The Rebecca Martyn Bankruptcy Windsor Blog

Not surprising to anyone having financial difficulties, there was a large increase in the number of personal bankruptcy filings in the third quarter of 2009 (the latest statistics available by the Office of the Superintendent of Bankruptcy).

Statistics for individual cities are no longer available. Instead they are published based on region. Our region includes Windsor, Chatham and Sarnia. In our region, there were 1,061 personal bankruptcy filings in the third quarter of 2009, a 44% increase from the third quarter of 2008. In addition, there were 213 consumer proposals filed, a 20% increase over the same period in 2008. For the 12 months ending September 30, 2009 there was a 41% increase in bankruptcies and a 24% increase in consumer proposals filed. The bankruptcy numbers are not surprising since many people rushed to file bankruptcy before the change in legislation took place. In fact, in our office the first half of September resulted in record bankruptcy filings.

Times continue to be tough in Windsor, but the message remains the same. Now is the time to develop a plan to deal with your debts.

For a no charge, no obligation meeting to review your situation, call me at 310-PLAN, email me, or complete the online evaluation form.

We have all seen the signs around Windsor. The company states you can avoid bankruptcy and they can get your debts reduced to 30%. Wow, sounds like a great deal doesn’t it? Sure, it’s called a consumer proposal. Who is allowed to administer a consumer proposal? A bankruptcy trustee. Don’t let our title scare you. Both consumer proposals and bankruptcies are administred by the same piece of legislation called the Bankruptcy and Insolvency Act.

And what about the ads? What does that company do. Callers have told me they will first charge you a fee to meet with them. I have been told that you need to bring $300 cash to your meeting. They will then help you complete the paperwork and refer you to a bankruptcy Trustee, but only after paying them an application fee. I have been told that application fee is anywhere from $500 to $1500.

So I guess you need to make a decision. You are having financial difficulties but you don’t want to file for bankruptcy (that’s ok, bankrutpcy is not always the best solution). You can call the company with the ad, pay them a bunch of money, and then have them refer you to a bankruptcy Trustee. Or you can call me, and I am a bankruptcy Trustee, at 519-250-8060 or 310-PLAN or email me and we can arrange a NO CHARGE meeting to review your situation in detail.

As a Bankruptcy Trustee in Windsor, I am often asked why I don’t do corporate work. For many Trustees corporate work is seen as the interesting work and the work that gets the attention. Well, the attention part can be true. There have been a number of high profile companies file for bankruptcy recently in Windsor and this can attract some media attention. I noticed two such articles in the local paper last weekend. The interesting note for me is our phone lines increase when this happens. As someone who used to work for a national firm this doesn’t surprise me. Someone may have called one of these firms and set up an appointment to discuss options to their personal situation. They book the appointment but then the trustee they were supposed to meet with starts working on a corporate file. What happens next? You guessed it – the personal appointment gets cancelled in favour of the corporate file.

That same person then calls Hoyes, Michalos, meets with me and we review the options in detail. They were stressed and annoyed that their meeting at another firm was cancelled, but now they are happy to know the options available to them.

It is important to meet with someone and review your options when you are having financial trouble. You can call me at 310-PLANto set up an appointment.

So, you probably googled “bankruptcy” or “consumer proposal” and you are wondering why the title of this blog is Cupcakes. I could also have titled it Customer Service.

Let me share with you a recent experience I had.

I called a bakery to order a mix of pastries for an event. The first problem I had was that they had machinery running in the background and I literally had to yell into the phone to be heard. The second was the order takers attitude when I placed the order. I wanted her to mix up a dozen pastries for me. I didn’t think my request was out of the ordinary since you can go to the local donut shop and order a dozen mixed donuts. Apparently it was though, because she didn’t understand my request despite my clarification that she could just box a dozen of whatever pastries they had. She was getting rude and I was getting annoyed and I was tempted just to end the call and call another company. Instead I settled on a dozen cupcakes.

