Archive for the ‘Credit Counselling’ Category

If you have too much debt, there are five options for eliminating debt.  Here’s my short video explaining your debt management options:

I explain these five debt busting options in the video:

1. Personal budgeting: Make a budget, and pay off your debts on your own.  (I’m not a big fan of budgeting, since it’s hard, so you can read my post on why budgeting is a bad idea, and what you can do to manage your money without budgeting).
2. Debt Consolidation Loan: A debt consolidation loan is a loan used to pay off multiple smaller debts. It allows you to combine multiple payments into one smaller monthly payment, generally at a lower interest rate and spread over a longer period of time. Of course debt consolidation doesn’t reduce your debt, unless you can pay more towards the principal each month.
3. Credit Counselling: A credit counsellor can negotiate repayment plan where you pay your debts in full, but at a reduced interest rate. This is called a “Debt Management Plan” and works well if you can repay your debts in full.
4. Debt Settlement: A debt settlement is an arrangement negotiated with a creditor where you pay a portion of the amount owing. If you owe $20,000, you could offer to pay $8,000 as a lump sum to settle the debt, or you could offer to make payments over time. If the debt is old, and if you have a lump sum of money, this may be a viable solution. However, if you have many debts, you must reach an agreement with each creditor, which may not be possible.
5. Consumer Proposal: A consumer proposal is a legally binding settlement between a debtor and a creditor. It typical involves the debtor making one monthly payment, on an agreed upon settlement amount, over a period of no more then 5 years. At the end of the proposal period the debtor is then released of any remaining balances, which may be left from their original amount of debt.
6. Bankruptcy: In an Ontario bankruptcy an individual surrenders certain assets to a trustee, in order to be absolved of their debts. They are then legally declared bankrupt and required to adhere to the duties of a bankrupt, in order to obtain an absolute discharge, at the end of their bankruptcy term.

November 14 to 18 is Credit Education Week in Canada, and I must admit I have mixed feelings. I strongly agree that Canadians need more education about credit, and debt, so anything we can do to help educate Canadians is good. However, I also wonder who should educate Canadians about credit.

Credit Education Week, according to their website, is sponsored by many financial institutions, including Capital One (the Platinum Sponsor), and three of the big banks (RBC, TD, and BMO). Other sponsors include OLG (who operates our lotteries and casinos; I’m not sure what they have to do with credit), a large payday loan company, Credit Canada, and three bankruptcy firms.

There are what appear to be many good conferences to be held during the week. According to their schedule, there will be a Money Management and Budgeting Workshop Monday to Thursday at the Family Counselling and Support Services for Guelph offices. We have referred hundreds of people over the years to Family Counselling in Guelph for credit counselling. They are a great organization, and I’m glad they are involved.

I must admit, however, that I do get a bit of queasy feeling when I see big banks and credit card companies sponsoring Credit Education Week. Don’t banks and credit card companies want us to borrow? Yes, of course they do, that’s how they make their money, but I guess they would tell us that they want us to borrow responsibly, and that’s why they sponsor Credit Education Week.

I think my queasiness is really caused by the use of the word “Credit”. I don’t like that word. Credit is a positive word, like “giving someone credit for a job well done.”

I prefer the word “debt”, because that’s really what we are talking about. I think we should call it what it is: “Debt Education Week”, but I assume the banks would not want to sponsor something that negative.

I also worry that the advice might be somewhat one-sided. If you call us here at Hoyes Michalos and ask us to explain your options, we will explain all of your debt management options. We’ll talk to you about budgeting to cut your expenses to pay off your debt on your own. We’ll talk about debt consolidation loans, credit counselling, debt settlement, consumer proposals and bankruptcy. Do the banks that sponsor Credit Education Week want you to know about consumer proposals and bankruptcy? I doubt it. They would be much happier if you paid in full, or if you did a debt management plan.

Of course we only make money from you if you file a consumer proposal or bankruptcy, so why do we explain all of your options? Two reasons:

First, we want you to find the right solution, even if we don’t make any money from it. We’ve been in business since 1999, and a big portion of our work comes from satisfied people we have helped, so we know that by explaining all options we will continue to grow.

