The Office of the Superintendent of Bankruptcy (“OSB”) has released its report on the number of bankruptcies and proposals filed both in September and October 2011 with some year-to-date comparisons. It appears whether or not you look at the numbers nationally, or provincially for Ontario or for the City of Toronto, that overall the number of filings are down.
Is this good news?
Yes, as it would appear that our financial houses are in order or under control. This might be supported by the fact that compared to the US, Canadians were cautious over Christmas in their spending and spending was down. Unemployment is also at one of its lowest or 7.1%. Generally economist indicate the Americans have reduced personal debt more than Canadians thus there markets are picking up. The upswing for us is that they are our largest trading partner so if the news is correct then we will benefit from an improvement in the American Economy.
In Toronto, the latest news is the condo market, that is new builds, is slowing down. It appears that there were a lot of new builds to take advantage of the low interest rate but the confidence that the interest rate will remain low is softening and thus starts are slowing down. If interest rates increase this could have a significant effect on home owners both for their mortgages and consumer or credit card debt.
So we are optimistically cautious. We do note from our offices in Toronto (2 Bloor Street East and 8 King Street East) that the number or proposal filings is up. For the Toronto offices proposal represent approximately 70% of our business as opposed to bankruptcies. So the OSB stats indicating that the number of bankruptcy filings are is accurate. We think many are still struggling with debt that is paying mostly interest and not reducing principle. Thus if their budget can afford it a proposal makes a lot of sense since the new bankruptcy rules came into effect in 2009, making bankruptcy longer with more costs and duties. And to quote Mr. Michalos, a co-owner of Hoyes Michalos & Associates Inc., “ Consumer proposals allow the hard-pressed consumer the ability to negotiate settlements with their creditors, a win-win for everyone”.
We need to stay on track and reduce personal debt. At Hoyes Michalos & Associates Inc., we are glad to assist you with any questions you may have and please feel free to use the tools such as our budgeting worksheet on our website at www.hoyes.com to help you