The Rebecca Martyn Bankruptcy Windsor Blog

I am dealing with a very frustrating situation right now.

A client filed a consumer proposal  The proposal was accepted and she had been making the required payments until April 2009.  At that point she lost her job and was waiting for her EI to start.  She promised to be in touch with us once she started receiving her cheque in 2 weeks to discuss a future payment plan.

Today is June 17 and she still hasn’t called us and we have been unable to reach her on the phone.  I hate to think she is at home stressing out when there is usually a solution to the problem.  What would her solution have been?  She could have filed an amendment to her consumer proposal to lower her payments.  Instead of doing that, by avoiding the situation her proposal will be annulled in 2 weeks.  The payments she has been making for the past 3 years will be distributed to her creditors, but now she will be in the same position as she was before she filed.

If your situation changes after you filed a consumer proposal, it is very important to let us know so we can work out an alternative plan.  You can call us at 310-PLAN to update your information.

Guest post by Douglas Hoyes, colleague of Rebecca Martyn, and co-founder of Hoyes, Michalos & Associates Inc.

As a frequent visitor to Windsor over the past 15 years am I always amazed at the many changes that continue to happen. I’ve watched as all of the “Big Box” stores have appeared on Walker Road by the 401; it seems that you can buy anything you want, and buy it in a big store. The massive re-development of the Ambassador Bridge, which is still in it’s initial stages, will enhance the movement of traffic to and from the United States, but will obviously cause changes in Windsor as well. And of course the upheaval in the auto industry has changed Windsor forever.

Speaking of upheaval, there is certainly a lot of uncertainty in Windsor. I spent today in our Windsor office, meeting with people who worked for the same employer for many years, only to be laid off over the last few months due to the downturn in the economy. They had good jobs, and now they are forced to survive on unemployment insurance. For three of the people I met with today they have also gone through a marriage separation. I’m not a psychologist, but I suspect that the stress of the job losses and economic uncertainty is affecting people in many ways.

The automotive uncertainty is hurting, and the various strikes by city workers and taxi drivers also seems to be contributing the the depressed mood. There is a feeling of hopelessness with many of the people I met with today. If I had to summarize the mood of many people I met with today in our Windsor bankruptcy office, that would be it: uncertainty and hopelessness. They don’t know when, or if, things will get better, and they don’t know what to do.

That feeling of hopelessness is made worse by the fact that 2008 was a record year for personal bankruptcies, and 2009 will probably set another record. According to bankruptcy statistics just released by the Office of the Superintendent of Bankruptcy, in the first quarter of 2009 personal bankruptcies in Windsor increased by 38%, and the number of consumer proposals filed increased by almost 46%. In total personal insolvencies increased by almost 40% in Windsor in the first three months of 2009.

The growth rate in personal bankruptcy is accelerating, since it was up 37% over the last twelve months.

In the twelve months ended March 31, 2009, 1,839 Windsor residents declared bankruptcy, and a further 534 people filed a consumer proposal.

Those are scary numbers, but they are just numbers. What does this mean for the people of Windsor with financial problems?

First, understand that you are not alone. In the last three months almost 700 residents of Windsor have filed bankruptcy or a consumer proposal. If you work in the automotive industry, or virtually every other industry in Windsor, business is slow, leading to cutbacks in hours and wages, and frequent layoffs. That’s not your fault.

Second, the bankruptcy numbers continue to increase, so we should all prepare for more problems over the next few months. Read my five tips to survive the recession to learn some practical steps you can take to deal with your debts.

I’m a big believer in having a “Plan B”. What would you do if you lost your job, or if your hours were reduced at work? Many people are picking up a part time job now, so that if they lose their full time job at least they will have some income. Cutting expenses is also critical. If you lower your expenses, you don’t need as much income to survive. Now may be the time to cut all non-essentials.

If you have debt, pay it off. Start by paying off your highest interest rate debts first, and use the interest savings to pay off your other debts faster.

What can you do if you already have more debt than you can handle? There are options. Credit Counselling in Windsor is an option. If you can’t afford that, a consumer proposal or a bankruptcy may be necessary to deal with your debts. There are options, but we can only create a plan for you if you give us a call in Windsor at 519-250-8060, or at 310-PLAN (no area code required), or e-mail us today to arrange for a no charge initial consultation where we will review your options for dealing with debt. The statistics prove that now is the time to take action to deal with your debts.