Second, it’s the law. We are licensed by the federal government, and Directive No. 6R3 requires us to “discuss the options available to debtor for resolving financial difficulties”, including “non-legislative debt settlement arrangements” which includes debt consolidation, credit counselling, debt settlements, and budgeting.

So, when you meet with us, we tell you everything, as I explained on the radio a few weeks ago:

So what’s my point? Am I against Credit Education Week?

No, I support Credit Education Week. But to answer the question “who should educate Canadians about debt?” the answer is NOT the banks, or bankruptcy trustees, or credit counsellors, because we all have our own biases. Credit counsellors make their money from debt management plans. Bankruptcy trustees make their money from consumer proposals and bankruptcies, so those are the options we will emphasize.

The answer, I believe, is that the best person to educate you, is you.

Do your own research. Go to some of the Credit Education Week sessions, but also do your own research. Read many points of view.

For example, Gail Vaz-Oxlade, host of TV’s Till Debt Do Us Part, and Princess, believes that during Credit Education Week we should all stop using our credit cards. That’s an interesting idea, and probably not an idea you will hear at a bank-sponsored event. I don’t agree with everything Gail says, but I do love her “no-nonsense” style, so when you are doing your research stop by her blog post where she suggests we should school, which means teach lenders not to lend to people who can’t afford it.

In an interview on CBC she tells the story of a young man, earning $21,000 per year, who got $15,000 in credit from a big bank. You can watch the interview on CBC. The only solution for this person was to, you guessed it, file a consumer proposal.

You won’t see Gail Vaz-Oxlade speaking at Credit Education Week, delivering her message of personal responsibility, and looking out for yourself.

Too bad, because looking out for ourselves is the best answer.

So here’s my challenge to you: assume this week is Debt Education Week, and make it your personal goal to learn as much as you can about the ways to deal with debt. Learn how banks make money, and research the role played by credit card companies, debt consultants, credit counsellors, and bankruptcy trustees. Review your debt options, and then decide what option is best for you.

Credit counselling, also called a debt management plan, may be a solution if you do not owe a lot of money to your creditors. It may also be a solution if you have fallen behind on your payments, or were unable to pay your creditors for awhile but feel you are able pay them in full now.

Janette Martin, North York Office Client Service Specialist

Here’s how it works: A credit counsellor will contact your creditors and help arrange a debt management plan that allows you to repay your debts in full over a period of time. This arrangement is voluntary and is not legally binding on you or your creditors. A credit counsellor is not able to settle your debts for less than the full amount owing, but is often able to negotiate a lower interest rate during your repayment period. A debt management plan will not work if you have a tax debt with Revenue Canada. A debt management plan will be reported to the credit bureau and will reflect negatively on your credit record.

If you feel that you have the ability to repay your debts in full but need help dealing with your creditors then your next step should be to contact a credit counsellor. Finding a reputable credit counsellor is not always easy. If you do an internet search for credit counselors in your area, you will likely get hundreds of hits. Word of mouth or a referral is a good way to find someone. We have a list of credit counsellors that we have dealt with personally, and we believe they are highly reputable.

When looking for a credit counselor, there are a few things to keep in mind. First of all, how much will you pay in fees? Is there an up front consultation fee? Annual or monthly “membership” fee? Monthly service fee? When you call to make your first appointment be sure to ask if there is a consultation fee.

Also, it is not a good idea to start making debt management payments until your credit counsellor has confirmation from each of your creditors that they are willing to participate in the program and exactly how much they agree to accept each month. I often meet with people that have entered into a debt management plan and after making several monthly payments, their credit counsellor contacts them to tell them that their monthly payment will need to be increased. This happens because one or more of your creditors did not accept the amount that the counsellor offered them initially and will only agree to your debt management plan if you increase your monthly payment. Beware of debt management scams where the debt consultant takes your money, but doesn’t actually do anything.

Is credit counselling a solution? Say you owe $15,000 to your creditors. If you decided to pay down this debt on your own over three years, you could expect payments of approximately $680 a month. If a credit counsellor could get all of your creditors to agree to stop interest and allow you to repay this debt over three years, you could expect to pay approximately $420 a month. Seems like a good solution. You know you can make payments of $420 a month because you are paying more than that each month to your creditors now. Unfortunately lot of people I meet with are unable to maintain their debt management payments because they underestimated the amount of money they have available after paying all of their living expenses.

