A few days ago I met with Sally (not her real name). On the advice of a friend, she went to see a trustee and told me she didn’t like how she was treated and felt pressured. She decided to get a second opinion and came to see me. She and I talked about the appointment she had and she told me she paid $350 for the first meeting (which raised an alarm for me right away), the person wanted her to sign paperwork on the spot, she told him she didn’t want to and left.

She told me she called him a few times in the next month with questions and her phone calls were not returned. She was told she would have to pay the balance of his consultation fee of $1500 before he would meet with her. Unfortunately Sally did not go to see a Trustee, but went to see a debt consultant. The first warning sign should have been the fee required for a meeting. If someone is going to charge you a fee just to meet with you, call someone else.

I also met with Richard. He came to see me because he really would like to file a consumer proposal. He went to see another trustee and all they talked about was bankruptcy. I reviewed all of Richard’s options with him and a consumer proposal made much more sense. We calculated a bankruptcy would cost him $12,000 because of his income, so instead he is going to file a $12,000 consumer proposal. If the Trustee won’t review all of your options so you can understand the costs associated with both a consumer proposal and bankruptcy, go see someone else.

It’s important to know that you can choose who you meet with, and it’s your decision on what to do. Don’t let anyone try to talk you into one option over another.

There are several signs to look out for when you call to book an appointment or go to see a trustee

1 – When you called during normal hours, was someone available to help you on the phone, or did it take hours or days to get a return phone call. If you can’t speak to anyone on the phone, how likely will they be to help you when you have questions? Be wary of someone who offers service 24 hours a day. Is a trustee really going to meet with you at 3 am – of course not. You are only going to be able to leave a message with an answering service who can`t answer any of your questions. If you call Hoyes, Michalos and Associates and a trustee or client service specialist is not available to speak with you when you call, we do our best to call you back within the hour.

2 – As I mentioned before, do not meet with anyone who is going to charge you a fee just to talk to you. We do not charge a fee to meet.

3 – Did the Trustee take the time to review your entire situation and explain all of your options? You may have an idea of what you want to do, but the Trustee is still required to review all of your options. If you feel pressured to do something you don`t want to do or to make a decision right away, talk to someone else.

4 – How did you feel when you left the meeting? Did you feel a sense of relief or did you feel rushed and annoyed when you left. No one is happy to come and see a Trustee, but you should feel a sense of relief when you leave, now that you know what your options are and that someone is here to help you.

5 – Make sure you are dealing with a Trustee. All trustee’s are licenced by the Office of the Superintendent of Bankruptcy. You can check their website to see if the person or company you spoke with is listed. If you are not sure you are meeting with a trustee, just ask them.

6 – What kind of firm are you dealing with? Do you really want to be dealing with a trustee that advertises all of the corporate work they do or do you want to deal with someone who only deals with individuals just like you? We only deal with individuals.

Dealing with debt problems is stressful. Remember that you are in control over what you do and who you meet with. If it doesn’t feel right, then walk away.

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The Office of the Superintendent of Bankruptcy recently released the year to date statistics for bankruptcy and consumer proposals filings.

The good news for Windsor is that bankruptcy filings were down for the first 6 months of 2011 compared to 2010. 581 people filed for bankruptcy in the first 6 months of 2010 while 480 filed in the same period for 2011 for a decrease of 17%. There were 270 consumer proposals filed in the first 6 months of 2010 and 278 in the same period in 2011. 3% isn’t a huge increase, but it is still a good news story. How is that good news? A decrease in bankruptcy filings is good if it means the decrease is caused by people being able to manage their debt. Why? Since the bankruptcy rules changed in 2009, bankruptcy has become longer and more expensive for many people. Rather than having an expensive bankruptcy for up to 36 months, you can have a reasonable payment under a consumer proposal for a longer period of time. However, if you need help managing your debt it’s important that you speak with a licenced bankruptcy trustee. I am meeting with too many people who were attracted to the fancy ads of debt consultants and spent thousands of dollars in fees only to either be referred to a trustee to file a consumer proposal.

For the Windsor economy in general, a declining personal bankruptcy rate is good news. In order to make the consumer proposal someone needs to have a source of income, usually employment income or pension. An increase in consumer proposals shows that people are working, although still struggling with their debt. They can make some payment towards their debt, they just need help.

Unfortunately, the situation for Leamington is a mixed message. There were 32 fewer bankruptcy files, however there also 12 fewer proposal files. Does that mean that people who live in Leamington are less likely to have debt? I don’t think so. Debt levels are still at record levels and people need to pick up the phone and call if they need help with their debt.

For information on statistics for other areas, please see Bankruptcy Canada and Consumer Proposal Canada.