That made me think about the Hoyes, Michalos approach to customer service when you call. First, you reach a live person who will take some general information (and no, we don’t have machinery running in the background). You are then forwarded to a Trustee or other professional who will take a few minutes to review your situation and help you to book an in person meeting. When the caller ends the call, they have the information they need, they know what to bring to the meeting and the address of where they are going. The caller now is feeling much better knowing that they have options to deal with their debt problems.

If you need someone to talk to about your financial situation, email me or call me at 310-PLAN.

When the new bankruptcy rules were announced we noticed a change in the paperwork requiring debtors to disclose their highest level of education.  All of us at Hoyes, Michalos were very offended by this disclosure requirement.  I don’t think it is relevant what your level of education is.  When I am reviewing your situation, I need to know your debt, assets and income, but it is not necessary for me to know your education to evaluate your situation.  I can only assume the government wanted this information for statistical purposes.

Yesterday we find out, due I am sure in large part of the lobbying by Trustees to have this changed, that this disclosure was no longer required.

The new rules are here and we are all familarizing ourselves with them.  However, if you are in financial difficulty and need to speak with me call me at 310-PLAN to book a no charge, no obligation meeting.

As readers of the blog will know, the government has passed new rules effective on September 18, 2009.  The net effect of the bankruptcy changes is that bankruptcies will cost people more.  Why would the government make bankruptcy more expensive for people in today’s economy?  I am not sure, but it might be that they want more people to file a consumer proposal.

As I noted in the last blog, as of Friday, if you are $200 a month (on average) over the government’s income guidelines your bankruptcy will automatically last 21 months (36 months if you filed bankruptcy before). 

This may mean that more people will file a consumer proposal.    As an example, if your bankruptcy will cost you $400 a month for 21 months, you may decide to file a consumer proposal of $200 a month for 48 months.  Yes, a proposal is costing more money, but the payments are easier to manage. 

I haven’t noticed any changes to the credit reporting websites, but currently a bankruptcy stays on your credit report for 6 years after discharge.  If your bankruptcy last 21 months, then the bankruptcy is on your credit report for almost 8 years (7 years, 9 months).  However, if you file a consumer proposal, the proposal is on your credit report for 3 years after it is paid off.  If it takes the full 4 years to pay it off, it is off your record in 7 years.

It is important to speak with someone about your situation and to see how the new rules could affect any bankruptcy filing.  Email me or call me at 310-PLAN and lets discuss a plan that is right for you.

On August 6, 2009, much to our surprise, Trustee’s received an email from the Office of the Superindent of Bankruptcy informing us that the new bankruptcy rules are finally coming into force.

You can read all about the new rules at our bankruptcy reform web site. Personally, I feel that the new rules are both good and bad.

The good news is that the cap on the amount of debt allowed for a consumer proposal is increasing from $75,000 to $250,000.

The second piece of good news is that a secured lender can’t seize your car if you file for bankruptcy. Currently there are lending instituations that seize your car just because you filed bankruptcy. It doesn’t matter if you were up to date and wanted to keep you car, that was their policy.

The bad news relates to debtors who have surplus income based on the governments income guidelines. If you are a first time bankruptcy filer, your bankruptcy will last 21 months, if you are a second time filer your bankruptcy will last 36 months. This means that your bankruptcy will probably be more expensive. Does this mean that if you are $1 over the governement’s income limit your bankruptcy will lost longer? Unfortunately, I don’t know the answer to that. The goverment won’t be publishing the new rules until August 19th and we can only hope this matter is clarified.

What does this mean for you? If you are thinking of filing a proposal, but your debts are over $75,000 it is best to wait until the new rules come into force. If you bring home a little bit more than the goverment imposed income limits it might be better to file prior to September.

If you are having financial difficulties and want to talk to me about how the new rules might affect you and if its better to file now or wait, call me at 310-PLAN or email me.

I received an interesting email the other day and I thought I would share it.

The emailer basically didn’t see the point of filing a consumer proposal. He/she stated that if you owe money you should just go to the bank, get a consolidating loan and pay your debt that way. If your credit is poor, he/she just suggested getting a cosignor. In the second part of the email, the emailer also mentioned that he/she didn’t think it was right that the Trustee charges money to administer the consumer proposal.

