in Windsor. Companies are reducing their work forces or shutting down. This in turn leads to lower incomes for those who worked at the company, and will also have an effect on the people who serviced those companies. It can cause hardship on everyone from the suppliers to the coffee shop across the street from the company.

The other reason for the record filings was the changes the government made to the Bankruptcy and Insolvency Act. If someone was thinking about filing for bankruptcy a month or so ago and realized that filing after September 18, 2009 might cost them more money, many of them decided to file before the rule change.

If you think you may need to file for bankruptcy, call me at 519-250-8060 or email me.

CONSUMER PROPOSAL

2009-07-22T17:46:00.002-04:00

IF I AM ALREADY BANKRUPT CAN I BE ELIGIBLE FOR A CONSUMER PROPOSAL?

Yes a consumer proposal can be filed be someone in bankruptcy. In fact it is quite common for someone who after filing bankruptcy has an increase in income or a windfall.

consumer proposals in Windsor, Ontario

2009-05-05T13:46:00.000-04:00

Question: If your consumer proposal is accepted, you pay off credit cards and such, do you keep your cards, or do the card issuers want them cut?

Thanks!

Answer: When you file a consumer proposal you give up all of your credit cards; they are cut up and sent back to the credit card companies. In order for the proposal to be successful it is important that you do not incur any additional debt, which is why you lose your credit cards.

What is debt consolidation?

2008-09-22T14:55:00.000-04:00

When faced with numerous loan payments and credit cards bills each month, the first step for many people is to find out if they can obtain a debt consolidation loan. The debtor (the person who owes the money) will go to his or her bank and apply for the loan. If the debtor qualifies, the bank will then give a loan and pay off the other credit card and loans. Once you receive the loan from your bank, if the bank doesn’t cut up your credit cards, you need to make sure you do it yourself. If you currently don’t have a source of income, it is unlikely you will be able to obtain a loan.

The main advantage of a debt consolidation loan is that it takes all of your debt and combines it into one monthly payment. Your new loan payment should be less than the minimum payments you were paying on your credit cards and loans. If it is not a lower monthly payment, this might not be the best option for you.

Another factor to consider will be the interest rate you will be charged. Most credit cards have interest rates between 10% and as high as 28% per year. The interest rate charged on the loan should be lower than you are paying now.

You will also need to consider any other terms the bank has. Do they want to put a lien on your car, or do they need a cosignor? If they do, you need to consider the risk to your car and the cosignor if you are unable to pay the loan in the future.

If you are able to make a monthly payment, but you don’t qualify for a debt consolidation loan, a consumer proposal might be a better option for you. You can call me at 310-PLAN or email me to discuss this option in more detail.

death and bankruptcy

2007-06-15T23:54:00.001-04:00

Question: What happens if someone is in the middle of their bankruptcy and have not been discharged and they die?? Can they still be discharged?? How do the creditors or trustees get paid??

Answer: The answer depends on how far the bankruptcy has proceeded at the time of death. If the bankrupt has fulfilled all of their duties, the bankruptcy may proceed to a normal discharge. If the bankrupt has not completed their duties, and they cannot be completed by the bankrupt's estate (such as through life insurance proceeds), the bankrupt will not be discharged, which is in most cases not an issue, since after death it is not likely the creditors will be pursuing the bankrupt.

Can I keep my house if I file for bankruptcy?

2007-01-22T15:57:00.001-05:00

As a Windsor trustee, this is a common question.

First question - is there equity in the house. Equity means if you sold you house, after paying the mortgage and costs would there be money left over? If there would be bankruptcy may not be for you. The money that would be left over belongs to the bankruptcy and you would have to pay it to your bankruptcy. If the amount is large enough a consumer proposal might also be something to consider.

If there isn't equity, as long as the mortgagor agrees, the bankruptcy will not take your house.

What happens to the debt after a consumer proposal is completed?

