When you complete all your duties in bankruptcy, you will receive a certificate of discharge from your Trustee (or get a discharge order from the Court). This means your bankruptcy has been completed and subject to some exceptions, your debts are eliminated.

However, your bankruptcy will remain on your credit report for another 6 years, if you’re a first time bankruptcy filer, and longer when you’re a second time filer. When you get your certificate of discharge send a copy to Equifax and Transunion and ask them to update your credit profile with this new information and make sure that all of your debts that were discharged in bankruptcy are reporting as such and have a balance of zero.

Make sure your certificate of discharge is kept in a save place as it is an important document. This document provides proof that you have no further obligation to meet and there may be a time in the future you may need to provide proof of your discharge in bankruptcy. Here are some examples of times you may need to provide you certificate:

• The certificate would be necessary in order to lift the lien against your property that a former creditor put on. The certificate allows the owner to file to have the lien removed from the title to make it possible to sell.

• If any former creditor tries to collect from you or says you still owe them money showing them a copy of the certificate of discharge will prove that you do not owe them any money.

• It doesn’t happen too often, but we just had a person try to file a second time bankruptcy. However the records of the Office of the Superintendent of Bankruptcy stated that the individual was not discharged from the first bankruptcy. In order for that person to file again, he would need to provide proof of his discharge from the previous bankruptcy.

• Applying for a loan as they may ask for proof of your discharge.

If you loose your certificate of discharge it could be time consuming and cost money to have another one issued. In short, keep it in a safe place.

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by Angela Marquis

Going through a divorce, change of career, losing a love one or moving your place of residence are all stressful situations both emotional and financially. Any or all of these reasons, could contribute to confusion or misunderstanding regarding debts.

If you are not sure whom you owe, the first step is to get copies of your credit report. There are two major credit reporting agencies: Equifax and TransUnion. Read the report carefully to see who you owe, account number, contact information for the creditor, outstanding balance and a nine point scale indicating whether a payment was made on time or late.

The nine point scale is as follows:
R0 Too new to rate; approved but not used.
R1 Pays (or paid) within 30 days of billing; pays account as agreed.
R2 Pays (or paid) in more than 30 days, but not more than 60 days, or one payment past due.
R3 Pays (or paid) in more than 60 days, but not more than 90 days, or two payments past due.
R4 Pays (or paid) in more than 90 days, but not more than 120 days, or three or more payments past due.
R5 Account is at least 120 days overdue, but is not yet rated 9.
R6 (Code 6 does not exist.)
R7 Making regular payments under a consolidation order or similar arrangement.
R8 Repossession (indicate if it is a voluntary return of merchandise by the consumer).
R9 Bad debt; placed for collection; skip.

All credit reports contain different information and keep in mind, just because a debt isn’t on the report, doesn’t mean you don’t owe them, as it just means the creditor did not report it or the debt was removed from the creditors report, usually after six years.

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by Angela Marquis – client service specialist

Recently I was shopping and thought there are many items we pay a large part of the cost in the expensive or elaborate packaging. Most times when we arrive home we discard the packaging and store the items ourselves. Many times we can save a lot of money by buying in bulk, if we do so wisely.

Here is a list of things that usually saves a lot of money:

- Spices – All you need is your own jar and you can buy as much or as little as you need.
- Meat – Is probably the best item you can buy in bulk to save you money. Freezing you meat can last as long as 12 months.
- Wheat Flour – wheat flour is rarely on sale, so buying from the bulk bin does save you money
- Any items that you will use up in a short period of time as long as the price is reasonable.
- Canned goods have a long shelf time, so you can purchase them in bulk.
- Paper towels, toilet paper, paper plates, q-tips or any other paper goods are all great products to stock up on.

Now just because you can buy in bulk, doesn’t mean you always save money. Here are some tips for you to consider:

• Don’t over stock because if you’re throwing it away, then it’s not a savings.
• Make sure you check the price, to make sure it’s actually less expensive to buy in bulk.
• Make sure you can store it properly, as they can go bad before you use them.
• Buying items in bulk that you don’t use often uses up money that you would probably use elsewhere.
• You may end up buying things in bulk that you would never have just because they are such a good deal. Do you really need ground cinnamon by the pound?
• Keep in mind when you have more, sometimes you use more. When you have more food around to eat, you’ll find yourself eating more.

