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.

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.

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?

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.

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.

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

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.

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

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

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?