A debt management plan is a good solution if you can afford to pay all of your debts in full, but just need a break on the interest. If you can’t repay the debt in full, a better solution may be a consumer proposal. A consumer proposal is a settlement of your debts and is legally binding on all your creditors, including Revenue Canada. A consumer proposal ensures that all of your creditors are treated fairly; one creditor does not have the ability to demand a higher payment than your other creditors. A consumer proposal can only be filed by a licensed Trustee; a credit counsellor cannot file it for you. The payments in a proposal on that same $15,000 of debt would be significantly less than a debt management plan, possibly as low as $200 a month for 36 months.

Understanding your options will help you pick the solution that works best for you. Since everybody’s situation is different and there are many factors to consider when deciding your best route, it is best to seek advice from a professional.

To find out if a debt management plan or a consumer proposal is right for you, please use our free, 10 second, on-line debt options calculator to review your options. Then call us at 310-PLAN (that’s 310-7526, no area code required, and that number works for all of our Ontario offices), or e-mail us today to arrange for a free initial consultation.

There are options, so let’s get started.

Each and every day I meet with or talk to people on the phone who are struggling with debt. The Blahs of Debt really are very similar to the Blahs of Winter.

I don’t know about you, but the after Christmas let-down can be pretty hard. I love the anticipation of Christmas – decorating the tree, seeing the children in my family shudder with excitement and scream with delight as the day grows nearer, getting together with family and laughing so hard that our jaws hurt the next day. Then, in a seeming instant, it is all over. Everybody goes home, the tree is tucked away for another year, work routines normalize and all that is left is dealing with winter.

Some people love winter – I don’t so much. I drive a lot for work, so I am always worried about the weather. I am not much for outdoor sports; aside from walking my dog, I pretty much avoid the outdoors. It is too cold, and just simply too much work. I hate shoveling the drive. Well, I think you are getting the picture. For some of us, winter is just not that much fun. It is easy to cocoon ourselves until Spring and that can leave us feeling pretty blah.

Just like winter, finances can leave us feeling a little cold, blue and blah. Just like winter, when dealing with debt, it sometimes just seems easier to pull the covers over our heads and wait for Spring. This is one strategy, but it is probably not the most healthy approach. Here are some alternatives to consider:

1.) Find the strength to take stock of your debt: how much do you owe? Are you behind in any payments? What would you have to do in order to get back on track? Use a debt options calculator to see what it would cost to get out of debt. Here is a credit card calculator that is a great tool to help you figure out what it would take to become debt free on your own

2.) If after taking stock, you determine that managing on your own is not a realistic option, make an appointment with your financial advisor or your bank manager – is there something that they can suggest that can help you to get your finances under control? Would you qualify for a debt consolidation loan?

3.) In some cases, banks and financial advisors can help, in other cases they can’t – if they can’t, there is another professional that I would encourage you to see – a Credit Counsellor – credit counsellors can be a very helpful and objective set of eyes – they may be able to suggest some changes that you can make to your monthly budget that can be effective in helping you deal more effectively with the debt. In other cases, they may be able to negotiate with your creditors – this is called a Debt Management Plan.

4.) Sometimes there is really only one professional who can give you the help you need to get rid of the blahs of debt – this is a Trustee in Bankruptcy – for many people, the realization that they may need to file bankruptcy in Ontario makes them feel even more blah, but this is most often because they don’t really understand how Trustees help. Lots of people make assumptions that they will lose everything and that bankruptcy is the only alternative. While talking to a Trustee can certainly be a difficult thing to do, in most cases the clients who do, are glad they did. Why? Because a Trustee can help them beat the Blahs of Debt. Whether through filing bankruptcy or a consumer proposal, the debt gets effectively dealt with. Most people tell us that by simply talking to us, they feel a weight lifted from their shoulders and their blahs turn into hope for the future.

Although dealing with the Blahs of Debt is similar to dealing with the Blahs of Winter, there is one very big difference. We can’t do anything about Winter – it’s here. But you can do something about your debt. We’d be pleased to help you understand what all of your options are. Give us a call at 310-PLAN, or send us an e-mail – let us help you put the blahs of debt behind you.

