Posted on Saturday, August 27, 2005My Incorporated Business is Failing. What Should I Do?Many people believe that a business must be closed through a bankruptcy. The problem is that a business bankruptcy is an expensive process. You are probably looking at $5,000 to $10,000 in professional costs. If there are no company assets to pay these costs, they are coming out of someone's pocket.Before deciding on whether a business needs to go bankrupt, you must look at what value does the bankruptcy provide. For example, if a landlord has locked the doors, and there are very valuable assets inside, at least as great as the professional costs mentioned above, then a bankruptcy makes sense as the landlord will have to turn the assets over to the trustee. The more important aspect of a business failure is its impact on the owners of the company. Usually there are personal guarantees which were handed out freely to banks, landlords and suppliers when times were good. There are also personal liabilities for government taxes. When these situations arise, it is time to seek out professional advice as to how to deal with these debts on a personal level. Call or email us today so that we can meet with you to work out a plan. Posted by Benny Mendlowitz, CA CIRP, Trustee @ 10:00 AM
Posted on Friday, August 12, 2005How Do I Stop a Wage Garnishment?If you owe money and can't pay, the company you owe money to may take you to court to garnishee your wages. Under the Ontario Wages Act the maximum garnishment is 50% of your wages.To stop a garnishment, you either need to pay the creditor, file a consumer proposal, or go bankrupt. Click this link for our article on wage garnishments in Ontario. Unless you pay the full amount of the wage garnishee it won't go away on it's own so please call or e-mail us today so that we can meet with you to make a plan to stop your wage garnishment, or prevent one from starting. Posted by J. Douglas Hoyes, CA, Trustee @ 7:34 AM
Posted on Monday, August 01, 2005Why Does Home Ownership Cause Financial Problems?At least once every week I meet with someone who purchased a house one or two years ago, and now they are in financial trouble. What happened?Many new home owners get into trouble because they underestimate the cost of home ownership. It's easy to calculate your regular mortgage payment; the bank will do that for you before they give you your mortgage. Your real estate agent may even convince you that owning a home is cheaper than renting. They will say "You're paying $950 per month to rent, but with low interest rates your mortgage payment will only be $900 per month!" Sounds like a great deal, until you realize that it's more than just the mortgage payment. You've also got property taxes, utilities (hydro and gas, which will cost more in your new 10 room house than they used to cost in your three room apartment), and repairs and maintenance (you are the landlord, so now when it breaks, you fix it). So now your $900 mortgage payment is closer to $1,500 in monthly housing costs, and that's not all. You need furniture for your new, bigger house. You want a patio set and a barbecue so you can have your friends over. You need a lawnmower, and some plants for the garden. Unfortunately most people don't have $10,000 cash in the bank after they buy their house; all of their savings went towards the down payment. So what do you do? You borrow. Probably using credit cards, because now that you're a homeowner, you qualify for a much larger credit limit on your credit card! And so the downward cycle begins. Your monthly payments are higher than you thought. The washing machine breaks so you buy a new one. Then you buy furniture on credit, so now you're paying more to your credit cards each month. Then an unanticpated emergency happens. It may be car repairs, or perhaps your hours are cut back at work, or you lose your job. Now it's even harder to make the payments. What can you do? First, try to free up extra cash each month. That may mean reducing your expenses, or increasing your income (perhaps by renting out your basement, or getting a part time job). If you can't solve the cash flow problem, the next option may be to consider selling your house. It may have increased in value since you purchased it, so by selling now you may be able to pay off the mortgage and selling costs, and find a place to rent. By getting your monthly living expenses under control, you may be able to start saving again, and buy another house in the future. The next option would be to try a consumer proposal. Depending on the equity in your house, it may be possible to try to make a deal with the people you owe money to (credit cards, banks) to reduce your expenses and keep your house. If all else fails, the final solution may be to go bankrupt. If you have minimal equity in your house, it may be possible to keep your house even if you do go bankrupt. However, if the excessive costs of home ownership have caused your problems, trying to keep the house during a bankruptcy may not be the best solution. What should you do? I suggest you contact us by e-mail today, or call us at 310-PLAN (no area code required). We would be pleased to review your unique situation and help you work out a plan for a fresh start. Posted by J. Douglas Hoyes, CA, Trustee @ 3:16 PM
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