Toronto Ontario Personal Bankruptcy Blog

What are the consequences after a Proposal to my Credit History?

2010-01-27T15:26:00.000-05:00

Question: Once it is off my Credit Report, will the individual banks that were involved in the consumer proposal lend me money again in the future? Would I have to repay them back what I still owed to be back "in their good books"? Would the answer be any different if I filed bankruptcy in Canada?

Answer: Once you have completed your consumer proposal, you are free to apply for new credit. It will be up to the individual banks to decide whether or not they will lend you money in the future.

You are correct that one factor they will consider will be the fact that they may not have been repaid in full in your consumer proposal. However, they will also consider other factors, such as your current income, and whether or not you have taken steps to repair and rebuild your credit after bankruptcy.

Your goal should be to pay off your consumer proposal as quickly as possible, and then begin saving money and take steps to re-establish credit.

2nd bankruptcy in Toronto, deferred discharge

2010-01-18T13:17:00.000-05:00

Question: I am a single mother, forced to declare bankruptcy, due to credit card/line of credit debt, and have monthly earnings at or below the monthly excess income limits. I was bankrupt previously, 18 years ago, for a totally different reason, than the current situation.
I will be going to court in February, and have been told that the most likely outcome is to have the bankruptcy discharge deffered 5-6 months.
What happens from the court date till the final discharge ? I have been told that I will no longer have to fill in the monthly income statements. Is this correct. Also, income tax & GST refunds that I would be elegible for in this period. Do they go to me, or to the trustee ?

Answer: Yes, what your trustee has told you appears to be correct. In the case of a second bankruptcy (filed before September 18, 2009) you are required to appear in bankruptcy court in Toronto for a discharge hearing. At that hearing the bankruptcy judge will determine when and how your bankruptcy will end. In the case of a second bankruptcy with no other issues it is common for the Toronto court to grant a "suspended order of discharge", meaning that your official discharge will occur six months in the future. You would not be required to complete further income and expense statements, unless ordered to by the court.

GST refunds continue to be sent by Canada Revenue Agency to the trustee until you are discharged. In most cases you only lose your tax refund up to and including the year of bankruptcy. Your trustee can advise you further, based on your specific circumstances.

NOTE: Under new rules implemented on September 18, 2009, a court hearing is not automatically required if a second bankruptcy is filed after September 18, 2009.

My AMAZING Bankruptcy Presentation To Lawyers In Toronto

2009-09-24T14:00:00.002-04:00

Several months ago, I was asked to speak at a lecture series put on by the Law Society of Upper Canada. The subject of the day was Bankruptcy and Insolvency Law for General Practitioners, and my topic was to be Personal Bankruptcy, as that is what we specialize in at Hoyes Michalos. Well, I gave my presentation today, which I think was amazing for a couple of reasons, and let me tell you why.

A week ago, I had a major fall. I banged my head on some rocks, resulting in 3 sets of stitches, 2 black eyes, a broken nose, and a concussion, along with many other aches and pains. While I lay in the hospital emergency room over night, many thoughts went through my head, including how am I going to be able to make my presentation next week. I should have been worrying about a lot of other things, but I guess that is just my nature. Well, as time went by, I started to heal. The swelling went down (not totally yet), the bruising started to fade and the stitches came out. I went so far as calling one of my colleagues to give them the heads up that I might need him to pinch hit for me. He tentatively rearranged his schedule to help me out, but with 2 days to go before the presentation, I felt well enough and strong enough to go it on my own. And that is amazing, Part 1.

So here I am in Toronto, giving a presentation on Personal Bankruptcy to 100 or so lawyers. These are lawyers, trained professionals, who have gone to law school, and I am filling them in on how bankruptcy works. Then I think to myself, if these people need help in figuring out what I do, how does that average guy or girl on the street with financial difficulties, the type of people I meet everyday in my office, figure it out. Amazing, isn't it? Let's just call that amazing, Part 2.