It’s that time of year again, where people look to get a fresh start and improve their lives. Many people do this in the form of New Year’s resolutions. Some of the most common New Year’s resolutions are:

• Improving personal health: some of the popular resolutions in this category are weight loss, quit smoking, exercise more, and drink less alcohol.
• Improving education:  such as obtaining a post-secondary degree, finishing high school, learning a new language or improving grades.
• Self improvement: Getting more organized, learning to cope with stress, and better time management are common goals people set for themselves.
• Getting a better job: Many people aspire to advance their career or change their career field.
• Getting finances in order:  save money and get out of debt are the most common.

Ross Stevenson

If your New Year’s resolution is to get out of debt, there are some steps you need to take. The first step would be to make a summary of your debts and your significant assets, such as your house, car and RRSP.

The next step would be to make a budget. It is important that you make your budget realistic. You don’t need to get complicated; you can simply calculate the monthly family income and where your money is being spent each month.

The final step would be to set financial goals. Consider what is important to you and your family. Think about where you would like to be in the future.  It is easy to get distracted by the things going on in our day-to-day lives and we forget about what we want in the future. New Year’s is an excellent time to evaluate where we are and what goals we have for ourselves.

In order to be in control of your financial situation you need to summarize your significant assets, make a budget, and set realistic goals.

After you do these things, you can evaluate the advantages and disadvantages of all your options, which may include:

• Using your assets to deal with the debt, perhaps by selling your house, or your second car, or cashing in some of your investments
• Getting a debt consolidation loan with a financial institution
• Debt Management Plan
• Consumer Proposal
• Personal Bankruptcy

Which option is right for you? Start by using our free, on-line debt options calculator.

If your New Year’s resolution is to get out of debt and you would like to discuss your options, we are happy to help. You can phone us at 310-PLAN (no area code required), email us, or fill out our online evaluation.  One of our experts will contact you and go through all your options. This could be the Year you finally get out of debt, so contact us today, and let’s get started.

With each passing year consumer proposals are gaining in popularity as a strategy for dealing with your debts while avoiding bankruptcy. In fact, in the twelve months ended August 31, 2010, while the number of bankruptcy filings in Ontario decreased by almost 17%, the number of consumer proposals filed increased by 26%.

A consumer proposal is a settlement negotiated with your creditors. Here’s a simple example:

Orville and Mary Smith owe $50,000 on their credit cards, an unsecured line of credit, and a payday loan. They have jobs, but cannot afford to make all of their minimum payments each month, and they are falling behind. They don’t want to file bankruptcy, so instead they decide to file a consumer proposal, where they will offer to pay $400 per month for 50 months, for a total of $20,000. If the creditors accept the proposal, they have one affordable monthly payment, and at the end of the 50 months, their debts are officially discharged.

Sounds great! One monthly payment, the calls from bill collectors stop, you don’t have to worry about a wage garnishment, and you get a fresh start! How does it work?

The process starts by contacting the professionals at Hoyes, Michalos & Associates Inc. I suggest you start by completing our on-line, free, anonymous debt options calculator. It only takes a few seconds. If the calculator shows that a consumer proposal may be an option for you, you can e-mail us, or complete our on-line evaluation, or call us at 310-PLAN (310-7526, no area code required in Ontario) to arrange a no charge initial consultation.

At your initial consultation we will review what you own, who you owe, and what you earn and spend each month. Based on that information we will help you decide whether or not a consumer proposal is the correct option for you and your family. (If you want to speed up the process you can download our fresh start application before our first meeting).

Doug Hoyes Explains Consumer Proposals

If you decide to file a consumer proposal, we prepare the necessary documents, and you meet with us to sign them. Prior to filing the proposal, in addition to meeting with one of our client services specialists, you will also meet with one of our trustees, who are also licensed proposal administrators. They will review the process with you, and answer any further questions you may have.

As soon as you have signed the proposal paperwork, and before you leave our office, we electronically transmit your file to the government, so that we can give you your government-assigned file number. With that file number you can direct all calls from creditors to our office. As soon as you file your proposal, we talk to your creditors. In other words, once the creditors are notified of your proposal, the collection calls stop!

