Dealing with Debt,  There are more options than you may think

Every day I meet with people in my Mississaugaoffice who are dealing with debt, I  also get a lot of e-mails and take a lot of calls from people asking the same question. What should I do about my debt?

Doug Hoyes, Co-Founder of HoyesMichalos & AssociatesInc. recently posted on our main site a clear summary of you options when dealing with debt. Included is really clear video summary of your options.

Click on this link to see Doug’s post and check out the video, it’s really quite good and answers a lot of questions.

If you want more information call me at 310-PLAN ( 7526) or click on www.hoyes.com and lets get started

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The Office of the Superintendent of Bankruptcies released the 2011 third quarter results today. If you like you can look at them at this  LINK Overall we can see a continued trend.

Bankruptcy filings are down from 2010 and trending down throughout 2011.  This is not really surprising as the economy continues a slow recovery from the 2008-2009 recession when bankruptcy filings reached a peak. More and more people are getting back to work, things are getting better for many people.

Another interesting trend is the continued increase in people choosing to file ConsumerProposals rather than filing for bankruptcy.

In the Toronto region Bankruptcy filings are down 25% over 2010  but Consumer Proposal filings are up over 3% over 2010 numbers.  In some parts of Ontario, the numbers are more striking, In Hamilton for example bankruptcies are down by 25% but Proposal filings are up by nearly 30%!

I think that this is due to a combination of reasons, foremost, people are learning more about Consumer Proposals, Trustees ( particularly HoyesMichalos & AssociatesInc.) are working hard to get the word out about Proposals. In addition legislative changes in 2009 to the bankruptcy and Insolvency Act made Proposals a much more viable solution for dealing with debt than they used to be compared to Bankruptcy.

In general these numbers give us insight to 2 things. first, the overall numbers of people needing to file bankruptcy or proposals is down from 2010.  Second, more and more people are avoiding bankruptcy by filing a ConsumerProposal to deal with their debt.

Although filings are trending downward, which is good news, we have not seen filings reduce to pre-recession levels. Clearly there are still a lot of people who need help dealing with their debt.

If you are struggling with debt, take some time and call us, we can help you get a fresh start, and finally put you on the road to debt freedom.

Call 310 PLAN ( 7526)  ir click on www.hoyes.com and lets get started

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Howlongisbankruptcy?

Most of the people I meet in my Mississaugaoffice have some pretty significant misconceptions about the bankruptcy process. This is not surprising as for most of them they have never needed to know anything about bankruptcy, until now.

Many people say that they “heard from a friend” that  “bankruptcy is 7 years”. Frankly there is a lot of misinformation out there. Some of it is even put out there by “DebtConsultants” to confuse the issue and get people to sign up with them in expensive and doomed settlement agreements.

so what is the real story?

For most people for whom bankruptcy is a viable option for dealing with their debt the process takes 9 months to complete.  Some people who have higher incomes the process can be extended out to 21 months to enable more money to be collected for the creditors, The cost of bankruptcy and how surplus income works I wrote about earlier this month you can find that post here . If you have been bankrupt before, the process is longer automatically, 24 to 36 months depending on your income.

So where does the 7 year thing come from?

After you finish the bankruptcy say in 9 months, there will be a footnote entered on your credit report indicating when you filed for bankruptcy and the date you finished. This record stays on the report for 6 years. So 9 months plus 6 years is pretty close to 7 years.

For many people who have too much debt and yet have a decent income, a bankruptcy is not the best option, for these people often a ConsumerProposal is the right solution for dealing with their debt.

If you have too much debt and need help dealing with it give us a call at 310 -PLAN ( 7526)

or click on www.hoyes.com and lets get started.

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Many of the people I talk to each day in my Mississauga office start the conversation with “ so how does this work?”

For most people considering filing for bankruptcy has been a long road, and not at all easy. Often a lot of very bad things have happened along the way to bring you to the point that filing for bankruptcy is a consideration.  The good news is, making the decision to go see a trustee is probably the hardest part of the process. Everything else is easy.

The procedure for filing is not all that complex, you do need to engage a licensed trustee in bankruptcy to proceed, only a licensed Trustee can file a bankruptcy for you. Also the paperwork required is not difficult to prepare, and your trustee will help you so you don’t need a “debt Consultant” to do this for you, save your money and see a trustee directly.

This link will take you to a site that goes through the details of what you need and what you can expect as you go through the process.