I will deal with the first point made. It is true, it is always best to try to get a consolidation loan first and we review that option with the people who come in to see us. But let’s look at the reality of the situation. Your bills are already with collection agencies so your credit rating is poor. Since your credit rating is poor the bank won’t lend you money. Times are tough for everyone so not a lot of people are able to co-sign a loan. I didn’t even mention the risk to the co-signor if you are not longer able to pay. Asking someone to co-sign really is a big deal. As a result, the only companies that will lend you money are going to charge really high interest rates.

Now consider the effect on your credit rating. Just because the bill is now paid doesn’t mean it is no longer on your credit report. Negative items remain on your credit report for 7 years after it is dealt with. I have written numerous articles about the consumer proposal process and the pros and cons and I am not going to repeat them here.

The next comment made by the emailer dealt with the fees. Yes, it is true that the trustee charges money to administer a consumer proposal. The trustee is providing a service and I would think you would agree that the trustee deserves to be paid for the time being put in to help you. The fees are regulated by the Bankruptcy and Insolvency Act, so all Trustee’s have to charge the same. If you get a bank loan, the bank will charge you interest. When you do your job do you work for free? No, you expect to be paid for the work you do.

It is important that you review all of your options and consider all the facts before making your decision. I can help with that. Call or email me today with your question or comment.

I receive numerous emails to my office in Windsor asking who we, as Trustees, work for. In addition, there are numerous for-profit counselors advertising stating “don’t go see a Trustee, they work for your creditors” (if you have been following my blog you can read more about for-profit counselors).

Trustees are appointed by the Office of the Superintendent of Bankruptcy to help you with either a bankruptcy or a consumer proposal. Yes, you pick the Trustee and yes you pay the Trustee to help you, but the Trustee does not work for you. Well then, you must be thinking that we work for the creditors. No, we are here to make sure both parties, the debtor and the creditors, are following the rules.

Let me give you a few examples. I am not using anyone’s real name.

Sue filed a consumer proposal with me. After the date of filing, Credit Union X took money from her pay cheque. We advised the credit union that they had to give the money back and they refused. Although the money in question was around $200, the point is that the credit union was violating the rules by not returning the money. I arranged a court date and the Credit Union finally agreed to return the money. That doesn’t sound like I was working for the creditor does it?

Robert filed for bankruptcy and was due to be discharged later this week. He hasn’t made the payments he was required to make based on his income. As a result he is not getting his discharge as scheduled and will have to pay the required payment in order to get out of his bankruptcy.

When you are in financial difficulty and need advice it is important to feel comfortable with the person you are dealing with. If you were uncomfortable at your meeting, you always have the option to see someone else before you sign any papers.

Call me at 310-PLAN or email me and I will explain all of your options to you.

I received a frantic call from someone who had filed a consumer proposal with me in July 2006. For the ease of this story, I will call him Joe (not his real name).

Under the terms of that consumer proposal, Joe had offered to pay $24,000 and the creditors accepted the consumer proposal. Joe has continued to make the required payments for the past 3 years, but unfortunately early this year, illness stuck a family member and the family income has substantially decreased.

I reviewed the options with Joe. Although he could file for bankruptcy, I suggested that he amend his consumer proposal. He has already paid a large portion of the consumer proposal and it was possible that his creditors would agree to an amendment considering the change in circumstances.

Joe had paid $17,000 to date and an amendment to his proposal was filed asking his creditors to accept the money paid to date and no further payments. Joe had nothing to lose by making this offer. If the creditors rejected it, he still had the option of filing for bankruptcy.

The creditors agreed to the amendment, and Joe avoided having to file for bankruptcy. As you can imagine, Joe is happy now that he can concentrate of helping his family while avoiding bankruptcy.

If situations change after you file a consumer proposal is it important to keep us informed. As you can read from Joe’s experience there may be options available to help you.