I have been reading about a few retired pro athletics who have filed for bankruptcy in the US recently. For many people this might seem strange. After all, many of these athletes made millions of dollars during their career, so why would they need to file for bankruptcy. According to a Sports Illustrated article 78% of NFL players have financial difficulties within 2 years of retiring and 60% of NBA players have difficulties with 5 years of retiring. That seems like a pretty high number to me.

Why is that, and what does that have to do with bankruptcy in Chatham. After all, there aren’t any professional teams here.

I see 2 similarities between the bankruptcies of pro athletes and the people I meet with in Chatham.

The first is the temptation when you get your first job. Once the paycheques start coming in you might decide its time for that new car or to take that vacation you always wanted. You don’t have the cash so you finance the car and put the vacation on your new credit card. You don’t see that as a problem, because you can use your paycheque and make payments over time. Before you know it you may have tens of thousands in debt (for the pro athletes that might be millions in debt). You may get to the point where you start having difficulty making payments, or you can only make the minimum payments. What will happen if your hours get cut back. It’s a similar story for many pro athletics. The huge cheque comes and the spending spree being, albeit on a larger scale. If all of the money is being spent on stuff, what will happen when the pay cheques stop coming?

The next similarity is retirement. Retirement comes as a surprise for many people. They might be suddenly struck by illness or accident and no longer able to perform their duties. They might be lucky enough to have a pension or even to get other employment, but it will be at a substantially reduced rate of pay. They might have built their lifestyle on a certain amount of money coming each month, and if that amount is reduced, they debt can’t be paid. For many or those people, bankruptcy is the best option to get a financial fresh start.

It doesn’t matter who you are, what you did, or what you earned. Financial problems can happen to anyone. There are solutions available to help you with your financial problems. Give us a call at 519-351-2323 and let us help you.

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The the Office of the Superintendent of Bankruptcy just released their surplus income guidelines for the year. The good news is that they have increased over last year.

The new limits are:

What is surplus income?

It doesn’t mean what you may think it does. Many people think it means money you have left over. In a bankruptcy, surplus income means the amount of money over the government limit. Basically it means, the more you earn, the more you pay.

What does that mean?

Here is an example. Let’s say you are single, with one dependents. Your government set surplus income limit is $2,465. Your take home pay is $2,700 each month. You are over the income limit by $235 ($2,700 – $2,465). You keep half of that amount and you pay half to the bankruptcy, which is this example is $117.50. This calculation is done each month for at least the first 6 months of your bankruptcy.

It can be confusing, but this calculator can help you figure out what your surplus income is.

What can you do if you want to avoid surplus income payments? The answer is simple: File a consumer proposal. That way the payment is set each month and you don’t have to worry about doing the math.

If you need have questions about bankruptcy or surplus income, give me a call at 519-351-2323 or 310-PLAN.

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When I meet with people in Chatham to discuss bankruptcy, a very common question is “can I keep my car”? In most cases, the answer is yes.

The decision to file for bankruptcy is never easy, and if you are concerned about your car, give me a call at 519-351-2323 and we can review your situation and whether or not you can keep your car.

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When I meet with people in Chatham to discuss bankruptcy, they usually ask the same questions. I thought I would share the top 5 bankruptcy questions.

1. What does bankruptcy cost? This can be a complicated question because there are 4 components to what bankruptcy costs.

• The first is the administrative charge. Everyone pays a minimum of $180 per month to file. If your file is complex, this amount will be higher.
• Next is what is known as surplus income. Essentially the more you earn as a family, the more you pay.
• You may also have to make payments to keep assets such as any equity in a home or car.
• And finally, although not a payment you make, you have to consider that you will lose at least 1 year of income tax refunds.

2. Will I lose my house? It depends on a number of answers. Is there equity in your house (is it worth more than you owe)? If there is equity, then you don’t lose your house, but you will have to pay the equity to the trustee before you are discharged.

3. Will my bankruptcy affect my spouse? Surplus income payments (see above) are based on family income. If your spouse has a source of income, this could increase your payments. If you have any joint or cosigned debts, those debts will then become your spouse’s responsibility. Many people think that simply because you are married, any debts you have are automatically your spouse’s debt. That is just not the case.

4. Will I really lose everything? No, there are certain assets you are allowed to keep. Some of those are:

• $5,650 in personal possessions
• $5.650 for a motor vehicle
• $11,300 for household furnishings
• $11,300 for tools required to earn your living
• Certain types of life insurance, investments, and RRSP’s.

