Sandra Sykora, Trustee

This week past both the Federal and Ontario provincial governments released their respective budgets for the coming year. My overall impression is it is all a bit of “nip and tuck” in the budgets – nothing drastic. Both are looking to reduce spending and save money to reduce the deficits. The Ontario budget is projecting a deficit of $15.3 billion. I deal with numbers and financial information all day but to be fair I am not sure I can really comprehend how much money, other then, it is a lot. It reminds of the commercial on TV with the two men discussing how much they need for retirement over the garden fence. Of course one has no plan so no idea and refers to his amount as a “gazillion dollars”!

I cannot imagine running my household without a budget or a plan as it would only lead to worrying. Not knowing would be the most stressful. So when people come to see me in our Toronto downtown offices not only is a good budget in order but then there is the plan. You really cannot have one without the other.

Both Ted Michalos and Doug Hoyes talk about the need for budgeting and how to do this. Doug has a video on this and Ted also has written on it.

However the jist of it all is that you need to know how you spend your money. So if you do not know how you spend your money then you need to watch your spending over a period of a couple of weeks or for a month. Keep a log and write down everything you spend your money on in that period. I believe Doug advocates budgeting based upon pay period. So if you are paid every week then what funds do you need for that week in order to cover your expenses. No matter how you do it you, once you know how much you make and what you spend it on you can change habits and plan for the future.

Sometimes once people do a budget and write down their income and expenses they soon see in black and white where the problem is and how it is they have no money left over at the end of month. There are ways to deal with debt and this shortfall on your budget. We would be glad to meet with you and assist you with the process and come up with a plan on how to deal with your debts. Bankruptcy is only one option. There is also a consumer proposal option whereby you repay a portion of your debt and this process is a legally binding contract if the majority of your creditors vote yes.

If you find yourself unable to meet your debt replayment obligations for any reason, keep in mind there is no charge for you to come in and meet with one of our professional team members who will be able to talk with you about your own financial situation. We’re here to help you understand your options and come up with a plan that works for you in order for you to get the fresh start that you’re looking for. Give us a call at 310-PLAN or email us to set up a meeting today.

Sandra Sykora, Trustee in Bankruptcy

Every year at about this time the Office of the Superintendent in Bankruptcy – the OSB, releases the new Surplus Income Limits.  The allowances set by the OSB are based upon family size and go up only marginally each year.    This year is no exception.  I refer you to our Bankruptcy Toronto web site for more info.

For most people that I see in our Toronto downtown offices, the issue is the allowances are national numbers for across Canada and do not take into account the cost of living that may be different in certain areas or cities.  So for most inTorontothey make more than the allowance set by the OSB and thus have surplus income of which they are required to pay 50% of it into their bankruptcy.  Thus the more you make the more you will pay in surplus.   If Surplus Income is high each month and consistent then for many their bankruptcy is extended from the minimum time of 9 months to 21 months and the surplus obligation or the 50% payment is very high each month.  In some cases they can hardly afford the surplus obligation.  So what is the solution for them?

For many it is considering a consumer proposal.  This option is a contract that you are trying to make with your creditors to repay a portion of the debt you owe.  The contract amount for sure must generate more money in total than in a bankruptcy and there are other factors but you get 5 years or 60 months to repay the contract amount.  And if you can pay it off faster than you can complete the proposal faster and be done- discharged from your debts.  No penalty, no minimum time.  So what is the key to a good proposal;  for most it is their budget that is, what can you afford to pay each month after you pay for rent and food etc.

For most the monthly payment in the consumer proposal is much more reasonable then a bankruptcy and they have flexibility to pay it off faster and be done faster.  You also know in 45 days, as your creditors vote on your offer, if they will accept it or not and what alternate terms they might consider.

Need more information please feel free to go to our website at www.hoyes.com or call us at 310-PLAN.

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

Happy New Year!