Another thing that many people don’t know is that most people who think they need to file a bankruptcy end up not doing so. Most people after they talk to a Trustee in Bankruptcy end up not filing for bankruptcy and do a Consumer Proposal instead.  A ConsumerProposal allows you to deal with your debt without bankruptcy, and is fast becoming the preferred method of dealing with debt in Canada.

If you have too much debt, and too many questions about what you can do about it, Call us we can help you make a plan the works for you. Initial consultations are free.

Call 310-PLAN ( 7526) or click on www.hoyes.com  and lets get started.

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This time of year there are a lot of changes going on. Fall is turning to winter, and people are getting ready to settle in.  The clocks are falling back, which is sure sign that winter is ‘round the corner.

I cut my lawn last week, probably for the last time this year, soon I expect things will be covered in snow.

It’s a seasonal fresh start, things have to die off and spend a bit of time dormant, before fresh life can spring forth when the weather warms in the spring.

A lot of the people I talk to every day in Mississauga are looking for a fresh start as well.  Many people have had periods of unemployment, or wage reductions and they have struggled to adjust.  Often they have accumulated too much debt during the adjustment, and they need to get out from under it.  They need a financial fresh start.

Fortunately we can help, Hoyes-Michalos founders Doug Hoyes and Ted Michalos have written a book that outlines how you can go about getting your fresh start. youcanfindthebookhere

It’s filled with information about various ways to deal with debt and helpful tips on making the best of a bad situation.

At some point in everyone’s life a Fresh Start is exactly whats called for. Every winter is followed by spring.

If you need some help dealing with your debt, and getting your fresh start,  click on the link above and find out more. then call us at 310-PLAN ( 7526 ) or click on www.hoyes.com and lets get started.

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We can’t open a newspaper, tune in a radio station or flip channels on the TV without seeing or hearing ads by “Debt Consultants”

But what exactly do they do?

The simplest answer is “not much” other than separate you from your hard earned money with false promises of “Freedom from Debt”  Here is a video of Hoyes Michalos founders Doug Hoyes and Ted Michalos discussing “Debt Consultants”.

The Debt Consultant industry in Canada is not regulated, anyone can call themselves a “debt consultant” no qualifications are necessary. Some of these “Consultants” do take the step of becoming qualified to provide the mandated counselling required under the law for anyone who files a bankruptcy or a Consumer proposal through a licensed Trustee in Bankruptcy, but most only do so so they can advertise themselves as “Government Approved”. Most never intend to provide any such services.

Quite a number of these “consultants” serve as representatives for American “debt Settlement” companies that have sprung up like mushrooms after rain. These American outfits generally are not licensed to operate in Canada, don’t know our laws and regulations and really could care less as long as you sign up to their “Debt Settlement” plans. These plans often have high fees and very low success rates, I’ve met people who have used these services, paid thousands in fees and still ended up with their pay garnished by people they thought they had protection from.

The fact is that many of these “consultants” really only want to take advantage of people who are desperate and fearful of seeking the help of a Trustee in Bankruptcy.  Many Debt Consultants end up referring people to Trustees after charging them a fee or milking them for as much money as they can.

So how do you protect yourself?

Simple, make sure you see a Trustee first. Trustees in bankruptcy are required to review your situation with a view of avoiding a bankruptcy. There are options other than bankruptcy for dealing with debt and a Trustee will make sure that if you don’t need to file a bankruptcy you will get the help you need to solve your debt problems. Today more than half the people I see never file a bankruptcy, most are able to arrange a solution to reduce their debt to a manageable size and make one affordable payment monthly to resolve their debt problems through a ConsumerProposal.

So don’t be fooled by predatory “debt consultants” they don’t work for you, they work for themselves and could care less if you ever get debt free as long as you pay their fees.

A licensed Trustee in Bankruptcy is required by law to be fair and impartial and to not act in self interest. And the fees that a Trustee charges are set by Law.

If you have too much debt and need help dealing with it call 310-PLAN ( 7526) or send me an e-mail (use the form on the right hand side of every page on this site) or click on www.hoyes.com and lets get started

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Bankruptcy and Proposal Statistics in Mississauga

Statistics in general are boring, but what they can tell us can be interesting. Every year the Office of the Superintendent of Bankruptcy releases statistics regarding trends in bankruptcy and proposal filings by city. This is an interesting means to gauge the general “financial health” of a community. If filings go up, one can presume things are bad, if filings go down things are better.