There is hope, so give us a call, and let’s get started.

Last article I wrote about for profit credit counselors and their fees. This time I would like to write about consultation fees some Trustee’s charge. I would also like to share a few of their stories about the meetings they have had with other Trustee’s.

I was scanning the Windsor yellow pages and noted that none of the advertising Trustees state that they charge a fee to meet with a new caller. However, when I speak with new callers on the phone I am hearing something different.

If you call a Trustee, ask if there is a fee to meet with them. If there is you should be calling us. We don’t charge for the initial consultation or follow up meetings if required.

I have also heard stories that some companies won’t even meet with you unless you first complete a lengthy application form and send it in first. Again, this is not necessary. Simply gather information about your debts and bring them into our office. I will even help you complete our “fresh start” form.

I have met with people who have come to us to seek a second opinion. They have met with a trustee who focusses on bankruptcy, when the person doesn’t want to file bankruptcy ; he or she wants to file a consumer proposal.

At this point they come to us for a meeting because they want to talk about all of their options, not just bankruptcy. In many cases they left all of their personal paperwork with the Trustee and now the Trustee wants money to return it to them. This is your paperwork and you shouldn’t have to pay to get it back. If you find you are in this situation, you should advise the Office of the Superintendent of Bankruptcy. If the Trustee didn’t tell you about a fee to meet with them, they shouldn’t be charging you to give you back your paperwork.

If you are unsure about dealing with the person you met with, don’t leave any of your paperwork with him or her. The same principle applies to paying a for profit credit counselor a meeting fee as paying a Trustee a meeting, you can speak with me at no charge, so why meet with someone who will charge you money to speak with them?

Call me at 310-PLAN or email me and I will be pleased to discuss your financial situation with you.

On February 4, 2009 Ted Michalos was interviewed by the Globe and Mail. The article got a huge response, so the Globe and Mail asked Doug Hoyes to participate in a “live chat” event. Readers were invited to send in their questions about personal bankruptcy in Canada, and Doug gave them instant answers to their questions. The reporter e-mailed Doug the questions, and he typed his answers and e-mailed them back. The readers asked some really good questions and we were told that the Globe and Mails servers had a hard time keeping up with the demand.

The questions illustrated the wide range of financial problems people have, and Doug was happy to share the wide range of solutions that are also available. You can read all of the questions, and his answers, in the Globe and Mail’s article on what you need to know about bankruptcy. If you didn’t get your question answered, please e-mail us your questions now, and our team will respond as quickly as possible.

Ted Michalos was also hard at work on Wednesday, doing a live interview on BNN, the Business News Network. You can watch Ted discuss the five things to consider before filing bankruptcy on the Hoyes, Michalos bankruptcy video page.

I suspect you will see Ted and Doug, and the other trustees of Hoyes Michalos, on the radio, on television, and in the newspaper frequently over the next few months. The media’s job is to cover the issues that matter to Canadians, and at the moment there is nothing more important to most Canadians than the state of our economy. Many of us have more debt than we can handle, and the media is looking for people that offer solutions. I am proud to be a member of a firm that has a great reputation, which is why the media calls on us for comments.

The good news for you is this: you don’t have to wait for us to appear on TV, and you don’t have to submit your question to a newspaper to get an answer from our experts. Simply contact us today, by phone at 310-PLAN or by e-mail, and we will answer your questions, tell you your options, and help you get a fresh start.

Increasingly I am seeing a lot of advertising with catchphrases such as “we can reduce your interest rate” or “we can reduce your debt by 70%”. The ads are popping up everywhere, on the internet, bus shelters and print. Just what do these ads mean?

I would like to share stories of 2 people I met with recently. I have not used their real names. The first person, I will call her Jill, was dealing with Company A. She was doing was she thought was a debt management plan . Jill had $20,000 in credit card debt and was paying company A $500 per month. What she didn’t realize was this was just their fee to start the process. Company A was charging her a total fee of $5,000. After this fee was paid, they would then approach each of her creditors to see if they would agree to a settlement plan. In the meantime Jill was continuing to receive past due notices and very aggressive collection calls. It wasn’t until she followed up with Company A that she realized what their plan was about. Jill had never met with anyone in person. She just filled out an on-line questionnaire, received information about a payment plan and sent in a void cheque for payment. She thought she was going to be debt free in 40 months; instead she was more stressed than ever. That is when she came in to see me. We reviewed her options and she chose to file a consumer proposal .