By law the creditors have 45 days to vote on your proposal. Each creditor gets one vote for every dollar they can prove that you owe. If 50% + 1 of your creditors vote in favour of your proposal, the proposal is approved, and all creditors are bound by it. That means that even if some creditors vote against your proposal, if a majority in dollar value accept it, the proposal is accepted.

What happens if more than half of my creditors vote “no”?

If more than half of the creditors vote against the proposal, we will contact them to confirm that they understood the terms of the proposal (since the proposal you offered should generate more money for the creditors than if you filed bankruptcy). We will also ask them if they wish to propose alternate terms. For example, if you offered $300 per month for 50 months, they may counter by asking for $300 per month for 60 months. You can then either reject or accept their counter offer.

At some point in 2011 Hoyes Michalos will file our 10,000th proposal, so obviously our longevity indicates that we have a very high success rate when filing proposals. In the vast majority of cases, if the proposal is reasonable, and if there are no unusual circumstances, your proposal should be accepted.

From your point of view, you have two important duties:

First, you will attend two credit counselling sessions. These sessions are designed to teach you some money management techniques, to help you avoid money problems in the future. The first session will occur within the first two months after filing, and the second session will generally occur between the third and seventh month. Each of the two sessions lasts for between 45 minutes and one hour, and they are all private sessions.

Second, you are required to make the agreed upon payment each month. We will set up your payments using our pre-authorized payment system, so your payments will be debited directly from your bank account, so you have no worries about bringing in cheques or making cash payments. We even let you decide the payment schedule. For example, if your proposal is for $400 per month, we can set it up so that you are paying $100 per week (if you get paid weekly), or $200 bi-weekly (if you get paid bi-weekly). I personally encourage weekly or bi-weekly payments, if it matches your pay schedule, because then in a month when you get your extra paycheque, you are making an extra payment in your proposal, and your proposal gets paid off faster.

In summary, for many people a proposal is a great way to have one manageable monthly payment to deal with their debts. If you want a fresh start, to find out more try our on-line, free, anonymous debt options calculator, then e-mail us, or complete our on-line evaluation, or call us at 310-PLAN (310-7526, no area code required in Ontario) to arrange a no charge initial consultation, and let’s get started.

Douglas Hoyes, Bankruptcy Trustee

I was interviewed by Jonathan Chevreau of the Financial Post for an article that appeared today titled No immunity to bankruptcy. Mr. Chevreau poses this question: “Does it ever make sense for retirees to go bankrupt?”

I am quoted as saying that from 2006 to 2010, between 7% and 9% of the debtors handled by bankruptcy trustees Hoyes Michalos & Associates Inc. were 60 years of age or over. That’s true. In fact, after holding steady in the 7% range between 2006 and 2009, in the first seven months of 2010 the percentage of people aged 60 or over who have filed a consumer proposal or a personal bankruptcy in Ontario with us has increased to 9%. That statistic clearly indicates that more seniors are experiencing financial difficulty, and are making the decision to formally deal with their debt.

Here’s the key problem, as quoted in the Financial Post article:

Of course, the problem with carrying debt into retirement is that it must be serviced with less income than when working full-time. Some adapt by making only the minimum monthly payments on credit cards, which leads to a downward debt spiral, a journey that often ends with a trip to offices like Hoyes.

That’s exactly correct. If you already have debt when you retire, and your income drops when you retire, it may become impossible to service your debt and pay your living expenses. It may not even be your fault. During this recession many seniors have financially helped their grown children who are also having money problems, and that can often deplete your retirement nest egg, and even lead to new debt.

What can seniors do if they have debt problems?

I’ve covered some of these issues in our article on What are My Options if My Income is from Social Assistance, Pensions, or Support Payments?, but here’s a summary of your debt management options if you have debts, and all of your income is from pensions:

First, you can do nothing, and stop paying your debts. If you have no assets, and if all of your income is from pensions, in most cases your creditors will be unable to garnishee your pensions. More specifically, a creditor cannot garnishee your wages if you don’t have any, so you could do nothing and the creditors would have no way to enforce any legal actions against you.