And what did I have to say to these lawyers? The same message I try to get across to the average person: identify a problem situation early enough, get expert advice, and come up with a plan. When the creditors are calling, the bills are piling up on the kitchen table, sleep is not easy and family ties are strained, it is time to get some expert advice. My job is to help people review their finances, their income, assets and debts, and come up with a plan. That plan may involve filing a consumer proposal, especially in light of the fact the our bankruptcy rules changed last week to make consumer proposals more attractive than filing for bankruptcy, or, if there is no cash flow to offer a settlement to creditors, than a bankruptcy may be the last resort.

If you would like some expert advice, feel free to call us at 310-PLAN, or your can e-mail us a question.

Simply AMAZING.

bankruptcy vs consumer proposal

2009-05-19T15:53:00.000-04:00

Question: my husband and i have our personal credit in debt, up to 71K due to a business star up, we're not trying to get on our feet but our debt just seems to be getting all of our funds and we can't make payments on time. we're likely to have $ 300 only after our apt lease, utilities and living essentials, such as gas and food, we own our car. can you tell me what are my options consumer proposal or bankruptcy,how can i pay back, do they reduce my debt fee? Thanks

Answer: In a consumer proposal, a settlement is reached with your creditors. For example, in a proposal you may offer to pay $300 per month for 5 years, or $18,000 in total. If the creditors accept, and you make the payments, the remainder of your debt is eliminated.

If you can't afford a proposal, or if the creditors don't accept the offer, the other alternative is personal bankruptcy. The cost of bankruptcy depends on your family income, the size of your family, and certain expenses.

Each situation is different, so we recommend that you contact a Toronto bankruptcy and proposal trustee to review your specific options.

Will consumer proposal cost my job?

2008-10-27T08:58:00.000-04:00

Question: I am currently work for a bank, if i file a consumer proposal and R7 will be on my record, will my employer fire me for this?

Answer: Over the years we have assisted many residents of Toronto who work for a bank file a consumer proposal. Unless you have a specific clause in your employment agreement preventing you from filing a consumer proposal, it would be very unusual for an employer to fire you for filing a consumer proposal. In most cases your employer will be pleased that you are finally dealing with your debt issues.

However, if you are worried about it, you should talk to someone in your Human Resources department first to determine whether or not a proposal would have any impact on your job.

Is your score affected by credit counselling?

2008-08-21T21:00:00.003-04:00

Here's an e-mailed question I just received: Is your score lowered by going for credit counselling?

The answer depends on your credit score before you go for credit counselling. If you already have a bad score because you have defaulted on payments, your score will probably be no worse for attending credit counselling. According to Equifax, credit counselling will remain on your credit report for three years after your program is completed.

While credit counselling is the correct option for many, a consumer proposal is often a better option. It has the same impact on your credit report, and in most cases we can work out a plan to repay less than the full amount of your debt, allowing you to get out of debt quicker.

2008-07-09T23:48:00.003-04:00

2 New Bankruptcy Rules in Effect Starting July 7, 2008:

Student loans now discharged after 7 years
If you have been out of school for 7 years and are still struggling with your student loans, they can now be included in a bankruptcy or a proposal. This rule was amended from the 10 year waiting period.

Your RRSP is now protected
Under the new rules, RRSPs are exempt from seizure; this means you can keep them (except for contributions made in the 12 months prior; this prevents people from abusing the system). Under the old rules most RRSPs would have been seized by the trustee in a bankruptcy.

Questions?
These rule changes are dramatic. If you would like more information on how they impact you, contact one of our offices to schedule a consultation.

Travelling Abroad after filing bankruptcy

2008-01-17T18:11:00.003-05:00

Question: Can a person who recently filed consumer proposal or bankruptcy in Toronto travel out of country on his passport or travel documents like USA on business trips?

Answer: Yes. The filing of a consumer proposal or a personal bankruptcy does not prevent you from being able to travel outside of Canada.

