Posted on Friday, November 25, 2005Canadian Bankruptcy Reform Now Law - Bill C-55 Passes House of Commons and SenateIn an amazing (and some would say disturbing) show of all party unity, both the House of Commons and the Senate ignored the normal committee review process and approved Bill C-55. All parties realize that an election will be called on November 28, and if the legislation had not passed prior to that date it would die; obviously no party wanted this to become an election issue.While we agree with some of the changes contained in Bill C-55, we are disturbed than the normal consultation and review process was not followed. There are flaws in this legislation, and we hope that the next Parliament agrees to undertake a detailed review of bankruptcy legislation that they chose not to do in 2005. Our detailed comments on Bill C-55 and bankruptcy reform in Canada list the major changes impacting on individuals. We do not expect these rules to become law before June, 2006, so stay tuned to this space for more information as it becomes available. Posted by J. Douglas Hoyes, CA, Trustee @ 9:38 PM
Posted on Wednesday, November 23, 2005Paying Creditors Before You FileAlmost every person who comes for a financial consultation is making every effort if possible to pay their creditors. As it becomes more difficult to make payments to everyone, there is a decision process that takes place on whom should be paid.It is always important to pay the household bills and items that are necessary for daily living. These include payments for rent, utilities and food. If you have a mortgage and car loan and need to keep your house or vehicle, these items should be paid on an ongoing basis as well. Any creditors that are unsecured, such as credit cards, lines of credit, loans from friends and family members, would be paid last. It is important to pay each of these creditors on an equal basis and not pay only one of them. It is important when your finances are getting difficult to manage that you treat all creditors the same, even though you may wish to pay off a close friend or relative or a "nice" creditor. My next entry in December will discuss why this is important. Should you wish to discuss this issue or your financial situation, please e-mail us or call us at 310-PLAN. Posted by Norma Yau, Trustee @ 11:40 AM
Posted on Monday, November 07, 2005What does a bankrupt person look like?I am often asked to describe the typical person we help. While that is a difficult question because every case is unique, we have examined our data over the past three years and developed the profile of the average insolvent debtor.We call him Joe Debtor, and he is a male, 40.5 years old, with one dependent living with him, either a spouse or a child. His take home pay is about $2,400 a month. He owes the major banks more than $30,000 for loans, lines of credit and credit cards. He owes other credit card companies (department stores and US credit cards that now operate in Canada) another $6,200. He owes the government more than $6,000 and he is likely dealing with finance companies and payday loans for around $4,000 more. His total unsecured debt is more than $50,000. Our study shows that 33% of debtors stated that lay-off or reduced incomes contributed to their financial problems, and 29% of debtors are separated or divorced. Of course many people go bankrupt or file a consumer proposal that do not exactly match this profile. However, it has been my experience that most residents of Ontario in financial difficulty are good, hard working people, but due to divorce, job loss and over use of credit are forced into bankruptcy. You can read our entire study, The "Face" of Bankruptcy - A Study of the Typical Insolvent Debtor for full details. As Parliament considers bankruptcy reform legislation, it is our hope that the average working Canadian with financial problems is not forgotten. If you are having financial problems, please contact us for a no-charge initial consultation to review your options. Posted by J. Douglas Hoyes, CA, Trustee @ 6:53 AM
Posted on Friday, November 04, 2005Motor Vehicle Accident Claims FundI recently met with a person who owes money to the Motor Vehicle Accident Claims Fund. He was in a car accident, and did not have insurance. The Fund made a payment to the injured party and now the debtor owes money to this Fund. The debtor asked me if this debt would be discharged (go away) in a bankruptcy.I spoke with someone who works for the claims fund and she advised me that when a claim is made through the fund, the debtor's driver's license is suspended, usually until the Fund is repaid. Unfortunately bankruptcy cannot re-instate a driver's license, so while legally the debt itself may go away in a bankruptcy, you will not get your driver's license back until the fund is repaid. If you owe money to the Motor Vehicle Accident Claims Fund, your best option may be to make repayment arrangements with them in order to get your license back as soon as possible. If you have other debts, a bankruptcy or proposal may still make sense, so please contact one of our professionals to review your situation in more detail. Posted by Rebecca Martyn, CGA, CIRP, Trustee @ 5:30 PM
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