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What is surplus income in a bankruptcy?

Simply stated, the more you bring home each month the more you pay.

The Office of the Superintendent of Bankruptcy has issued guidelines stating how much money a family is allowed to make in a bankruptcy. The more family members, the greater the allowed income. Before calculating how much you have to pay each month we are allowed to consider certain expenses such as support payments and child care. You can see numerous examples of how to calculate surplus income at our surplus income page.

Is surplus income calculated on my income before or after tax?

After tax.

What about the fact I have a mortgage and car payment?

Sorry, but there is no allowance given for housing and car payments. The income limit is the same of everyone regardless of where you live or what you drive.

I have money left over each month. Does that mean I have to pay that to the Trustee?

It’s great that you are able to save money. But no, surplus income for bankruptcy is based on your net income and the guidelines. You are not penalized to being able to save money.

I am paid weekly. What happens when I have a 5 pay cheque month?

The limit is the same even if it’s a 5 pay month. However, the payments are make are based on your average income during the first 6 months of your bankruptcy.

Wow, that sounds confusing, is there any way I can avoid having to worry about whether or not I have surplus income?

Yes, when you file a consumer proposal, your payments are fixed. You don’t have to worry about being penalized if you earn more than allowed.

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by Angela Marquis, client service specialist

One of the more stressful situations in life a person can go through is a separation or a divorce. If it is compounded by financial difficulties, which is often the case, it can seem overwhelming.

Recently, I had just this situation and the question arose “my spouse declared bankruptcy after we separated. What impact does that have on me?”

If one spouse files and the other doesn’t, it does not always mean the other spouse will be forced to file for bankruptcy too. If all the debts are just one one spouse’s name, then only the spouse with the debts will file. However, if you have joint debt, or you are the co-signor with your ex-spouse on a debt, or have a secondary credit card, the creditor can require the entire payment of that debt from you even though the separation agreement says the full debt belongs to your ex-spouse. Unfortunately the creditor didn’t agree to this, so they aren’t bound by it.

Keep in mind that if both spouses own property together, such as a house with a mortgage, then that would be a debt of both parties.

Many people believe that filing for bankruptcy means you don’t have the obligation of paying child support or alimony. This is not true as these are non-dischargeable in bankruptcy. Meaning it does not release your spouse from the obligation of continuing to pay alimony or child support to you.

As you can read, this is a very confusing situation. You can sit down with us and we can review your situation and try to help you understand what debts you are responsible for .

If you’re concerned about how the bankruptcy would affect you or are considering filing for bankruptcy either separate or filing jointly with your spouse, call us at 519-250-8060 or 310-PLAN to set up an appointment to find out which situation will be best for you.

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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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There are many misconceptions about filing bankruptcy.  I find often when meeting with clients in the Windsor, Chatham and Leamington offices that many people have “heard through the grape vine” a lot of wrong information.  Bankruptcy laws have changed in the last couple of years.  There are options for dealing with your debt, and depending upon your information, sometimes bankruptcy may make the most sense.

Bankruptcy Facts

You Do Not Have to Lose Everything….

Most personal belongings are exempt from seizure in bankruptcy under Ontario law.  You may keep your clothes, furniture and appliances.  It is possible to keep your owned vehicle if the black book value of your vehicle is under $5,650 (exemption amount) in Ontario.  If you have a financed vehicle you must maintain the payment to keep it.  Most mortgage holders will allow you to keep your home if you file bankruptcy, however, you would have to pay the equity in your home to your bankruptcy estate if you wish to keep your home.

Legal action stops…

Phone calls from collection agencies and creditors stop.  Legal action such as wage assignments and garnishments stop.  Creditors are unable to register a lien against your property after filing bankruptcy.

You Get a Fresh Start….

Bankruptcy is a legal process that eliminates most if not all of your debts.  Credit Counselling is provided to help you rebuild and repair your credit.  You may qualify for a 9 month bankruptcy if you complete your duties, have minimal surplus income (bring home less than $200 on average above the government guideline) and if no creditors object to your discharge.  If you filed a previous bankruptcy then your discharge may be in 24 months if there is no average surplus income.

It may be time to call 310-PLAN and book a no cost, no obligation consultation if you are falling behind with your monthly payments.  I would be very happy to review your information and explain all of your options including bankruptcy in full detail

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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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