The story for 2011 in Mississauga is overall, good. In general filings in the GTA are down by 11%. This is to be expected after a recession and during the ongoing economic recovery. In Mississauga filings are down by 16% indicating locally the recovery is a bit better than in the GTA in general. This makes sense to me, as I talk to people every day that were laid off but are now back to work, many of them in the manufacturing end of the economy which has seen recovery over 2010.

when we look at filings of Consumer Proposals versus Bankruptcy filings the story gets really interesting.

Bankruptcy filings are down a whopping 39% over the 2010 numbers in Mississauga, while Consumer Proposal filings are actually up by 9% over the same period of 2010. This is another indicator of recovery. We have more information on the trends in Consumer Proposals at this Link

Far fewer people are having to file for bankruptcy, and more and more people are choosing to proceed with a consumer proposal. This indicates that people in financial distress none the less have a stable income  and /or are homeowners with some equity in their homes that they want to keep while they deal with their debt. This is certainly true if my day to day meetings with clients are any indication. Many people I see daily suffered a period of unemployment where their debt ballooned but now they are back to work ( often at less money) and need to deal with their debt. For most people bankruptcy is not the best solution and filing a consumer proposal is what is needed to deal with debt, while still paying their mortgages.

Mississauga is not unique, Ontario wide statistics show the same trends.

What is certain is the economic recovery is real and it’s having an effect on the number of people who are under financial stress. Things are getting better and even the people who are in financial trouble are more often able to avoid bankruptcy by dealing with their debt with Consumer Proposal.

If you are struggling with the after affects of the recession, I’m sure we can help. Call 310-PLAN (7526) or click on www.hoyes.com and lets get started.

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To file of not to file , that is the TAX question.

Tax filing season is hard on us, the personal filing deadline is past.

I meet with a lot of people in my Mississauga office who have Tax problems, most of them presume that amounts owing to Canada Revenue Agency can’t  be included in a Proposal or  Bankruptcy filing.

I’m not sure where that idea came from, but it’s not true. Income Taxes don’t enjoy any special protection and are dealt with as any other kind of unsecured debt. You CAN INCLUDE tax debt in your “get out of debt plan”.

I also met with a lot of people who have not filed income taxes in a few years ( the record was 22 years for one fellow I helped)

Sometimes people just don’t “get around to it” but often people decide not to file because they know that they will have TAX DEBT that they can’t manage, So they just stop filing.

Sometimes they have amounts owing to the Government for things like Student Loans and Tax refunds are being set off against those debts.

This is not a winning strategy , under the Income Tax Act, not filing a return is an offense. Owing money that remains unpaid is not. The CRA is much more likely to take harsh collections actions such as garnishment in a non filing situation than in a filing but not paying situation.

File your taxes, find out what you owe, and then if it’s too much when taken with your other debt, at least you have the full picture and can then decide what to do about the whole debt problem including Income Tax debt.

Most of the people I help NEVER file a bankruptcy to deal with their debts. For most people their debt can be dealt with by offering a Consumer Proposal to all their creditors including the CRA.

If you are dealing with Debts including TAXES call us today at 310-PLAN ( 7526 )  or click on www.hoyes.com . and lets get started on your get out of debt plan.

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Everyone is talking about Consumer Proposals

Just what exactly is a “Consumer Proposal” and why are we hearing more and more about them?

A Consumer Proposal is a formal arrangement between you and your creditors to repay a portion of your debt. It is filed and bound under the laws of the Bankruptcy and Insolvency Act and administered by federally licensed Trustees in Bankruptcy, however it is NOT bankruptcy.

In popular publications, transit newspapers and even on the radio and television we can see more and more advertising for Consumer Proposals. A good portion of this advertising is not being done by Trustees in Bankruptcy, but by “Debt Consultants”. If only a licensed Trustee in bankruptcy administer a Consumer Proposal, then why are people who are not Trustees advertising them.?

The answer is both simple and disturbing, To make money.  These Debt Consultants “skim” money from people in financial distress and then pass them on to Licensed Trustees to actually file the Proposal. They may help you complete paperwork and “consult” with you on what a proposal is and how it works but really all they are doing is standing as an intermediary between you and the Trustee, and they make you pay a fee to get through. The trustee is a willing partner in this “arrangement” and willfully looks the other way while the “consultant” charges their fees.