Last week I met with Gary. He was about to sign up with a plan with Company B and wanted a second opinion. We reviewed the information he was given and I pointed out that Company B was going to charge him $2,400 for a fee and then he would pay $200 per month for 36 months to his creditors. After Gary paid Company B all they were going to do was to refer him to a trustee to file a consumer proposal after their fee was paid. When someone files a consumer proposal with a trustee the monthly payment includes all fees and disbursements. You can probably guess what he decided to do. He saved himself $2,400 and filed a consumer proposal with me.

The lesson here is buyer beware. What services are you signing up for, who will you be dealing with and how can the company guarantee a debt reduction? If the fee sounds unreasonable the easy answer is don’t do it. I deal with many credit counselors who charge $25 - $200 for the time they spend with you.  Anything more than that is probably not very reasonable. If all the credit counselor is going to do is complete a form and then send you a trustee it’s important to remember that you can just call me yourself and meet with me. Finally, no one can guarantee a reduction in your debt. In a consumer proposal it is up to the creditors to vote on the plan, it is your proposal to your creditors and your creditors decide if they want to accept it.

If you want more information about whether a consumer proposal is right for you call me at 310-PLAN or email me.

The short answer is that is means the consumer proposal has ended.

When a consumer proposal is filed it is based on the assumption that the debtor’s income and expense will remain the same during the term of the proposal. Unfortunately, things can change. It is next to impossible to predict what will happen in the future. In these tough economic times, hours are getting cut back and people are losing their jobs. In many cases, this means that the debtor can no longer pay the amount under the original consumer proposal. What can be done?

If there is still a source of income it might be possible to file an amendment to consumer proposal. With an amendment the creditors are offered a new payment for the remainder of the term. The creditors vote on the amendment and determine whether or not they will accept it. We review each file on a case by case basis and share our experience with the debtor about the chance of success.

I would like to share 2 cases. In both cases I have not used their real names. Mary filed a consumer proposal 3.5 years ago and offered $200 a month for 48 months. 5 months ago her hours were cut back. She stopped paying into her proposal and didn’t respond to any of our calls or letters to discuss her proposal. Her proposal was annulled and it wasn’t until that point that Mary came in to see us to see what she could do. We explained that the proposal was over and what her options were. Now here is what Mary should have done: she shouldn’t have ignored us. She had $1,000 left to pay. We found out that she could have afforded to pay $125 a month. She could have offered to pay $125 for the remaining 5 months on her proposal, or she could have offered to pay $125 a month for 8 months to still pay the same amount, just extending the term. Instead Mary is looking at the prospect of filing for bankruptcy.

Linda was in a similar situation as Mary. Her hours were cut back 3 years into a 4 year consumer proposal. Her original proposal was to pay $300 per month for 48 months. She contacted us right away to advise us of the change in situation. She offered an amendment of $250 per month for the remaining 12 months of her proposal. The amendment was accepted and Linda is very happy to be able to continue with her consumer proposal.

If you are in a consumer proposal and your situation has changed, please contact us before it’s too late. We will reassess your situation and discuss whether an amendment is the best course of action. Call me at 310-PLAN or email me.

I met with a debtor in Windsor last week who had been unable to make all of his payments in his bankruptcy and wanted to know what would happen next.

When debtor’s meet with me at the start of their bankruptcy, we review various paperwork including their duties and responsibilities. One of these duties is making payments based on their income. If the payments are not made, the debtor is no longer eligible to receive an automatic discharge and the file is sent to bankruptcy court.

The court wants to see that we have worked out a payment plan with the debtor and we attempt to do so prior to the court hearing. At court, a court order is issued detailing the payment plan. It is very important that the debtor comply with the court order. We don’t have the power to override the court order, so if a debtor doesn’t do what the court ordered, we are required to close the file. When a bankruptcy file is closed it means that the debtor remains in bankruptcy, but he no longer has the protection. Creditors can then pursue him, take him to court and garnishee wages. If you are having problems making your payments, it important to speak with us so we can try to work out a reasonable payment plan. You can call us at 310-PLAN or email me.

In my last post I wrote about the use of what appear to be court forms with the word “draft” across them. Today, I will write about some of the practices that collection agencies use.

