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Most Canadians rely on credit to some extent to make purchases throughout the Christmas season. Some will pay the balance in full in January; others will have budgeted to use their tax refund to pay the balance; still others will make minimum payments. Of those making minimum payments, some have budgeted to insure that the payment is affordable. Some however, may not have budgeted, and their Christmas purchases have either compounded an already existent credit problem, or have created one. It is human nature to simply enjoy the season, and leave the worries to the New Year.

If you find yourself dreading the credit card bills you will be receiving shortly, and are concerned about your ability to manage your financial obligations, please know that help is available. You are not alone. Empower yourself with the information you need to understand how you can Turn Worry into a Plan. Call us at 310-PLAN or e-mail us today to learn how.

I was told that i can apply for personal bankruptcy on my student loans after 10 years. that date is coming up early next year. is that still possible? as i know i do not make enough money to pay them off or i will be paying them off for the rest of my life.i am a single mother of 2 children

thank you kindly

A client I first spoke to last month called me back. She was struggling with knowing how much she can afford to pay her creditors. She knew she and her husband could afford to repay the debt, she just wasn’t sure how much. Should she file a consumer proposal and try to pay back a portion of the debt they owe? OR Should she enroll in a Debt Management Program with a credit counseling agency and repay 100% of the debt owing? She told me she just wanted to “do the right thing”. This is not an uncommon quandary. Knowing how much we can afford is often what gets us into financial trouble in the first place. And how much we can afford varies greatly between individuals. I suggested to this client that, as a first step, she and her husband project what I call a “brutally honest” budget. What do I mean by “brutally honest”? An honest budget captures our real spending vs. what we think we spend. I suggested they start by listing their fixed expenses, which is all of the expenses they have no choice but to pay. This includes rent or mortgage payments, utilities, car payments etc. What would then be left over is the amount available to spend on variable expenses, or the expenses that they have some control over. This includes groceries, meals out, entertainment etc. In the case of these particular clients, this amount would also have to cover a payment to their creditors. The math, if done carefully and honestly, can often assist in the debt solution decision. These particular clients also enlisted the assistance of a credit counseling agency. The counselor they met with reviewed their budget, and made some suggestions that eventually led them to their final decision to explore a consumer proposal in more detail.

If you are dealing with debt, and are struggling with budgeting for a solution, you are not alone; this is a very common query. Please feel free to contact us at 310-PLAN; help may be just a phone call away.

About a year ago, an elderly client called me wondering about options to deal with a creditor that was calling her. Her husband had passed away a few months prior, and she was now barely able to house and feed herself. In discussing her situation, I learned that her only sources of income were Canada Pension, and Old Age Security. Since neither of these sources of income can be garnished, I advised her that she was “creditor proof”. This means that even if a creditor sued her, they would not be able to garnish (or take part of) her income. She had the reassurance of knowing that, even though the creditor could continue to call her, they could not take any of her income. She was relieved because she did not want to file bankruptcy. I did suggest however, that she change her bank account as soon as possible. Why? Since her bank account was with the same creditor that she owed money to, that creditor could take money deposited to her account to satisfy the outstanding debt she owed to them. This is called “right of set-off”.

I spoke to the same client yesterday. She called me back because the creditor we spoke about a year ago had taken money out of her bank account the day before; she was very upset and wondered why they did this, and what she could do about it. Even though a year ago, I suggested she change bank accounts, she unfortunately had not done so. She told me that a few months after speaking to me, the creditor stopped calling her, and so she thought it would be safe to not change her account. So, what can she do now? Sadly, there really isn’t anything she can do; the creditor is not required to return the money taken. However, I again suggested that she close her old account and open a new account at a different bank (that she owed no money to) to prevent this from happening in the future. She told me that she had already done so.

If you are on a reduced income, and have questions about how to manage your debts, please feel free to call us at 310-PLAN or visit us at Hoyes.com.

My colleague Susan Jung and I had a very informative meeting today with Mary Jefferson, Tony Daly, and Nina Lewin from Catholic Family Services of Hamilton.