Consumer Proposals: Significant Increase in Consumer Proposals Filed in Toronto in the First Half of 2007

2007-08-02T11:07:00.000-04:00

The number of consumer proposals and bankruptcies filed in Toronto increased by 6% in the first six months of 2007, according to statistics just released by the Office of the Superintendent of Bankruptcy. Toronto fared better than the rest of Ontario, where personal insolvency filings increased by 9%.

Most surprising is the increase in consumer proposals, which are fast becoming the leading alternative to bankruptcy in Toronto. Consumer proposals increased by 22% across the GTA. In the first six months of last year 2,275 residents of Toronto filed a consumer proposal. In the first six months of this year that number has increased to 2,768.

A consumer proposal is a legally binding deal we negotiate with your creditors. Instead of going filing for bankruptcy, you make payments over a period of time (no more than five years), usually for less than the full amount you owe. You avoid bankruptcy, and make one monthly payment, and the creditors get more money than if you went bankrupt, so everyone wins.

If you would like more information about consumer proposals or bankruptcy, call our Toronto team at 310-PLAN (310-7526, no area code required) or E-mail us to arrange a free initial consultation. There is help available, so give us a call, and let's get started.

Personal Vehicle & Family Vehicle and Bankruptcy in Toronto

2007-02-15T01:06:00.001-05:00

Question: I have a personal vehicle "86 Pontiac" value $2000, basic transportation.
Through a serious family illness, I have become the primary care giver for a parent. Left work and have not been employed for 4+ years. Through the years debt has accumulated. The family purchased a physically challanged adapted vehicle to use for the parent, the vehicle was registered in my personal name as I am the only driver in the family, I pay the insurance through funds given by the family account.
How does this vehicle fit in my personal bankruptcy in Toronto?

Thanks

Answer: If you file for personal bankruptcy in Toronto, or anywhere in Ontario, you are permitted to keep one motor vehicle worth up to $5,650. If you own more than that, you would be required to either surrender the vehicle to the trustee, or pay to your bankruptcy estate the difference.

For example, if you own a $2,000 vehicle and a vehicle worth $8,650, you would declare that the first $5,650 of the $8,650 vehicle was exempt, and you would pay the trustee $3,000 to keep the vehicle. Since you are only permitted to declare one vehicle as exempt, you would also be required to pay the $2,000 value of the other vehicle if you wanted to keep it.

If there are liens or loans against any of these vehicles, the answer would change.

These rules can get complicated, so I suggest you call us at 310-PLAN, or e-mail us for further information.

Mortgage Payments and Income Taxes Under Consumer Proposals

2006-10-22T21:06:00.000-04:00

If I file for a consumer proposal, will I have to leave my home if I am in default with my mortgage?

Do consumer proposals cover debt owing for income taxes?

Using Scissors to Avoid Bankruptcy in Toronto

2006-10-16T19:19:00.000-04:00

The Toronto Star ran an interesting article today (you can see it on their web site) where they described the most obvious way to deal with credit card debt:cut up your credit cards.

The article quotes Jean-Guy St-Amore, a spokesperson for the Financial Consumer Agency of Canada, who says that: "The average person has three credit cards, we question that."

The article goes on to state that if you are carrying a balance on more than one credit card, the best solution is to cut up all but one of your credit cards, then call the credit card company and cancel them so you don't incur any more debt. Then, make a budget and start working to repay your credit cards.

If your credit is still in good shape, consider getting a debt consolidation loan to reduce the interest you are paying.

The article doesn't go on to discuss what to do if you have bad credit and can't get a debt consolidation loan, but the obvious next steps would be to consider filing a consumer proposal, or a bankruptcy.

Feel free to contact us at 310-PLAN or e-mail us for more on your options to avoid bankruptcy in Toronto.

Is the Housing Market in Toronto Getting Soft, and Will That Lead to a Higher Bankruptcy Rate?

2006-10-05T19:25:00.000-04:00

An interesting article appeared in today's Toronto Star. The article was titled Housing Market to Cool, and it quoted experts as saying that after the record sales in 2005, the number of sales in Toronto will probably fall by 1% in all of 2006.