As part of welcoming the new year, many people make resolutions. A very common goal that people set at the beginning of the year is to get a handle on their personal finances and spending habits. Budgeting can be a very challenging task, and can be frustrating to figure out and stick to. Take a look at this post on our website which gives you a different perspective on how to approach budgeting. There is also a follow-up video to the one you’ll see on that page, and you can watch it here:

If you think your financial troubles are just too complicated or you owe too much to manage tackling on your own, consider giving us a call. There are many options avaialble to you to help you address and deal with your debt problems. These include debt management plans, personal bankruptcy and consumer proposals. Our firm, Hoyes Michalos & Associates are experts in all Ontario consumer debt options and we would be happy to meet with you to help come up with a plan that’s right for you.

Don’t put off your resolution any longer – give us a call at 310-PLAN or email us and let’s get working towards your fresh start today!

Something we spend quite a lot of time talking to our clients about is the difference between a consumer proposal and bankruptcy, and which is a better solution for their debt problems. This week, we met with a young professional who was looking for a debt solution that would give him a fresh start. He came in to see us, thinking that bankruptcy was going to be the right solution with him, but after we got talking, we were able to show him why in many cases, including his, a consumer proposal is actually better than a bankruptcy.

In a bankruptcy, if you earn above a certain government-set threshold, your bankruptcy may end up costing you a lot of money, and lasting longer than you originally expected. In a consumer proposal, once your creditors agree to the terms of the contract, you know exactly what your payments are going to be, and you are free to go out and earn as much money as you can without having to worry about whether your Trustee will be taking it from you! Not only do you get to keep any hard-earned raises, a consumer proposal is much simpler than a bankruptcy. When I explained to this young professional that a bankruptcy would involve submitting a monthly income and expense statement to us and collecting his tax information to send in to us, he commented that it sounded like a lot of work – it can be! In a consumer proposal, you don’t have to submit monthly statements and you continue to file your own taxes (which means you get to keep any tax refund you may have coming – another bonus over bankruptcy!). He had also been nervous as he had heard stories about people having to attend court when they are bankrupt which is a possibility for anyone declaring bankruptcy – again, not the case in a consumer proposal. After the initial 45 day voting period after the contract is accepted, as long as you continue to make your regular reasonable monthly payments, there is nothing further you have to worry about.

This only highlights a few of the reasons why a consumer proposal is often better than a bankruptcy. Take a look here to read more about the differences between a consumer proposal and bankruptcy. As always, there is no charge for you to come in and meet with one of our professional team members who will be able to talk with you about your own financial situation. We’re here to help you understand your options and come up with a plan that works for you in order for you to get the fresh start that you’re looking for. Give us a call at 310-PLAN or email us to set up a meeting today.

Last week, we explained the process of how someone would go about claiming bankruptcy in Ontario. One of the frequent questions we get when talking to people about whether a personal bankruptcy or consumer proposal is the right option for them is “what is surplus income in a bankruptcy?”

The basic idea of surplus income is that if you earn more than the government sets out as the limit they believe you need to live, you will have to pay more back to your creditors while you are bankrupt (“The more you earn, the more you pay”). These limits are revised ever year by the Office of the Superintendant of Bankruptcy and will depend on how many members there are in your family. Some of the technical details about surplus income can be found here on our main website. The most important thing to remember about surplus income is that if you have to pay it, your bankruptcy can become very expensive, and it will mean that if it’s your first time, your bankruptcy will automatically be extended to 21 months (36 months if you have been bankrupt before).

Often when we are reviewing options with our clients and we realize that they will have to pay a lot of surplus income, the consumer proposal will start to make a lot more sense for them. Reading about the technical calculations of surplus income can be very overwhelming! If you’re trying to decide whether a personal bankruptcy or a consumer proposal is the better option for you, we always suggest that you give us a call.

You can come in and see us for a free no obligations consultation where we will review your situation, explain all your options to you, and help you get started on the plan that’s best for you. Give us a call at 310-DEBT or 1-866-747-0660 or email us to take the first step towards your fresh start today!

