Question: I owe money on four credit cards.  I have a good enough job, but my due dates are all over the place, and I can never keep track of all of them.  I tried to do a spreadsheet, and to keep track on paper, but it’s too hard.  If I can’t get this under control i will need to go bankrupt, and i don’t want to.  help!

Answer: The easiest way to budget is to not budget.  Just pay your bills as often as you get paid.

If your Visa payment is $400 per month, and you get paid every two weeks, send Visa $200 every two weeks, on payday.  Do it with your internet banking, so you are not writing cheques and sending them in the mail.  Here is a link to an article on how to budget by not budgeting.

If this doesn’t work, you may need to consider a consumer proposal or a bankruptcy in Toronto to deal with your debts.

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Question: I know this may seem odd but I’m considering a Consumer Proposal to work on my debt crisis but in two months time I’ll be settling a personal injury lawsuit (with money coming to me).
How would this affect my standing and the Consumer Proposal?

Answer: When you file a consumer proposal or a bankruptcy you are required whether or not you expect to receive any lump sums of money in the next twelve months.  So, if you expect to receive money in two months, you would be required to disclose the amount of money you would expect to receive.

If the money will be substantial, it may simply be best to wait until you receive the money and repay your debts in full.  If you won’t have enough money to repay the debts in full, you could offer a proposal for a lesser amount.

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Question: How soon can you purchase a home after your discharge from a consumer proposal and would you be able to take advantage a good interest rate?

Answer: That will depend on a number of factors.  The proposal is one factor, but other factors will include the amount of equity you have in your home, and your income, and whether or not you have a co-signor.  Your bank or mortgage broker can provide you with more information.

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There is so much information on bankruptcy but from what I understand is that a person must use a Bankruptcy Trustee for both. Im not sure if that\’s true. Are they the same in the end? Is one worse than the other?

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Question: My husband and I declared bankruptcy on September 17, 2009. My husbnad was a first time bankrupt, and was discharged in June 2010. I am a second-time bankrupt (the first time was 15 years ago due to massive student loan debt). I received a phone call from the office of my Trustee advising that I will have to appear in court in order to recieve my discharge. I was told that the judge wants to know why I declared bankruptcy instead of filing a proposal. I was told at my initial meeting with my Trustee that my husband and I did not earn enough income to file a consumer proposal, as we were barely meeting our monthly expenses. However, most of the debt was in my husband’s name. Now I am very concered about this court case. What are the possible outcomes? Are they likely to make me re-pay the debt that was included in the bankruptcy? I am certainly not in a financial position to do that. Please advise – I am extremely anxious about this.

Answer: Prior to September 23, 2009 all second time bankrupts in Toronto were required to have a discharge hearing.

We would suggest that you discuss this with your trustee to determine if there are any outstanding issues.

If there are no issues, simply appear in court, and answer the questions that are asked.  For you, it will probably be a routine hearing.

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Our government has just released bankruptcy statistics indicating that the number of people who filed for personal bankruptcy in North York has decreased since this time last year.  Here is what we are looking at: 

During the first six months of 2010, 943 people in North York claimed bankruptcy.  In addition, 1,042 filed a consumer proposal.  This totals 1,985 individuals who made use of our bankruptcy laws between January and June of this year.  If we use these numbers to project the remainder of this calendar year, 3,970 people will have filed a bankruptcy or proposal in North York during 2010.  How does this compare to previous years? 

In 2009, there were 2,388 bankruptcies filed in North York, and another 1,663 proposals, for a total of 4,051.  This would mean we could be looking at a modest 2% drop in filings in North York.  This number compares to a 13% provincial wide projected decrease in insolvencies.   

On the whole, a reduction in the number of personal bankruptcy filings is good news for the economy.  This would lead us to believe that more people are working and better able to manage their debt loads. 

What’s ahead for the balance of 2010?

I think that bankruptcy rates will continue to decline in North York for the rest of this year.  We have stable interest rates and unemployment numbers, so no big changes are expected.  Things to watch out for are an increase in interest rates, or the impact of the new HST on consumer spending. 

One more important point to reflect on:  the good news is that more and more people in North York are choosing to file a consumer proposal as an alternative to bankruptcy.  In 2009, 41% of filings in North York were proposals (the rest filed bankruptcy).  This year, that percentage has increased to 52%.  That’s a big jump.  And it’s a good sign, as more people are choosing to negotiate a settlement with their creditors than file for bankruptcy.

If you would like some more information about filing a consumer proposal in North York as an alternative to claiming bankruptcy, call me at 310-PLAN or email me today to arrange a no charge initial consultation.

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Question: Hi there. I recently received a Suspended Discharge from my Toronto bankruptcy as I am 2nd time bankrupt. My hearing was very straight forward…my prior bankruptcy was over 18 years ago and I followed all criteria for this one…payments, statements and counseling sessions. . My question is…am I able to start to rebuild my credit now…as in purchase a pre-paid credit card or use a low limit credit card if I were able to obtain one (doubtful I know!). Or do I have to wait until the 6 month suspension is up?

Thanks so much!

Answer: You can apply for a pre-paid credit card, or a secured credit card, whenever you want. However, most credit card companies will only issue the card once your bankruptcy is officially over. Our advice is to start saving money now, since that’s the best way to re-build your credit, and then apply for the pre-paid credit card in six months.

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Question: I live in Toronto now, and I am considering filing bankruptcy. If I move out of Toronto, can I still file bankruptcy if I move somewhere else? What are the rules for bankruptcy Canada?

Answer: Bankruptcy is governed by federal law, so the bankruptcy process is similar everywhere in Canada. The only significant differences are that what you are allowed to keep in bankruptcy is governed by provincial law, so bankruptcy in Ontario is slightly different than bankruptcy in other areas of Canada.

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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.

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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.

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