What does the Trustee who chooses to deal with these guys get? Pre-qualified clients, advertising costs savings ( The Consultants pay for the advertising ) and a steady flow of clients that they did not have to do anything to get. It’s a good arrangement for the Trustee, as long as they don’t mind their clients paying unnecessary fees.

It’s not a good arrangement for you, the person who is suffering debt problems. Money is tight enough already, you don’t need to be paying extra fees of hundreds of dollars for a referral. Trustees generally provide free initial consultations, I know we do at Hoyes Michalos & Associates Inc. so you can find out all about your options including consumer proposals FOR FREE, we will help you complete the paperwork FOR FREE, and we will NEVER charge you an up front fee. You don’t pay a cent until your proposal is filed with your creditors.

We choose not to deal with “Debt Consultants” because we think you deserve the personal attention of a federally licensed professional, and not “some guy” who will not tell you the whole story and charge you fees for nothing.

Deal Direct, and deal in Trust, Call us today at 310 PLAN (7526) or visit us at www.hoyes.com

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Thinking of Bankruptcy in Mississauga?

Do you know who you are dealing with?

Check any local or commuter newspaper and you will find ads placed by “Debt Counselling Services”  or “Debt Consultants”.

They claim to be able to make you “debt free without Bankruptcy”  or to “settle your debts for less than half what you owe”. Some claim to “work for you” while claiming Trustees “don’t work for you”. Who are these people and can they really back up their claims?

The answer is a resounding NO! Well except for the claim that Trustee’s don’t work for you, that is true. Trustees in Bankruptcy are officers of the court licensed by the federal government to facilitate the filing of Bankruptcies and the administration of Proposals. Trustees don’t work for your creditors either. They are independent impartial facilitators who’s only role in the process is to ensure that everyone is treated reasonably and fairly.  The fees charged by trustees are regulated by the law under which they operate. Initial Consultations with Trustees are usually free and if it turns out that you don’t need their services trustees are bound by the law to tell you. You don’t need to worry about “ending up bankrupt” if you don’t need to.

Lets contrast this with the so called “Debt Counsellors”

Who regulates their operations?  No-one, they operate without oversight of any kind.

Who do they work for?  Themselves, they are independent business people who charge fees for services.

Who sets the fees that they charge?  They do, and they can charge whatever they think they can get away with.

What services do they provide?  Principally they are a referral service, they operate as a client gathering mechanism for Trustees who don’t mind if their clients , who are clearly under financial distress, end up paying unnecessary fees to intermediaries that perform no necessary service.

Are they necessary?  Not at all, why pay someone to introduce you to a Trustee when you can simply call one up direct and meet with them at no charge to discuss you situation.

Is it legal?  yes absolutely, these companies are not doing anything illegal. There is no law against duping people into paying for things that they don’t need.  The principle of Caveat Emptor  or let the buyer beware applies.

If it’s not necessary and costs already distressed people unnecessary expense why do trustees deal with these companies and accept referrals from them?

That is a good question that has no satisfactory answer. In some cases these “consultants” operate within ethnic communities that have a tradition of “fixers” connecting clients and professionals. In these cases Consultants may provide a legitimate service in bridging cultures and language barriers. However in the vast majority of situations their services are not necessary.

An analogy to this process is you wanting to go buy a car but having to pay someone to tell you where the dealership is. Which makes sense if the location is a closely guarded secret, but it’s not.  Trustees in Bankruptcy advertise openly in the public media you don’t have to pay someone to introduce you.  Paying a person for information that is freely available is unnecessary.

Don’t be fooled by unscrupulous operators looking to skim off some of your already stretched dollars. Make certain you are dealing with a Licensed Trustee in Bankruptcy.

Dealing with a Trustee does not mean you will be filing a bankruptcy, most people can resolve their debt without bankruptcy by filing a Consumer Proposal and re-paying a portion of their debt in one easy to afford monthly payment.  Only a Licensed Trustee in Bankruptcy can help you file a proposal.

At Hoyes Michalos and Associates Inc. we refuse to have anything to do with unnecessary intermediary debt consultants we don’t use them and we don’t support their presence in the marketplace. We just think that  is the right way to deal with people, direct and without unnecessary hidden fees.

If you are having debt problems Call us, we can help.  310-PLAN (7526)

or click www.hoyes.com

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