Catholic Family Services of Hamilton is the only not-for-profit credit counselling agency in Hamilton that meets with clients face to face, helping clients in financial trouble learn money management skills, and intervening on behalf of clients with creditors to negotiate a debt repayment schedule.

At Hoyes Michalos we pride ourselves on helping people make a plan to deal with their money problems. Sometimes that plan involves filing a consumer proposals or a personal bankruptcy, but for many people credit counselling is a better solution.

I learned today that Catholic Family Services of Hamilton’s credit counselling group helps over 100 new people each month. In addition to teaching money management skills, they also do Debt Management Plans, where you make one monthly payment to CFS, and they then distribute it to your creditors. The average person in a Debt Management Plan has debts of around $27,000, but CFS has done Debt Management Plans for people with as little as $5,000 in debts, and debts of over $100,000.

In addition to a very strong credit counselling program, Catholic Family Services also has a Walk-In Counselling Clinic, Family and Individual Counselling, and numerous other programs to improve and strengthen the quality of life of all individuals and families in the Hamilton community.

If you have money problems and you don’t feel comfortable talking to a trustee in bankruptcy, the professionals at CFS would be happy to explain your options. They can be reached via their Catholic Family Services of Hamilton web site, or by calling 905-527-3823.

I meet with many clients who, when I ask them what brings them to see me, respond “I was once young and foolish”. At the root of most of the client’s stories seems to be a common theme: Getting all kinds of credit, letting time pass without paying it, and then hoping that it will simply just go away. In many cases, it does seem to go away; we change telephone numbers, we move and our creditors seemingly “forget about us”. This notion very much reflects the “young” in us; however our creditors soon catch up with our “foolish” side. How? At some point in our lives, we settle down; we get married, or live with someone, have children, and need credit. Perhaps we want to purchase a house, or some furniture for our apartment; we may wish to lease or buy a car. Or we may simply want a credit card to be able to reserve concert tickets or rent a car. These are the kinds of events that bring our past crashing back to reality. How? Because most often, it is only us who “forget” about the bill we didn’t pay. The company we owe it to most often does not. Instead, they report our failure to pay them with the same credit reporting agency that the mortgage company, leasing company or credit card company looks to for information that will reassure them that we have good credit. I’ve talked to many clients who have sat across from a lender, only to suffer the humiliation of having their pasts come back to haunt them. In some cases, clients have not told their spouses about their past credit history. At that point, dealing with the lender becomes the least of their problems; now they have an angry spouse to account to.

So, please beware of the debts that you think have simply disappeared from your “Young and Foolish Days”. If you are one of the people who find out the hard way that their debts have not been forgotten, or if you simply want to get things fixed up before it gets you into trouble, give us a call at 310-PLAN, or visit us on our website to learn more about your creditors, how they can affect your future and the options you have to deal with them.

I’ve now had a couple of clients refer to their use of cash advance stores as an “addiction”. In each case, the clients borrowed $200 in order to pay their rent on time. The following week, interest had accumulated making it impossible for them to cover the entire debt to the cash store with their pay cheque, so they ended up going to another cash store in order to pay the first cash store. They borrowed enough money from the second cash store to pay the first, but by the time the monies were received, more interest had accumulated on the first. By the time they called me, they were now borrowing from the 3rd and 4th cash stores to pay for the previous debts incurred, and their combined monthly payments to all of them exceeded $600. The term “Addiction” probably is a good way to describe this state of affairs, and as long as the cash advance stores are willing to lend us the money, the cycle or addiction continues. In some ways I suppose, the cash stores can be viewed as being the enablers. In one of the cases, the client had fallen so far behind with the 1st cash store, that his wages were being garnished. His rent had fallen so far behind that he was being evicted, and what started as a loan intended to help him out, ended up as a source of great worry and stress for him. Cash stores may be able to help us with the occasional payment, but it is important that you pay the debt back in full as quickly as possible, but more importantly that you know when to stop. If you don’t, you could very well end up addicted like the 2 clients I’ve talked about here. The good news is that we were able to help these clients find a solution that was affordable, and fit in with their financial goals and objectives.

