Posted on Monday, July 23, 2007If only she had done this years ago... I have a story to tell you; the story is true, but the names have been changed for privacy reasons. This is a story about Mrs. B. She is in her 50's, divorced and has no dependants. Mrs. B's financial difficulties started 18 years ago. She separated from her husband, who subsequently went bankrupt and saddled her with their joint debts. She raised her infant son, worked two jobs and managed to purchase the condo she owns jointly with her sister, which they both live in. During all these years, she made payments towards her old debts, but never paid them off in full. She never had enough extra money to make a big dent in the outstanding bills. Over the past few years, the number of hours given to her at work had decreased. She was still working her two jobs, but with fewer hours. This is when the financial pressure started to increase. She found that she had to start using one source of credit to pay another. Her liabilities had now grown to just over $70,000. The balancing act continued until she ran out of credit to meet her payments. That is when she called me. We sat down and looked at her financial situation. She had a few small assets: a 10 year old car and an extremely modest RRSP. But what she did own was a 50% interest in her condo with her sister, which was practically debt free. This was the key that would unlock her financial mess. If Mrs. B and her sister were to sell the condo, after paying real estate commissions, legal fees, a penalty to break the mortgage, and paying off the mortgage, Mrs. B's share of the proceeds would be about $40,000, which is obviously not enough to repay her $70,000 in debts. Fortunately, there is a way to use the equity in her condo to offer her creditors a proposal; a deal to pay them something, not everything, but more than what they would receive in a bankruptcy, and Mrs. B did not want to have to file for bankruptcy after coming this far in her life. At Hoyes Michalos we have a network of professionals we can call on to help solve financial problems, so I put Mrs. B in touch with a mortgage broker who was able to find a lender willing to provide enough financing to pay her creditors the equity in the condo. Here's what we did: her share of equity in the condo was $40,000, so the mortgage broker arranged a $40,000 mortgage. Mrs. B then offered her creditors a $40,000 consumer proposal. The creditors were better off because they received this equity without a fight, with little delay and without the additional costs that would have been incurred if Mrs. B were forced to sell the condo. Mrs. B was better off because the monthly mortgage payments were far less than what she was paying in monthly minimum payments, and she was able to keep her condo, the roof over her head. I asked Mrs. B why she hadn't tried to get help sooner. She said that she never thought things were that bad that she couldn't manage them. She now wishes she had sought help years earlier; the stress on her was great, but she managed to live with it year after year. Now the stress is gone. Would you like me and the team of professionals at Hoyes Michalos to put our experience to work for you? Mrs. B learned that the sooner you ask for help, the sooner we can work out a solution, so if you have more debt than you can handle, please give our office a call today at 310-PLAN (that's 310-7526; no area code required anywhere in Ontario, and your call will be routed to our nearest office), or fill out our no-obligation bankruptcy evaluation form, or e-mail us today, and let's get started. Labels: consumer proposal, personal bankruptcy, Success Stories Posted by Benny Mendlowitz, CA CIRP, Trustee @ 10:29 AM
Posted on Monday, July 16, 2007Joe Has Change in his PocketJoe (not his real name) came to see me; he was looking somewhat depressed.Joe had a good job, but he had a huge amount of debt. Joe told me that things had been going well for many years, but then his marriage ended. His wife had always taken care of the finances, so when she left, Joe had no idea where the money went. Joe's son was living with him, and with two mouths to feed, and without his wife's income to help, Joe began to rely on credit cards to pay his day to day living expenses. He fell deeper and deeper into debt. When he came to see me, he was afraid that he had fallen so far behind that his creditors would take him to court and garnishee his wages. He didn't know what to do. He felt completely hopeless. I started by telling him that I understood the pain he was feeling. I have met with hundreds of people over the years who work hard, but for some reason have nothing to show for it at the end of the week. They live from paycheque to paycheque. I also told Joe that my job is not just to be a shoulder to cry on. My job is to give practical advice on ways to get out of debt. I pulled out a blank piece of paper and asked Joe to tell me everything he spends money on each month. He listed his rent, grocerices, car insurance, gas for the car, telephone bill, and hydro bill each month. He also showed me some recent pay stubs so we could figure out how much he makes each month. What did we find? Based on what Joe was making, and what he told me he was spending, he should have had about $500 left over each month. But he didn't. So I dug deeper. I asked him to describe his typical day. He told me that he got up early each morning to drive to his job in Toronto. On the way to work he stopped at the coffee shop for a cofee and a muffin.  "Stop right there", I said. You didn't mention the coffee shop earlier. It turned out that Joe stopped for a coffee and muffin on his way into work, and also went to the coffee shop at this morning coffee break, at lunch, at his afternoon break, and on his way home (he had a long drive each day). He was spending about $3 on the way to work, $4 for his morning coffee break and snack break, $8 for lunch, $3 in the afternoon, and $2 on his way home. That's $20 per day, five days a week, or over $400 per month at the coffee shop! Joe didn't realize what he was spending at the coffee shop. Once he realized what he was spending, it was easy to make a plan to save money. Joe already had a coffee maker at home, and a big thermos. That night he went to the grocery store and bought a loaf of bread and some cold cuts, and he went home and filled up the coffee maker. When he got up the next morning he pushed the button on the coffee maker, and by the time he left for work he had a fresh pot of coffee, which he used to fill up his thermos. He made himself two sandwhiches and brought them with him to work. With a full thermos and a full lunch bag, he didn't need to stop at the coffee shop. One week later I saw Joe again. He wasn't looking depressed. He was actually looking happy. He told me something amazing: He had change in his pocket! Loonies, Twonies, a whole bunch of change! Amazingly enough, by simply making his own coffee and lunch, Joe had managed to save a lot of money. Now I don't recommend that we all boycott the local coffee shop. We all like a fresh cup of coffee; it's what makes us Canadian. But by actually writing down what he was spending, Joe was able to make decisions about where to cut back. Making his own coffee and lunch allowed Joe to free up some cash, but his debts were too large. He was not able to dig his way out of debt on his own. However, with the "extra" cash he had each month, Joe was able to do a consumer proposal. We offered his creditors a plan where he paid $400 per month (the money he saved by making his own coffee and lunch) over a four year period. They accepted the deal, and now Joe has one monthly payment, and no worries about supporting his son. Joe is a success story, because, with our help, he was able to take control of his financial life. Would you like to be a success story? Give our office a call today at 310-PLAN (no area code required anywhere in Toronto), send us an e-mail, or fill out our free bankruptcy evaluation form, and let's start. Labels: consumer proposal, Success Stories Posted by J. Douglas Hoyes, CA, Trustee @ 1:13 PM
Posted on Monday, July 02, 2007Closure, Bugs and Bankruptcy in Ontario Last week I met with an elderly lady and her daughter. She had lived off credit for many years since her husband died, and now she owed many thousands of dollars on various credit cards. She has been retired for many years, and only receives a small government pension. The pension is sufficient to cover her monthly living expenses, but not enough to make all of her debt payments. I explained that since she has no assets and only has pension income, she is basically "creditor proof", meaning if she does not pay her credit cards they cannot seize her assets (she doesn't have any) or garnishee her wages (she doesn't receive wages). She could simply open a new bank account at a new bank where she doesn't owe any money, and stop paying the credit cards. After much thought and discussion, she said she understood what I was saying, but said she wanted to deal with her debts, even if her creditors couldn't garnishee her, and even if she had to make a contribution each month towards the cost of her bankruptcy. She wanted closure. I was reminded of this last night, at about four o'clock in the morning, when my young son woke me up. Apparently there was a fly or bug or something flying around his room, and he couldn't sleep. (It's interesting that when the problem is a bug that needs to be killed my son wakes me up, but when one of my boys has a bad dream and they need comforting, they wake Mom up). I went up to his room, and we searched for the bug. I couldn't find it.  So my son wouldn't go to sleep. Finally, as I left his room I saw something move, so I smacked the wall with the fly swatter. I'm not sure if I hit the bug or not, but my son was satisfied. In his mind, the problem was solved. He had closure, and he was fast asleep in about one minute. When dealing with problems, we want closure. We want a plan. That's what we do here at Hoyes, Michalos & Associates. We review your situation, and explain your options. You might need a debt consolidation loan, or a debt management plan through a non-profit credit counsellor, or a consumer proposal, or you may need to file personal bankruptcy. Either way, you understand your options, you pick the one that best deals with your debt problems, and you get closure. If you want closure, give us a call today at 310-PLAN (that's 310-7526; no area code required anywhere in Ontario), or complete our confidential bankruptcy evaluation form, or send us an e-mail with your questions, and let's get started. Labels: 310-PLAN, bankruptcy ontario, closure, Success Stories Posted by J. Douglas Hoyes, CA, Trustee @ 9:21 AM
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