Of course doing nothing doesn’t eliminate your debt. The creditors may still phone you and send you letters, and they may take you to court, so you haven’t solved the problem; you have simply ignored them. If you open a new bank account at a bank where you have no debts, and if you are not stressed out by the phone calls, and if you have no other assets, doing nothing may be the correct option for you.

If however doing nothing would be too stressful for you, your next option is to deal with the debts on your own. You could sell your house, or liquidate investments like RRSPs, and use the proceeds to pay off your debt. You probably don’t want to sell your house, but selling may be a wise financial move if you can eliminate your debts, and reduce your monthly living costs by moving to a smaller house or apartment.

Second, if you have no assets to sell, the next option would be to consider a debt consolidation loan. With a debt consolidation loan you borrow at a bank at reasonable rates to pay off your high interest debts, like credit cards. The lower interest rate may allow you to devote more of your monthly payments to principal instead of interest, so you can repay your debts on your own. However, to qualify for a debt consolidation loan you may need assets (like a house) to pledge as security, or you may need a co-signer (since your pension income may not be sufficient to allow you to qualify on your own).

If a loan isn’t a possible solution, the third option is a debt management plan through a not for profit credit counsellor. In a debt management plan you repay all of your debts in full, but generally at a reduced or zero interest rate. For example, if you have $50,000 in debts, you could pay $1,000 per month for 50 months through a debt management plan.

If you can’t afford to repay your debts in full, the fourth option is a consumer proposal. In a consumer proposal you repay a portion of your debts. The amount you repay is negotiated by your Hoyes Michalos consumer proposal administrator with your creditors, and depends on your income, your family size, and your assets. For example, if you have $50,000 in unsecured debts, it may be possible to negotiate a settlement where you pay $500 per month for 50 months, or roughly half of the amount owing, or perhaps even less. Please contact us today to determine what your consumer proposal payments may be given your unique situation.

If even a consumer proposal is more than you can afford, the final option is personal bankruptcy. Bankruptcy discharges your unsecured debts, but there is a cost to bankruptcy, and it will negatively impact your ability to borrow in the future.

As you can see, there are many factors to consider when deciding how to deal with your debts. The answer to the question: “Does it ever make sense for retirees to go bankrupt?” depends on your situation.

For a retiree, the cost of bankruptcy may simply be too high, and the “do nothing” approach may be the best option. However, the stress of the situation may lead you to decide that a consumer proposal or bankruptcy is the correct option. The options are confusing, so here’s my advice: give our office a call, or e-mail us, or complete our free on-line evaluation and we can discuss your options. Our first consultation is free, and there is no obligation, so deal with the stress and contact us today, and then you too can have a fresh start. Let’s get started.

I recently joined Hoyes Michalos, and I work in our London and Sarnia offices. Previous to joining Hoyes Michalos I spent 6 years as a credit counsellor. One theme that comes up again and again in my work is that folks we see are hesitant to call for help.

There is no question that financial distress can be one of the most difficult things to deal with. Money problems are a private issue and it’s hard to tell who to turn to for help.

At Hoyes Michalos our goal is to help you to find the right option for you and your family. People I talk to worry that personal bankruptcy is the only option. Rest assured that when you call us, bankruptcy is the last option we will discuss, not the first.

As a former credit counsellor I’m well qualified to discuss how a debt management plan may be the solution to your problems. Debt management plans are great if you have a limited amount of debt, and the ability to repay your debts in full.

If you can’t repay your debts in full, a consumer proposal may be the perfect option. Like a debt management plan we negotiate a settlement with your creditors, and in most cases a settlement can be reached where you pay less than the full amount owing.

When you call Hoyes Michalos, you will speak with someone who cares about helping you find the right option. We will go over your situation with you, and if you like, we can book you a free consultation to meet face to face and review your options. There is no obligation or cost to this meeting, and you will find us welcoming and non judgmental.

If you are struggling with debt due to job loss, difficult business climate, relationship issues, or any other reason at all, let me invite you to call us. We can be reached toll free at 310-PLAN (that’s 310-7526 – no area code is required). We look forward to helping you build a plan to deal with your debts.

But remember, we can’t help you if you don’t first make the call.