5. Are there other options rather than Bankruptcy? Absolutely. In fact, more than half the people I meet with successfully file a consumer proposal. For many people, having a set monthly payment, which is normally lower than the bankruptcy payment, makes this an attractive alternative to bankruptcy.

Now that you know the top 5 questions I am asked on a daily basis, call me at 519-351-2323 or310-PLAN or email me your question. We can book a free meeting to answer your questions, review your options and costs and formulate a plan that is right for you.

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Occasionally when I met with someone in Chatham, I refer to them as creditor proof. What does that mean?

Does it really mean I am protected from my creditors? Well, yes and no.

The main reason someone files for bankruptcy is to protect with wages or assets. If you don’t have any wages or assets, you have nothing to protect. Hence, the term creditor proof.

Does that mean I can’t be sued? No, you can still be sued. The difference is that even if you are sued there is little that can be done. You don’t have any wages that can be garnisheed and you don’t have any assets that can be seized.

However, these rules don’t apply to Canada Revenue Agency (formerly known as Revenue Canada). If you owe money to the government such as student loans or CMHC, they have the right to take your tax refunds and HST cheques until that debt is paid in full.

If you are in this situation, you really need to review the cost of filing for bankruptcy versus the benefits. For some the correct answer is to do nothing until you are back to work. For others, especially those with tax refunds that have been seized, it may be more beneficial to save up the money to file for bankruptcy to put an end to losing their tax refunds.

Contact me at 519-315-2323 or 310-PLAN if you have questions about bankruptcy or your debts.

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As a Chatham, Ontario trustee, I hear this question quite often “what are my options to deal with my debt?”.  I get a phone call or email and someone is stressed.  They have debt they can’t manage but they are not sure what they can do. 

In general everyone has 5 things they can do.

1.  Do nothing. Yes, this is an option.  If you have employment earnings or assets it is not a very good option.  But if you are creditor proof, this is something to consider.

2. Try to solve the debt problem on your own. You may be able to save up money and offer them a lump sum settlement. Or, you may be able to get a debt consolidation loan from your bank. For many people, this is not a viable option. If you are already behind on your bills, you may find you bank is not able to help you.

3. You can hire an outside agency such as a credit counselling agency. They will work out a plan between you and your creditors to either settle the debt and/or reduce the interest rate. This plan is best for people who can make the minimum payments on their debt each month, they just need get ahead of the compounding interest.

4. File bankruptcy. This is good option for people who are low income and have minimal or no assets. You have to make payments based on your income, and you are allowed to keep certain assets. Contrary to rumours you do not “lose everything” if you file for bankruptcy.

5. File a consumer proposal. This ever increasing option is being used by those who have the ability to make payments on their debt, they just can’t make the full payment. It typically requires you to make monthly payments for up to five years. It is court approved and only requires the majority dollar amount of your creditors to agree to it.

To review your situation and formulate a plan that is right for you. Give me a call at 519-351-2323 or 310-PLAN.

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I just spoke with someone who came to see me 2 months ago. She has not yet file bankruptcy or a consumer proposal. As I always tell people who are in financial difficulty, do not bank where you owe. To her surprise (but not mine), the bank took money from her bank account to pay her arrears on her bank loan. I thought it worthwhile to re-post the article on why you need a new bank account.

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If someone has decided to file a bankruptcy or consumer proposal I insist that they bank with a financial institution they don’t owe money to and I explain why. I even give them a bright yellow sheet explaining how to do that and why it is important. However, every so often someone comes back to see and I find out they didn’t take my advice and move to a new bank.

Let me make this clear, if you bank at a bank where you owe money, there is a really good chance that they will freeze your bank account when they get the bankruptcy or consumer proposal papers. Your bank account is frozen and now your car payment and rent cheque will bounce.

Yes, I know you have been dealing with your bank a long time and they know you, but you have to consider what will happen if you don’t get a new bank account. They can take money out of your bank account if you are behind on your bill payments. Opps, that money was for your rent … sorry but the bank took the money to pay the visa bill, and yes they are allowed to do this. Now how do you pay your rent?

“But switching bank accounts is a lot of work”. I know it is, but you would rather have the bank freeze all of your money for days or weeks, or would you rather take an hour faxing your new bank account information to your employer, utility, insurance, car lender, etc.

“But my bank really likes me”. Then why did they turn you down for a loan?