1. They don’t tell you who they are. The person claims to be calling from XYZ Visa, but they are really a third party collection agency. They advise that if you don’t pay by a certain date XYZ will take action. What they don’t tell you is that XYZ has already taken action by assigning your account to a third party collection agency.

2. They make it appear that they can just walk across the street to the court tomorrow and get a court order to garnishee your wages. This is just not true. In order to garnishee your wages the creditor needs a court order. In order to get a court order they need to give you notice of court and allow you time to file a defense, this takes a minimum of 21 days.

3. Rude behaviour. I had heard countless stories of the impolite tone that some collection agents use to try to get the debtor to pay them money. They also try to make you feel guilty because you owe money. The main point is not to let the caller get to you. If you don’t like the tone of their call, ask to speak with his or her supervisor. If that doesn’t work you can always file a complaint with the Ministry of Small Business and Consumer Services:

Consumer Protections Branch
5775 Yonge Street, Suite 1500
Toronto, ON M7A 2E5
Tel: 416-326-8802
Toll free: 1-800-889-9768
Fax: 416-326-8810

If you are getting collection agency calls you probably have a debt problem and you need to seek professional advice. You should call us at 310-PLAN and we can review your options with you, including referring you to a credit counselling agency.

Many visitors to this blog are experiencing a problem with a collection agency. On our website hoyes.com you can read the letter of direction issued by a Registrar with the Ministry of Small Business to the collection agency industry in Ontario.

I have seen many people who have received a document that looks like a court order but with the word “draft” in the corner. This is done to appear that the collection agency was about to start legal action. However, this is just a form letter designed to scare the debtor into make a payment.

If you have received such “draft” letters or letters from lawyers that don’t identify who they are working for you should contact the following government office:
Consumer Protections Branch
5775 Yonge Street, Suite 1500
Toronto, ON M7A 2E5
Tel: 416-326-8802
Toll free: 1-800-889-9768
Fax: 416-326-8810

By sending copies of your letters to the government you will help to clean-up this deceptive practice on the part of collection agencies. This number can also be used for any other complaints or concerns you may have about collection agencies in general.

The reality is that if you have collection agencies calling you, you should speak with a professional about dealing with your debts. We can arrange a no charge, no obligation meeting to meet with either myself or Catherine Ouellette. In many cases, we will tell you that filing for bankruptcy or a consumer proposal is not the best option and we can refer you to a credit counsellor.

Call our office at 310-PLAN or email me to review your financial situation.

Most people in Windsor have heard about bankruptcy , but although the number of people who filed proposals Windsor has increased in the past 4 years it still seems to be an unknown option for many people.

The first thing we review is can the person afford to pay their creditors in full through a debt management plan. If they can, we refer them to a local credit counselor to pursue that option. If it appears that they cannot afford a debt management plan we then review if a proposal is a good option.

Proposals work best for people who can afford to make some kind of monthly payment to their creditors. There are 2 types of proposals. The first is called a consumer proposal. The first is called a consumer proposal and is used for people who have debts less than $75,000 (excluding the mortgage on their main residence). This number increases to $150,000 if 2 people are filing together (such as spouses). This is the most popular kind of proposal.

If your debt is greater than $75,000 it doesn’t mean you are out of options. There is second type of proposal called a Division 1 proposal. I will provide more detailed information about both types of proposals in another blog entry.

Both proposals are guided by the Bankruptcy and Insolvency Act. Don’t let the name of the legislation scare you, proposals are not bankruptcy; it is just the way the name of the legislation is worded.

The pros of a proposal are that is allows people to avoid bankruptcy, have a consistent payment, maintain their assets and it has a better effect on the credit rating than bankruptcy. People who file proposals also have the option to pay the proposal off as quickly as they like. It gives you court protection from most of your unsecured creditors, meaning that your credit card company can’t sue you for a debt that is included in the proposal.

So what are the cons of filing a proposal? If you are having trouble paying your debt, it is likely your credit rating is no longer perfect. When you file a proposal, you receive a R7 rating on your credit report (R1 is best, R9 is bankruptcy). Other than that, I really can’t think of any cons. I have received countless phone calls and emails from people thanking me for telling them about this option and letting me know what a stress reliever it is to know they don’t have to file for bankruptcy.

If you would like to meet to review your situation to see if a proposal is right for you, call me at 519-250-8060 or 310-PLAN or email me me to arrange a meeting.