2007-01-08T15:52:00.000-05:00

I had a debtor come in today to make the final payment under the terms of his consumer proposal. He was a very happy person.

He had heard a rumour that now that the proposal is done, he now has to make repayments for the balance of the debt. He didn't think it was so, and just wanted confirmation. I told him that expect for some circumstances (such as student loans that are less than 10 years old), this is not true. A clause in the proposal states that if the creditors accept the consumer proposal it is for final settlement of the debt.

If you have a question, feel free to send me an email.

What causes bankruptcy in Windsor?

2006-12-12T15:51:00.000-05:00

There are a two main reasons for bankruptcy in Windsor. The first is marital separation or divorce. A family unit has 1 or 2 incomes, and 1 set of expenses. After separating, the 2 spouses each of the same income, however now they both have their own set of expenses. In addition, each might have their own debt, plus joint (in both of their names) debt.

Another factor in Windsor is the reduction of overtime and in many cases layoffs. Employees might have had steady overtime hours 2 or 3 years ago, however, now their hours have been cut back to 40 or less. The debt was probably manageable at 60 hours a week, but now at 40 hours a week, there just isn’t enough paycheque to go around. If this sounds like you, then call me at 519-250-8060 or email me so we can discuss the options that are best for you.

How to choose a trustee

2006-12-07T11:55:00.000-05:00

Realizing that you have financial difficulties is overwhelming. Next you need to know where to turn to get advice in Windsor on what your options are to deal with your debt. When you call a trustee consider these questions:

1. Did they take your call right away or within a reasonable amount of time? If they didn't, do you really want to deal with them?
2. What was the telephone manner? Were they polite on the telephone, or did they treat your poorly? If you did not like their telephone manners do not deal with them.
3. Were you able to speak with a trustee or someone in a position to give you answers on the phone?

You have the right to be treated with respect when you call for assistance. You do not have to meet with someone you are not comfortable with.

When you call, you will speak with me or another Trustee, and you will meet with me personally. Call me at 519-250-8060 to discuss options that may help you.

I filed for bankruptcy. Why are the creditors still calling me?

2006-11-22T11:35:00.000-05:00

This is a frequent occurrence after someone files bankruptcy. The short answer usually is that the creditor is calling you because they don’t know about the bankruptcy. Once you sign your bankruptcy paperwork, the trustee mails the documents to your creditors. It takes time for the paperwork to get to the right person working for you creditors. Other times a creditor sent the debt to a collection agent, but the bankruptcy papers were mailed to the original creditor. The best thing to do is to tell the creditor who calls that you filed for bankruptcy and give them the name and phone number of your trustee. If they call again, get the name and phone number of the person calling you and give that information to your trustee for follow-up.

Applying for Credit After Bankruptcy

2006-10-25T11:28:00.000-04:00

After someone files for bankruptcy in Windsor, I am often asked about how he or she can obtain credit again. The first thing to note is that you cannot get any new credit until you are discharged. Once you are discharged, the easiest credit to get is a secured credit card. You can apply for this through various financial institutions. You should also be saving money to use as a down payment for any big purchases such as a car. The lender will probably be more willing to extend credit if you have made a large down payment.

If you have a question, send me an email.

Bankruptcy vs. Consumer Proposal

2006-10-11T16:15:00.000-04:00

As a Windsor based trustee, I am often asked what is better – a bankruptcy or consumer proposal. There are pros and cons of each. Here is an overview:

BANKRUPTCY:
CON:
- you lose your non-exempt assets
- you lose the ability to deal with your own assets while bankrupt, such as selling an exempt asset
- you make a payment based on your income so your monthly payment can change each month
- you get the worst credit rating

PRO:
- bankruptcy can be faster from start to finish than a consumer proposal

CONSUMER PROPOSAL:
PRO:
- you do not lose your assets
- you do not better effect on your credit rating than bankruptcy
- payments are fixed each month, your payments don’t increase if you get an increase in salary
- provides a better credit rating than bankruptcy

CON:
- it can last longer than a bankruptcy. The period can be anymore from a lump sum payment to up to 60 months

If you would like to review your situation and determine which option is better for you, call me at 310-PLAN or email me to book a no charge consultation.