If you or anyone else you know is struggling with cash store debt or any other kind of financial burden, help is just a phone call away. Call us at 310-PLAN to discuss your options or e-mail us if you have any questions.

I just got off the phone with someone who called me because she is struggling to pay her debts. She had a good job, but was laid off. In spite of spending 5 hours a day looking for another job, she has been unsuccessful. Now on Ontario Works, her income has dropped to the extent that she barely has enough money to pay for her rent and a few groceries each month. She did some research and thought that maybe bankruptcy might be an option for her. However, a friend of hers told her that she wouldn’t be able to file bankruptcy if she is on Ontario Works. She called us to find out if this is true, and I thought that I would share what I told her with you, our readers.

The source of income does not determine if one can file bankruptcy or not. In this case, being on Ontario Works does not preclude the client who called me from filing personal bankruptcy. Having said that, income from Ontario Works cannot be garnished; this means that even if a creditor sued her, they would not be able to garnish (or take a part of) this source of income. So, the client I spoke to has the option of postponing making any decision about dealing with her debt. Knowing this brought a great deal of relief to her; this meant that she had some time to try and find another job and then resume making payments. On the other hand, if she can’t find a job and the payments pile up to the point where she knows that even if she got a job, she wouldn’t be able to get caught up, she could explore bankruptcy as an option.

If you, or someone you know is struggling with debt, and need some clarification about the options available, please call us at 310-PLAN.

According to numbers released by the Office of the Superintendent of Bankruptcy, the number of personal bankruptcies filed in Hamilton, Ontario in the first six months of 2006 decreased by 7% as compared to the same period last year. In the first six months of 2005 there were 974 individuals who filed bankruptcy in Hamilton; that number fell to 904 in the first six months of 2006.

The number of consumer proposals also fell significantly, from 239 in 2005 to 213 in the first six months of 2006 in Hamilton, for a drop of 11%. (A consumer proposal is a legal alternative to bankruptcy where you make payments to your creditors over a period of time, generally three to five years).

Combining both numbers the rate of personal insolvency fell by 8% in Hamilton. Of all major cities in Ontario, only London (at 16%), Peterborough (at 27%) and Brantford (at 15%) experienced larger declines. In all of Ontario personal insolvencies fell by 5%, so Hamilton’s performance is well above the average.

No-one knows for sure why the bankruptcy rate is falling in Hamilton, but we believe it is largely because interest rates remain relatively low, making it easier for Hamilton residents to continue servicing debt without needing to resort to filing bankruptcy.

However, as interest rates continue to increase, and if the economy begins to slow down, the personal bankruptcy rate in Hamilton may once again resume the upward trend that existed prior to 2005.

If you are experiencing financial problems and don’t want to become a statistic, please call our Hamilton office at 310-PLAN or e-mail us for more information or to set up a no charge initial consultation.

Tagges as: personal bankruptcy, bankruptcy Brantford, bankruptcy Ontario

Many clients that I talk to tell me that they feel that the amount of debt they have is so small that they are embarrassed to be calling me to talk about it. So, how much is too much debt? This really is a relative question. For some people, $2000.00 may be a lot of debt, for others $200,000.00 may be a lot of debt. So how do we know when the debt we have is too much for us to handle? How do we know when we need help? Too much debt is when we find ourselves:

1.) choosing between buying groceries or making a payment on our credit cards
2.) working overtime on a regular basis to make the payments on our debt
3.) selling our furniture or other property in order to pay our creditors
4.) borrowing from family piggy banks and savings in order to pay for expenses
5.) choosing between paying our hydro or gas bills and paying the people we owe money to

Doing these things for a few months may be necessary to get us through a temporary lay-off or short-term illness, but if you find yourself doing this month after month, you may need help. If you are struggling with debt, please give us a call at 310-PLAN to book a free consultation or e-mail us with your questions. We are here to help you find a solution that works for you.