Hoyes Michalos is one of the largest filers of consumer proposals in Windsor and Leamington , so if you are interested in learning more about this increasingly popular option to bankruptcy, call me at 519-250-8060 in Windsor, 519-326-1467 in Leamington or email me to arrange a no charge consultation.

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As a Windsor bankruptcy Trustee, it meet with many people who have the same questions. I thought I would share the top 5 bankruptcy questions.

1. What does bankruptcy cost? This can be a complicated question because there are 4 components to what bankruptcy costs.

The first is the base fee. Everyone pays a minimum of $180 per month to file. It could be more if your file is complicated.

Next is what is known as surplus income. Essentially the more you earn as a family, the more you pay.

You may also have to make payments to keep assets such as any equity in a home.

And finally, although not a payment you make, you have to consider that you will lose at least 1 year of income tax refunds.

2. Will I lose my house? It depends on a number of factors. Is there equity in your house (is it worth more than you owe). If there is equity, then you don’t lose your house, but you will have to pay the equity to the trustee before you are discharged.

3. Will my bankruptcy affect my spouse? Surplus income payments (see above) are based on family income. If your spouse has a source of income, this could increase your payments. If you have any joint or cosigned debts, those debts will then become your spouse’s responsibility. Many people think that simply because you are married, any debts you have are automatically your spouse’s debt. That is just not the case.

4. Will I really lose everything? No, there are certain assets you are allowed to keep. Some of those are:

$5,650 in personal possessions
$5.650 for a motor vehicle
$11,300 for household furnishings
$11,300 for tools required to earn your living
Certain types of life insurance, investments, and RRSP’s.

5. Are there other options rather than Bankruptcy? Absolutely. In fact, more than half the people I meet with successfully file a consumer proposal. For most people, the monthly payment in a consumer proposal is lower than the monthly bankruptcy payment.

Now that you know the top 5 questions I am asked on a daily basis, call me at 310-PLAN or email me your question. We can book a free meeting to answer your questions, review your options and costs and formulate a plan that is right for you.

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I meet with many clients in Windsor, Chatham and Leamington on a weekly basis to discuss their options for a fresh start.  I am very surprised to learn from the majority of people I meet with that they have never heard of a Consumer Proposal. 

KEY ELEMENTS OF A CONSUMER PROPOSAL

It is a legal and binding agreement between yourself and your creditors to pay back, in most cases, a portion of what you owe. The one monthly payment can be made over any affordable time limit up to five years.  The funds paid to your proposal are distributed to everyone you owe on a pro rata basis.  Your debts are eliminated when you fulfill your proposal payments.

HOW DO I QUALIFY?

For an individual your unsecured debt must be under $250,000 and this excludes your mortgage if you have one.  Your debts must be greater than your assets, basically what you own. Also you must have the ability to afford and maintain the monthly payment plan.

ADVANTAGES OF A CONSUMER PROPOSAL

• You can avoid filing Bankruptcy
• Interest is stopped on the date it is filed
• Legal actions started or threatened by creditors such as wage assignments, garnishments, registering a lien on property are stopped
• Assets remain yours, for example house equity, owned vehicles and RESP’s
• The proposal becomes legal and binding on all of your unsecured creditors if it is accepted by the majority of your dollar voting creditors
• Consultations are always free
• There is a “light at the end of the tunnel”
• Our fees are paid through the administration of the file
• NO HIDDEN FEES

Contact my office at 310-PLAN and book a no cost, no obligation meeting to review all of your possible options for a fresh start.  Don’t let the stress  cause you to loose any more sleep!!

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I am very surprised to learn that the majority of clients I meet with everyday in my Windsor, Chatham or Leamington offices are unaware that they can and should get a copy of their credit report.

Credit bureaus basically fulfill two different functions. They collect and store information on a person’s financial history. This information is used by lending institutions to determine if a person is a high or low level of risk for lending purposes. Information is also kept on the collection of debts for creditors. This is an excellent link to Credit Education Centre.

Everyone should receive a copy of their credit report for a variety of reasons. First of all, you want to ensure the information on your file is correct. Remember there could be several people with your name across the country. There is also room for human error when information is attached to files.

The two major credit reporting agencies are Equifax 1-800-465-7166 and Trans Union 1-866-525-0262. Did you know that you could receive your credit report in less than 10 days by dialing your personal information into your touchtone phone? It really is that simple. I received my credit report in 10 days! The automated phone system will ask you a series of personal questions that you answer by simply pressing the numbers into your phone key pad. Remember also your credit report will not be sent out unless they are 100% sure it is you requesting the information. This is done for your safety and protection. The credit reporting agency may request you to mail in a copy of your birth certificate, etc. before they mail out your report.