Do I qualify for bankruptcy?

2006-09-25T21:36:00.000-04:00

As a Windsor based trustee, I often get asked if someone qualifies for bankruptcy. The requirements to file for bankruptcy are: debts greater than assets, debts greater than $1,000 and unable to pay the bills on time. However, most people we see owe more money than $1,000. If you think you need to file for bankruptcy, you first step is to call or email me and we will review your situation.

Filing a Second Consumer Proposal

2006-09-11T12:07:00.000-04:00

A few months ago I met with someone in Windsor who wanted to file a second consumer proposal. The first one failed because missed 3 months of payments. Unfortunately, under the Bankruptcy and Insolvency Act he cannot file another consumer proposal until all of the debts from the first one are paid, unless he gets a court order allowing him to do so. He then was able to hire a lawyer and obtained a court order allowing him to file another consumer proposal. This second consumer proposal is now awaiting creditor approval.

The important point is that his first proposal failed because he stopped making payments. If your situation changes and you can no longer afford the proposal, you need to talk to your trustee about this. It is possible to send an amendment to your consumer proposal if you are no longer able to make the payments you once could. If you would like to discuss consumer proposals in more detail, email me a question.

Pay day loans

2006-09-05T14:06:00.000-04:00

As a trustee based in Windsor, I have noticed a dramatic increase in the number of people who come to see me and owe money to various “pay day loan” stores. It is important to understand the cost of these loans before you use this form of debt. For instance, I looked a one company’s web site and they indicated that they charge $25 for every $100 you borrow.

Let's say a paycheque is $300. You borrow $100 from the pay day loan store, and now owe them $125. You get your $300 paycheque next week, but now you only get to keep $175, the rest pays back the loan. For many people, they have started started into a cycle which is very difficult to get out of. I meet with some people who owe money to 2 or more pay day loan stores. You need to look at the big picture before you get stuck into a bad cycle. If you can't pay your credit cards and unsecured loans, you should call us at 519-250-8060 or 310-PLAN
to see if a consumer proposal or personal bankruptcy is an option for you.

Debts greater than $75,000

2006-08-17T14:33:00.000-04:00

As a Windsor trustee, I am occasionally asked what a debtor can do if his debts are over $75,000. He doesn’t want to file bankruptcy, and as noted on our website a consumer proposal can only be filed if the debts are less than $75,000 (not including the mortgage on the principal residence). What can he do?

He can offer what is called a division 1 proposal. The legislation was originally intended to be used for companies, and was written when the average debt level was less a lot lower than it is today. A division 1 proposal is similar to a consumer proposal however there are some key differences:

- a meeting of creditors to vote on the proposal is required within 21 days of filing the proposal;
- the proposal is accepted only if the unsecured creditors accept the proposal by a majority in number and 2/3 in dollar value voting on the proposal;
- if the proposal is rejected, the debtor is automatically bankrupt; and
- if the proposal is accepted, the trustee then goes to court to receive court approval of the proposal.

There are other differences which are beyond the scope of this blog.

If your debts are debts are greater than $75,000, not including the mortgage on your principal residence, call or email me to discuss if a division 1 proposal can help you.

Can I file for bankruptcy in Windsor if I work in Detroit?

2006-07-23T16:11:00.000-04:00

As a Windsor trustee, I am getting that question asked more of me than I was a few years ago. The Canadian dollar is a lot stronger now compared to the US dollar than it was before. To people who work in the US this seems like a pay cut. A few years ago they were getting $1.50 exchange, now they are getting $1.10 exchange. However, the cost of gasoline and tolls has increased.