Throughout our day in my Downtown Toronto office located at 8 King Street East, we get a several similar requests: I have a lot of debt that is overwhelming and how do I declare bankruptcy? 

First you need an appointment with a trustee for an assessment of your financial situation and to discuss ALL options (not just personal bankruptcy).  Because as it turns out, many who think they need to declare personal bankruptcy do not, and actually have other options such as a consumer proposal for dealing with their debts. 

This assessment or meeting takes about an hour and is a free consultation.  Once we have this meeting there is typically some homework or information that you need to gather and we prepare the necessary paperwork so you can sign the bankruptcy paperwork and actually file for bankruptcy.  We then e- file the paperwork with the Superintendent in Bankruptcy to get a court number or your ID number for your bankruptcy.  How quickly this process moves is up to you to decide. 

On the technical side of things in order to file for bankruptcy, you need to be of age or over 18, resident in Canada and have debt totaling at least $1,000.  For complete details please go to our web site http://bankruptcy-canada.com/how-to-file-bankruptcy-canada/.  This criteria is not difficult to meet so it is usually other issues that come up at the consultation that will change a person’s mind on how they want to deal with their debt.   In November 2009,  the Bankruptcy and Insolvency Act changed many of the duties or rules related to bankruptcy and as  a result, for many,  the duties mean a much longer bankruptcy and therefore make a consumer proposal a better option for dealing with your debts. 

Once you are bankrupt, you have legal protection from your creditors against any further garnishment etc.   A bankruptcy is a minimum time of 9 months with duties you need to complete to be discharged or relieved from your debts.  During the time you are in bankruptcy you do not pay any of your debts.  You do have to report you income every month and pay a portion or 50% that is over the allowance the court sets.  The allowance is based upon family size so it varies.  There are two counseling sessions you are required to attend on rebuilding your credit and budgeting.   The trustee is required to prepare the tax returns for the year you go bankrupt. 

So you may feel you need to file for bankruptcy.  Whether or not that is the case will depend on your individual circumstance so to start the process you need to make a call to start the discussion at 310-PLAN.

Today, once the fun of Halloween is over, we really get into fall. We are into the home stretch for the next big holiday which is Christmas for most people. And likely the most expensive holiday for most households. Although I do know a few people who go all out for the Halloween holiday.

Before we get into the holiday party season and have no or very little time to get anything done, now we have the time or opportunity to set out a budget along with a list of all the presents and gifts etc that we may need to be getting. We need to decide who really needs to get a gift that is store bought versus say a homemade gift or in some cases maybe it is a lunch or dinner instead of a gift.

Once you have made your budget and list stick to it no matter how hard. It is the only way to manage the expenses next to income and not to get into too much financial difficulty in the New Year.

It is also a time to start to manage children’s expectations regarding the holiday and presents. They are being bombarded with advertising about what they need to get and it can be very difficult to say “no” all the time. Let them participate in the holiday by making homemade Christmas cards and decorations. As parents we love these the most and keep them forever.

I was just cleaning out one of my mother’s old trunks and found a box of cards I had made in grade school for mother’s day. She obviously kept them all and I am not going to tell you how old I am but they are approaching vintage.

If you find that finances are out of control and no amount of budgeting is working and you are just over stressed with the holidays and debt, please do not wait to find out about your options. We would be glad to sit down with you to review all options. Bankruptcy may not be the only option, if we look at options early enough. So please feel free to contact our office at 310-PLAN for a free consultation where we can meet and discuss all your options and come up with a plan that will work for you and your family so you can have a happy and safe holiday season.

With everyone getting ready for Halloween, I’m sure there are a few Trustees in Bankruptcy considering dressing up like a “Debt Consultant” to give their colleagues a good scare! Trustees in Bankruptcy, like the ones that work at Hoyes Michalos and Associates and are licensed by the Federal Government, get pretty scared by all the debt “consultants” that are around these days. You’ve probably seen a lot of their ads – they’re everywhere! They make lots of promises about being able to reduce your debt by 70%. What their ads don’t tell you is that they’re likely going to charge you an up-front fee – maybe as much as $1,500 – and all they’re really going to do is refer you to a Trustee in Bankruptcy to file a consumer proposal. Of course, some people don’t ever hear from their “consultant” again after they fork over that fee.