I was interviewed on Sunday March 29 on CBC Television on their CBC News Sunday program. As the recession continues, personal bankruptcy in Canada is increasingly in the news. Bankruptcy rates are up, so the CBC wanted to do a story on how bankruptcy affects the average person that files bankruptcy. I have done many TV and radio interviews over the years, but this was the first time I was interviewed with a person who had actually filed bankruptcy (although not with me), so it was a great chance for people trying to decide what to do to actually here from someone who had gone through the process.

I explained the different options available to someone in financial difficulty, and then the interviewers delved into the psychological aspects of bankruptcy.

I explained that the typical person I meet feels embarrassed and “down” as a result of their financial problems. However, after they understand their options, and decide to take action, they start to feel much better. Once they have made the decision to deal with their debts they feel as though a weight has been lifted from their shoulders, and they start to feel much better. They have a more positive outlook on life, and that positive outlook helps them at work and in their personal relationships.

The solution may be credit counselling, a consumer proposal, or a personal bankruptcy; the point I attempted to make in the interview is that there are options, but it’s up to the person in trouble to take the first step and make the call asking for help.

If you are experiencing financial problems, please call our offices at 310-PLAN (no area code required) or e-mail us today, and let’s get started.

The economy is getting worse. I just met with a car salesman who told me that he is selling fewer cars this year than last. Factory workers are telling me there is no more overtime, and many are now on reduced shifts or layoffs. I even met with a collection agent this week who is in financial trouble because the economy is so bad he can’t even collect on delinquent accounts! What does this mean?

It means you need a plan.

If you have any debt, the worsening economy may mean that your income will be reduced, and it will be harder for you to repay your debt in the future. Ask yourself this question: what will you do if you lose your job tomorrow, or if your hours get cut back? What will you do if the price of gas keeps increasing, and you have less money to make your debt payments?

You need a plan to deal with your debts.

If you still have a job, and if your wages are not yet being garnisheed, you have more options. You may be able to get a second job to increase your income, or you may be able to start cutting expenses to free up cash to pay your debts. You may still qualify for a debt consolidation loan to reduce the interest rate you are paying on your high interest credit card debt. You may be able to file a debt management plan through a not-for-profit credit counsellor who will negotiate a repayment plan with your creditors.

What if the bank won’t give you a debt consolidation loan, or you can’t afford a debt management plan?

Then you should consider a consumer proposal. Give us a call at 310-PLAN and one of our professionals will ask you some simple questions, such as how much money you owe, what you own, and what you take home each month. If you could afford to repay some of your debt, a consumer proposal may be the solution for you. For example, if you have $50,000 in credit card and other debts, we could file a consumer proposal where you pay $400 per month for 50 months, or $20,000 in total. You get an affordable repayment plan, with no interest, and your creditors are happy because at least they get some of their money. Of course the exact amount your creditors will accept will depend on your individual circumstances, but the call to us at 310-PLAN is free, so you have nothing to lose (but your debt) by calling us today.

If you cannot afford a consumer proposal, the final option is personal bankruptcy in Ontario. At Hoyes, Michalos & Associates we consider personal bankruptcy to be a last resort, if all of the other options won’t work for you. However, bankruptcy exists to give you a fresh start, so if that’s what you need, we would be happy to walk you through the process. So what do you need?

You need a plan.

No option is right for everyone, but one of the options discussed above is right for you. You don’t need to suffer through the endless telephone calls and threatening letters. It is possible to get a fresh start, but your fresh start only starts when you make a plan to deal with your debts. Here’s how we can help:

Call us at 310-PLAN. We have professionals available from 8:00 am to 6:00 pm during the week, and from 9:00 am to 1:00 pm on Saturdays. Our 310-PLAN phone number works throughout Ontario, and you don’t even need to dial the area code. Or, take three minutes and complete our free on-line bankruptcy evaluation form. One of our professionals will review your information and e-mail or call you back with a plan for your unique circumstances. Or, just send us an e-mail and we will call or e-mail you back with the answer to your questions, and if you want, we’ll arrange for a no-charge initial consultation at one of our 22 fresh start offices in Ontario.

There is help available, but you need to make a plan to get started.