Yes you can file for bankruptcy in Windsor if you work in Detroit, but live in Windsor. You can meet with me and we will review all of your options. Chances are that your wage is still good, just not good enough to pay your minimum monthly payments each month. If that sounds like you, then a consumer proposal is probably a good option. If you would like to review your situation in more detail, call or email me a question.

I own a house in Windsor. Should I file a consumer proposal or get a second mortgage?

2006-07-19T15:26:00.000-04:00

I own a house in Windsor. Should I file a consumer proposal or get a second mortgage?

The answer is, it depends. If you can obtain a second mortgage at a low interest rate and pay off all of your debt in full that makes sense. However if you are unable to pay off your debts in full, a consumer proposal makes more sense.

I recently saw a couple in Windsor who were trying to decide what to do. A consumer proposal seemed the best alternative because a second mortgage would not allow them to pay off all of their debts. However, they decided to get a second mortgage and realized the next month that they couldn’t afford it and all of the rest of their debt. They then filed a consumer proposal to deal with their remaining unsecured creditors, plus they also have their mortgages to pay. However, if they have filed a consumer proposal initially their total monthly payments would have been lower. It's important to do all of your homework first.

If you would like to review your situation, email a question.

New Legislation for Exempt Automobiles

2006-06-23T15:58:00.000-04:00

Yesterday, new legislation was passed dealing with the equity in an automobile in a bankruptcy. Prior to June 22, 2006, an automobile was exempt from seizure if its value was greater than $5,650. For example, if the car was valued at $5,000 it was not seized by the trustee, but if it was worth $5,700 it was seized by the bankruptcy or the bankrupt had to pay the trustee the value of $5,700.

Under the new legislation, the first $5,650 is exempt from seizure. For example, if the car is valued at $5,700, the bankrupt person has to pay the difference of $50 ($5,700-$5,650) to the trustee.

This new wording will help people filing bankruptcy to keep their car, and help them get a fresh start.

To discuss your financial situation and develop a plan that is right for you, call the Windsor of Hoyes, Michalos and Associates at 250-8060 or email a question.

What debts are included in a bankruptcy?

2006-05-31T15:32:00.000-04:00

We are often asked what debts are part of the bankruptcy. The Bankruptcy and Insolvency Act states that all debts are discharged (gone) once your bankruptcy ends except in general for:

- student loans that are less than 10 years old,
- fines, penalties, restitution orders,
- awards for damages in civil court for wrongful death or sexual assult,
- alimony or support,
- debts incurred through fraud or misrepresentation,
- an amount a creditor who didn't know about a bankruptcy would have received if they had been notified of the bankruptcy.

There are always interpretations about what kind of debt does not go away in a bankruptcy. To review your situation in Windsor, please call our Windsor office at 250-8060 or 310-PLAN or email a question.

What is the difference between debt consolidation and a consumer proposal

2006-05-04T14:46:00.000-04:00

Debt consolidation is a loan offered to a debtor by their bank. For example, if you have $30,000 in credit card debt, if you qualify, the bank will give you a $30,000 loan to pay off these credit cards. Depending on your term and interest rates, the payments could be around $650 per month for 5 years or more.

A consumer proposal is a payment plan administered by a licensed trustee in bankrupty. You offer a payment plan to your creditors based on your ability to pay. In most cases the payment is alot lower than a debt consolidation.

To discuss a consumer proposal in more detail, call or email a question.

What are the options to bankruptcy?

2006-04-09T15:49:00.000-04:00

Many people don't want to file for bankruptcy for a variety of reasons. Fortunately, there are other options to bankruptcy.

Credit counselling is good for people who have the money to pay their bills, they just need help managing their money. If your debts are manageable, in my experience probably less than $5,000, the credit counsellor could help you file a debt management plan. Contact a credit counsellor for more information.

If you have already been to your bank for a consolidation loan, but that option was not available to you, consider filing a consumer proposal.

I will be happy to meet with you and discuss how a consumer proposal might be able to help you.