This is a great source to find out which creditors you owe and how much. This might be the first step you need to take before calling me at 310-PLAN to book a no cost, no obligation meeting to review the best plan of action for dealing with your debts.

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Recently, I posted a blog called Easy Steps to Teaching our Children About Money Management.

Basically, you teach your children to track every penny spent and to find ten percent to put into an emergency fund. I remember telling my son Bradley, a story that was told to me by my financial planner. She told me about this young kid about 18 years of age in her office that saved ten percent of his earnings and brought it to her to invest. How much money did that kid have at age 40? The kid had over $800,000. Bradley has never forgotten that story and stated he was going to do the same thing. One of his goals is to graduate from the University of Windsor debt free. He is on his way and was even profiled in the Windsor Star recently!!

I am very proud of Bradley and his plans, but not everyone can graduate debt free. Currently, you may be a student or a recent graduate and finding it hard to secure employment to pay your student loans. Student loans are only automatically discharged if you have “ceased to be a student” for more than seven years prior to when you file a consumer proposal or bankruptcy. You may read more regarding student loans here.

There are generally 3 options to deal with the debt. The first option would be a debt management plan, which is to pay 100% of the debt over a 5 year period. The second option would be a consumer proposal, which is to pay a portion of the debt over a 5 year period and the last option would be a bankruptcy.. This short video explains options you have for dealing with your debt.

If debt stands between you and your future goals, please give me a call at 310-PLAN to help you make a plan for a fresh start!!

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Many clients I meet with in Windsor, Chatham and Leamington are concerned about their credit rating and how to repair their credit.

A credit bureau is an information service for credit lenders to exchange information with credit borrowers. The credit reporting agencies receives this information directly from the financial and retail institutions and retains it to help other lenders make decisions about granting you credit. Because your credit report contains all the information received from your lenders and provides a picture of your financial health, other lenders will request your report when they are determining whether or not to grant you a loan. Your credit report is a history that will help them determine what kind of lending risk you are – if you are likely to repay your obligation on time or not.

You may or may not already know that there are two major credit reporting agencies; Equifax and Transunion .

Everyone is entitled to get a copy of their credit report once a year to ensure all information reflected on it is accurate. If inaccurate information exists on the credit report then it is up to the individual to contact either Equifax or Transunion to find out how to change the information. The consumer reporting agency works for both you and the business to which it is reporting. It must inform the business of your current credit situation – and be fair and honest about what it reports. It is to the agency’s advantage to provide the best and most accurate information possible to ensure trust in its services. You could be denied a loan if your credit contains an error.

Generally a consumer proposal is on your credit report for three years after your last payment, and a bankruptcy is reflected for six years from the date of your discharge, unless it is a second bankruptcy which is noted for 14 years.

A practical way to re-establish your credit rating is to maintain current house payments or vehicle payments on time or to obtain a secured credit card from a Canadian Financial institution. This type of revolving credit requires you to pledge money as security to use the credit card.

If you are having difficulty handling your bills, then please come in to see me. I can help you get started on a fresh start plan for your future. You can call me at 310-PLAN or email me.

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I meet with clients on a daily basis in one of my offices located in Windsor, Chatham or Leamington and it is amazing to me how many people do not read their sales contracts before signing. All too often contracts are signed in haste before reading the fine print. Reading your cell phone, credit card or gym membership contract before hand can help to eliminate future problems.

SHOP AROUND and compare as you should be able to compare, price, guarantees, warranties and the duration of the contract.

WHO you are dealing with? Contact the Better Business Bureau or investigate a company online.

NEGOTIATE what you want through investigating the competition. If the sales person wants your business they will listen to your concerns.

READ THE CONTRACT and do not listen to the verbal promises of the sales person. Initial any changes and blank out any spaces not filled out so nothing can be added after you sign.

UNDERSTAND EVERYTHING IN THE CONTRACT and do not feel pressured into signing right away. It is a good idea to bring it to a lawyer to review before you sign.

KNOW WHO TO CALL TO GET HELP OR LODGE A COMPLAINT if you are not given customer service information then request it when signing documents. You should know how to resolve issues in advance.

KNOW HOW TO GET OUT OF IT. Sometimes there is a period of time to get out of your contract without penalty. Most of the time it will cost you to get out of your contract early.

SLEEP ON IT especially if you are prone to being impulsive. That will give you time to think it over and ask yourself if it is a need or a want.

GET A COPY OF IT as you may need to refer to it down the road for customer service inquires.

Signing paperwork you don’t understand can lead to financial problems down the road. If you find yourself in this situation and you need advice about your debt call me at 310-PLAN.

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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.

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