The truth is that a “Debt Consultant” is not legally able to help you with your debt problems. Only a licensed Trustee in Bankruptcy is able to file a consumer proposal or personal bankruptcy for you.

When debt consultants are advertising that they can reduce your debts by up to 70%, they are referring to filing a consumer proposal. A consumer proposal allows you to make an offer to repay a portion of your debts, taking up to five years to make the payments. A consumer proposal is a contract that is filed with the Federal Government. It can stop wage garnishments and harassing collection agency phone calls, and also give you the satisfaction of knowing that you are paying back the portion of your debt that you are able to.

A consumer proposal is a great way for you to get a financial fresh start – but remember that only a Licensed Trustee in Bankruptcy can actually help you file one. Save your money and don’t pay any up-front fees for financial advice. You can come meet with us for free! If you’re interested in a free consultation to discuss your debt and the options that are available to you, including a consumer proposal, email us or call us at 310-PLAN today and we’ll get started on a plan that’s right for you.

During any given day I meet or talk with various people about their debts and options.  On this particular occasion, it was a person who had contacted our offices over the phone about their options. 

It was a very interesting call from my perspective as it was from a pay phone outside the Debt Consultants office.  She was there for a meeting with a debt consultant to discuss options regarding her debts.  She was not sure if she was doing the correct thing and asked to be excused from the meeting and go to the bathroom.  It was at this time she called our offices as she also had one of newspaper advertisements with her.  For this purpose I will call the person “Sally”.

Sally wanted to know if we had any fee that we charged upfront.  I advised her that our initial consultations were free or at no charge.  Also typically there was no money up front that she would be required to pay to do either a bankruptcy or a consumer proposal.  Sally went on to tell me that once the debt consultant had reviewed some of her financial information they concluded that she needed to see a trustee to likely file for bankruptcy and that for a fee of $1000 they would make the introduction for her.   Sally called our office as she did not have a $1,000 to give them but needed to do something about her debt and wondered if she could see us at no charge.  AS I had told her there was no fee to meet with us for a consultation it was free and we would review all options and come up with a plan that would work for her. 

We did continue the conversation so that I could get a little more financial information from her over the phone and give her some things to bring to our meeting.  From the information over the phone it appeared that she might be able to do a consumer proposal and not a bankruptcy.  She was happy to hear that the proposal was still an option.  She really did not want to file for bankruptcy which is why she went to the debt counselor in the first place.

She was not far from my office and she had most of the information with her for the meeting she had with the debt counselor.  I had a free hour and asked her if she wanted to come over to our place for about an hour to discuss the proposal option further.  We set up a time for later that day.  We sat down and reviewed all options.  Her financial situation was follows:  She had about $25,000 in credit card and like debt.  She did have a car loan and was current on the payments and wanted to keep it, as she needed it for work.  She did various shifts.  Told her that was ok but she needed to continue to make the car payments to be able to keep the car.  She understood.  Her budget was good she was making about $2300 net income per month.  She had about $275 left over on her budget after rent and food and the like.  I suggested a consumer proposal for $200 per mth for 40 months or $8,000.  She was good with that and we proceeded to finalize the paperwork.

She same in later that week to sign the necessary paperwork to begin the proposal process.  She liked the fact that she now had a legally binding contract with all her creditors that would be finalized in the next 45 days – the voting period.  The creditors did vote yes for the proposal and it passed with no further issues.  Sally found the process to be simple and easy to follow.  She liked the fact that we were upfront about all costs and issues and that there was not a new cost to be charged along the way. 

She is currently making payments.   Granted she still has another couple of years to go.

To read more about some of our client’s experiences with debt consultants, take a look at this article: http://www.hoyes.com/blog/2011/10/debt-consultants-horror-stories.html