The Rebecca Martyn Bankruptcy Windsor Blog

By now you have read about your options and in particular, all about consumer proposals. The big question is what do you offer?

That is where I come in. You can meet with me for a no charge meeting , and I can review your particular situation to determine what kind of consumer proposal makes sense for you.

1. Who are your creditors? Hoyes, Michalos maintains a database of creditor voting. I am going to let you know how your creditors have historically voted so you don’t offer a consumer proposal that has a small chance of being accepted.

2. What would a bankruptcy cost? No, you are not filing bankruptcy, but creditors will not accept a consumer proposal if they would get more money in a bankruptcy. If you have assets that have value or you have surplus income you need to offer at least that amount of money in a consumer proposal.

3. What can you afford to pay? I need to see an accurate monthly income and expense statement to determine what you can afford to pay. It is important to include all items such as groceries, lunches and cigarettes and to show your creditors you have a balanced budget when you include the consumer proposal payments. It doesn’t make sense to offer a proposal payment that will cause you to have a hard time paying your rent each month.

After reviewing all of the above, we can discuss what kind of proposal might be accepted. Remember, it is always up to your creditors to decide if they want to accept your proposal. If anyone tells you they can get your debt reduced, they are not telling you the whole story.

Call me at 310-PLAN, 519-250-8060 or email me and together we can formulate a plan that is right for you.

For some, retirement is years away, for others it is just around the corner.  The problem for everyone is the same.  You need to plan for retirement.

Income will be reduced, so before you think you will need to retire you need to start reducing your debt and expenses.

I met with a gentleman who recently retired.  His contract stated he had to retire at the age of 65, but retirement still came as a surprise to him.  2 years before he retired he financed a lot of stuff.  His income is reduced and he came to see me to see what he could do.  When looking at his budget, all his payments on stuff he financed came to over $2000.  His pension is $2200, so it doesn’t leave any money for rent, food, or other living expenses.  I asked him what stuff he is willing to get rid of and he doesn’t want to get rid of anything.   In addition he has over $75,000 in credit card debt.  The options that are available to him such as a consumer proposal, bankruptcy, or a debt management plan won’t help him until he can learn to live on his income.

I understand the attachment to things you have financed such as a car or boat, but when it comes to money, you need to make some hard choices.  Having groceries and a place to live is more important than a shiny new car.

What should have happened?  In the years leading up to retirement, he should have reviewed his needs versus wants, financed stuff to either pay it off before he retired, paid cash or financed stuff he could afford on a reduced income.

If you are facing a reduction in income and you need a plan to help with your debt, call me at 310-PLAN or 519-250-8060 or email me.

The Office of the Superintendent of Bankruptcy published the 2009 statistics this morning. I view the numbers as a mixed message. Bankruptcies in Canada increased by 28.4% over 2008 and consumer proposals. In Ontario the numbers are 28.5% and 43.3% respectively.

What about Windsor? Windsor bankruptcy filings are up 25.3% and the consumer proposals increased by 14.8%. For bankruptcies we are just about average compared with Ontario and Canada. This is not bad news. In prior years, Windsor had above average bankruptcy filings. The economic downturn hit Windsor first due it our dependence on manufacturing. It appears that the rest of the province and country has just caught up with us.

I was rather surprised to read that Windsor was below the national average for consumer proposal filings. In the Windsor office, I saw an increase in the number of proposals filed in 2009. The good news, is that some debtors still have the ability to make payment on their debt. Does this mean that many people don’t have the income to fund a consumer proposal? It might. I looked at the statistics for filings for January 2009 to September 2009 and Windsor had a small decrease in the number of proposals filed. This means, that the majority of consumer proposals were filed prior to the change in the legislation. What I take from this is that once people understood the consumer proposal option better, they choose that route.

2009 was an odd year due to the change in bankruptcy legislation in September 2009. Many people who otherwise may have delayed filing bankruptcy for several months filed prior to the change in legislation. We will have a better idea what, if any impact that had this time next year.

The message is always the same. Call us at 519-250-8060 or 310-PLAN to develop a plan that is right for you.

Consumer proposals have become increasing popular since we opened our Windsor office in 2003. Each year I have seen an increasing number of filings in Windsor and surrounding area. Since Hoyes, Michalos first opened its doors in 1999 we have maintained a database of creditor voting patterns and we have noted some very interesting recent voting patterns.

I can’t name names because I could get sued, but I want to share some examples of recent votes. Big Bank A recent voted against a consumer proposal and would not accept any counter offers. They stated they voted against the proposal because the debtor’s debts were too low (his total debts were $16,000). In another example, Big Bank B voted against a consumer proposal with a rate of return of 21% and they made a counter offer with a rate of return of 27%. In both cases there were sufficient other votes for the consumer proposals that they both passed even without Big Bank A and B’s support.

The logic of some of the voting is strange to say the least. The debtor has offered a consumer proposal with a reasonable rate of return and a rate of return far greater than a bankruptcy. In many cases when a consumer proposal is rejected the debtor has no other option but to file for bankruptcy. It doesn’t seem logical that a creditor would reject something that would pay money.

In 2008 (the latest year statistics are available), Hoyes, Michalos filed 8% of all of the consumer proposals in Ontario. Keep in mind that this includes regions we don’t even have offices in. We estimate that if we only include the regions where we have offices, our firm filed 25% of all of the consumer proposals filed.

What does this mean? If you are looking to file a consumer proposal you want to be dealing with someone who has extensive experience in this area. You want to hear about creditor voting patterns to make sure your are offering a consumer proposal that is fair to both you and your creditors.

Call me at 310-PLAN or 519-250-8060 or email me and we can review your situation and formulate a consumer proposal that is right for you.

I have had many people ask me about the “new” rules. I call them “new” because they have been in place since September 18, 2009. They wonder why the rules were changed now, at a time of economic hardship, making bankruptcy lasting longer and be more expensive. I think those are great questions and would be best directed to the government. After all, they were the ones who changed them.

However, I can tell you that according to the Office of the Superintendent of Bankruptcy, the rules were changed to encourage debtors to pay back some money back to their creditors and to encourage the filing of consumer proposals.

The bottom line is this. If you are experiencing difficulty paying you bills, you should be calling me at 310-PLAN. The fact is the new rules are here and I can explain them in detail and how they may affect you.