In September 2005 there were 7,326 sales in Toronto, but in 2006 that number fell to 6,622, a drop of almost 11%, indicating perhaps an even steeper decline than many experts expected.

As interest rates increase, monthly mortgage payments increase, making it more difficult for homeowners to make their monthly payments. If incomes also start to decline as the economy slows, some homeowners and real estate investors get caught in the squeeze, and are forced to sell their homes. With more sellers, prices drop further, squeezing even more people.

I have seen many people over the last few years who have re-financed their houses as interest rates dropped and house prices increased, and they have used the money to pay off other debts, but many of those people find themselves in debt again as prices and incomes decrease, and that can ultimately lead to a higher rate of bankruptcy in Toronto.

If you have more debt than you can handle, and you are worried it may get worse, please e-mail us or call us at 310-PLAN (no area code required) to discuss your options. Be sure to ask us about a consumer proposal, which is a great option for dealing with your debts and allowing you to keep your house in Toronto.

Third Bankruptcy

2006-09-12T06:48:00.000-04:00

Can I claim personal Bankrupcy for the third time and what will this involve? I owe $90,000.00 in credit cards and one loan for 8,000.00. Total house hold income is aprx. $45,000.00

Can I keep my car in a bankruptcy? (NEW government rules)

2006-06-22T07:59:00.000-04:00

A deficiency in the law was corrected today. Now, if you file for bankruptcy and your car is worth less that $5,650, and there are no liens against it, you may keep it. If your car is worth more than $5,650 and you want to keep it, you will have to pay your trustee the difference. (Under the old rules, you had to give it to your trustee.)

This rule change will give people who have to file for bankruptcy a better chance of starting over without any additional pressures being put on them.

If you would like some more information about this topic or have any other bankruptcy related questions, e-mail or call us at 310-PLAN.

Business bankruptcy in Toronto

2006-05-11T11:38:00.000-04:00

I am a partner in an incorporated business, if the business declares bankruptcy, will I have to declare personal bankruptcy as well?

RRSP and personal bankruptcy in Toronto

2006-05-02T20:48:00.000-04:00

Hi,
When I file for bankruptcy in Toronto, will I lose everything I have in my RRSP?
FYI:
My RRSP are held with my bank, almost all of it are invested in various equities.
Thank you in advance

guarantor of loan

2006-04-28T00:21:00.000-04:00

I am a guarantor of someone else's loan. When I file for bankruptcy in Toronto, does this release me from this debt as i can no longer afford to pay the loan?

Alternatives to Bankruptcy: Your Options

2006-04-21T07:40:00.000-04:00

When someone meets me for the first time, I don't view this as a meeting to simply explain bankruptcy to them. This is a chance for me to explain how they can get a fresh start and what their options are. My job is to evaluate your financial situation, determine a way of dealing with your money problems and then help you implement a plan to put this all behind you. During our meeting, we will explore all or your options.

Personal bankruptcy is an option, but you probably didn't know that most of the people we see do not end up going bankrupt.

Some people simply need help with budgeting; others may be candidates for a debt consolidation loan. Perhaps a debt management plan administered by a credit counselor is right for you. And then there's my favourite, a consumer proposal, which I would be happy to explain to you. Finally, once we have exhausted all these options, we may have determined that bankruptcy is your only course of action.

Everyone's situation is different; my job is to help you develop a plan that's right for you. Feel free to e-mail or call me at 310-PLAN to schedule a consultation. It's up to you now to take that first step towards a fresh start.

Payday Loans

2006-04-17T08:04:00.000-04:00

Let me address this topic with just one word: DON'T.

From my personal experience as the Trustee in Bankruptcy responsible for the Greater Toronto Area practice of Hoyes, Michalos, I can tell you that the number of people who come to see me with payday loans included in their list of creditors is on the rise. Payday loans are a big business and they are easy to get in to but hard to get out of. I don't consider payday loans to be the main problem; they are merely the "icing on the cake". By the time someone has decided to get a payday loan, the problem has usually gone way too far.