“But all I have with them is a car loan and I am keeping my car”. Unfortunately, that doesn’t matter. Once your paperwork is entered into the bank’s computer, the freeze is automatic. They don’t have someone checking your file to see if they should be doing it.

“But I bank where my mortgage is.” You can bank where ever you want, you don’t have to bank where your mortgage is. You just have to tell your mortgagee to take the money from your new bank account.

“What if I don’t owe any money to the bank?” You may not need to get a new bank account. However, if you have written any post-dated cheques or have given pre-authorized payments on a debt that will be part of your proposal you will have to put stop payments on all of those payments. Putting stop payments on cheques can be expensive, you may find it cheaper to just get a new bank account. Talk to your bank about this.

To make it clear, don’t bank where you owe.

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My first question is what caused you to contact us or search out this web site? Are you having difficulties making your payments? Do you find you are using one credit card to pay off another? Are creditors calling you are work? Do you have a garnishment order in place? If any of these answers are yes, it’s best to speak with a professional about your situation.

That doesn’t mean you have to file for bankruptcy. There are many other options to deal with your debt including a debt management plan or a consumer proposal. If you are already in collections on your debt, it is unlikely your bank would give you a consolidation loan, but for some, that may be an option.

When you come to my Chatham office for your no charge meeting, we will review your entire situation. The things we will discuss you about you include:

- What caused your financial difficulty? Has your income gone down, were you off work or out of work, or did you have a relationship breakdown?

- We then review your debts. Please tell me about all of your debts including mortgages, car loan, credit cards or debts you know won’t go away with a consumer proposal or bankruptcy

- We also review your assets. This doesn’t mean you lose your assets, I just need to know what you have.

- Finally we review your budget. It is good to know how much you bring home (net income) and what your household expenses as, such as rent, mortgage, utilities, car payment, gasoline and groceries.

We then review all of your options including the one that may be best for you.

If you are struggling with your debt payments, then give me a call at 519-351-2323 or 310-PLAN and lets get started on your fresh start.

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Every week in my Chatham office I receive a phone form somebody who states he or she “has to file for bankruptcy”.

My first question is “who much do you owe?” It might seem like a straight forward question, but what do to you do when the answer is “I don’t know”?

We then discuss why they don’t know what his or her debts are? Have you just not added them up? Do you have unopened creditor bills at home?

If you are calling in a panic to file for bankruptcy, why? Are creditors calling you, have you received collection letter or has your employer received notice of garnishment? All of these are pieces to the puzzle that will fit together to find out how much you owe.

Maybe you went to apply for a loan and you were denied and were told your credit rating is poor. The first thing you should do it to get a copy of your credit report. You can get that from either Equifax or Transunion. You don’t need a credit card to do this, you can request a free copy via mail. No, we cannot get your credit report due to privacy reasons, you are the only one who can do it.

Once you get a copy of your credit report, read it to find out what the problem is. If all you have on it is a small bill from years ago, it is probably easier just to pay if off then to file for bankruptcy.

If you still need to file for bankruptcy, then contact us at 519-351-2323 or 310-PLAN to arrange a no charge consultation.

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When I get an email from someone in Chatham, it often is just a simple question: How do I file for bankruptcy? The answer though is a bit too in-depth for an email so I thought I would summarize the steps here.

1. You need to call our office at 519-351-2323 or 310-PLAN to set up a no charge meeting. It is better to do this via phone so we don’t go back and forth for days on email trying to get a time that works for your schedule. When you call we just need general information such as approximately how much you owe, your income and what assets you have.

2. At this meeting we will review all of your options to deal with your debt including debt consolidation, credit counselling, consumer proposal and bankruptcy.

3. Together, we gather all of the necessary paperwork to complete the fresh start application form. This includes information such as your creditors, income, expenses and details on what you own such as a house or car.

4. We complete the bankruptcy paperwork and you return to our office to sign the documents.

5. Once the paperwork is signed we electronically send it to the Office of the Superintendent of Bankruptcy and you are officially bankrupt. You are on your way to your fresh start.

6. During the bankruptcy process, you complete a series of duties which includes making payments, attending two credit counselling sessions, providing tax information and submitting monthly income and expense reports.

7. If you perform all of your duties, and if no creditor objects, you are automatically discharged at the end of your bankruptcy period (which is 9 or 21 months in a first bankruptcy, or 24 or 36 months in a second bankruptcy, depending on your income).

Of course, the bankruptcy process can’t fully explained in a one page article, so I suggest you contact me to set up a meeting. I would be happy to meet with you to discuss your situation.

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