So what is the answer? You need a plan. You need a plan to deal with your current financial situation, and live within your means. There are options available to you. Our job is to investigate your specific financial situation and then come up with a plan that is right for you and your family. If you would like to schedule an appointment to review these options, e-mail or call us as at 310-PLAN.

What are the early bankruptcy warning signs?

2006-04-01T21:50:00.000-05:00

Almost every one of us experiences some level of financial difficulty in our lifetime. Sometimes, we have no one to blame but ourselves, whether it be due to uncontrollable spending, poor money management or just plain being irresponsible. Other times, the situation may be beyond our control: separation, loss of employment, health reasons, or a business failure. Here are some of the warning signs you should be on the look out for:

> Your credit cards are always maxed out
> You use cash advances from one credit card to pay another
> Minimum payments on your credit cards are all you can afford
> You have missed a loan or mortgage payment
> You get calls at home and at work from collection agencies
> Your creditors are taking legal action against you
> Your finances are affecting your health and personal relationships

If you recognize any of these bankruptcy warning signs, you should seek out professional help. A trustee in bankruptcy is qualified to evaluate your specific financial situation and recommend a solution for your problem. You may not have to file for bankruptcy: a consumer proposal might be right for you. The best thing to do right now is e-mail or call us to schedule a consultation. Our telephone number is 310-PLAN. Don't wait for your creditors to start taking action against you; take care of your problem as soon as you notice it.

I heard your radio commercial. Is personal bankruptcy in Toronto as easy as it sounds?

2006-03-15T15:43:00.000-05:00

We recently ran some ads on the FAN 590, Toronto's only all sports radio station. In the ads I say that "over the years we have helped thousands of people, just like you, who are overwhelmed by debt, to make a plan to deal with their debts." (That's why our phone number is 310-PLAN).

Yesterday I got a call from a man who had heard our commercials many times on the FAN, but he didn't call us right away because he didn't believe we could actually help him. He thought it sounded too good to be true; he thought we must be exaggerating how we can help people.

I told him that Hoyes Michalos & Associates Inc., like all trustees, is licensed by the federal government of Canada, and therefore we have the power to use federal law, the Bankruptcy & Insolvency Act, to help people deal with their debts.

We file a large number of consumer proposals in Toronto every year to help people deal with their debts. In a consumer proposal, we work with you to determine what you can afford to pay, and then we negotiate a legally binding repayment plan with your creditors. In most cases you pay no interest on your debts, and you repay less than the full amount owing.

Sound too good to be true? As I told the caller, a consumer proposal requires you to make payments each month, and it will appear on your credit report for three years after you have made all required payments, so it's not a free ride. However, for many people, a consumer proposal is a great way to get back on track.

Unfortunately with the high cost of living in Toronto a consumer proposal is not always possible, so a bankruptcy may be necessary.

Either way, the professionals in our Toronto bankruptcy office, located steps from the subway on Yonge, just north of Sheppard, will meet with you personally to review your options and work out a plan that works for you, so e-mail us your question or call us at 310-PLAN (no area code required) and let's get started.

Toronto Ontario Canada Bankruptcy Statistics for 2005

2006-02-10T20:20:00.000-05:00

You may have been wondering how many people in Toronto, Ontario declared personal bankruptcy or filed a consumer proposal in 2005?

Well, here are the numbers (Office of the Superintendent of Bankruptcy statistics):

Personal bankruptcy filings: 10,983
Consumer proposal filings: 4,159
Total Personal bankruptcy and consumer proposal filings: 15,142

This compares to 40,092 for all of Ontario and 101,192 for all of Canada.

To save you doing the math, Toronto accounts for 15% of all Canadian filings and 38% of all the filings in Ontario.

What might be more alarming is that while Canadian numbers are up 1.2% over the previous year, the increases for Ontario and Toronto are 3.1% and 6.3%, respectively.

These numbers are staggering, so don't feel alone. If you find that you are overwhelmed by your financial situation, I would suggest you contact us by e-mail or telephone (310-PLAN). We can arrange a meeting to review your specific situation and work out a plan that's right for you.