Archive for May, 2006

One of the ironies of meeting people in my Brantford office is that a lot of the calls they get from collection agents are coming from collection agents in Brantford!

Without naming names, one of the largest employers in Brantford is a collection agency. (Collection agents work for companies, like banks and credit card companies, to collect money from people who are behind on their bills). While many collection agencies are based in the United States or even overseas, it is not uncommon for Brantford residents to receive calls from collection agents based in Brantford.

Collection agents receive a commission for every dollar they collect, so they are persistent; they will keep calling until they collect.

There are five obvious strategies for dealing with collection agents.

First, if you have the money, pay them, or work out a plan to pay them over time. Making a budget is a good way to decide what you can afford to offer as a payment each month.

Second, try getting a debt consolidation loan to reduce the interest you pay.

Third, if you don’t qualify for a debt consolidation loan, you could try a debt management plan through a not-for-profit credit counsellor; in Brantford, there is only one non-profit credit counselling organization: the Family Counselling Centre of Brant.

If your debts are too high for a debt management plan, a consumer proposal or a bankruptcy may be required.

Collection agents will not just give up, so if you are getting frequent calls from collection agents, call us in Brantford at (519) 770-4440 or e-mail us to ask a question or set up a free consultation.

budget, debt consolidation loan, credit counseling, consumer proposal, personal bankruptcy, bankruptcy Brantford, bankruptcy Ontario

Since we opened the Hoyes Michalos bankruptcy office in Brantford, Ontario back in 1999, I have met with hundreds of people who have lost their job, or had their hours reduced, and now they are in financial trouble. Many of those people had debts before they lost their job; the job loss and resulting loss of income made a bad situation even worse.

It seems that over the years Brantford has had it’s share of job losses, starting with the big Massey closing in the 1980s. Recently, I have met with a number of people who worked at Bluebird building buses for many years, and who have now lost their jobs.

My advice to everyone who loses their job is the same:

First, you need to develop a plan to meet your family’s basic needs. You need cash flow to pay the rent or mortgage, to buy groceries, and to deal with your other living expenses. That means immediately starting to look for another job, and applying for Unemployment Insurance if appropriate.

Second, I recommend reducing your expenses as soon as possible. If you are currently unemployed, cut all non-essential expenses. That may include cutting things like premium cable, extra phone services, and entertainment expenses. Every dollar you save is a dollar you don’t have to earn.

The housing market is hot right now, so if you own a house with a large mortgage now may be the time to consider selling your house and downsizing, if it makes financial sense to do so.

Next, you need to consider whether more drastic action is required. As you start to get behind on your bills, you may start to consider bankruptcy as an option, particularly if you are getting letter and phone calls from your creditors.

Bankruptcy in Brantford will get rid of your debts, but there are disadvantages, such as the requirement to make a payment each month to your trustee (which could be me) every month that you are bankrupt.

The reason most people go bankrupt is that they have more debt than they can handle, and they don’t want their creditors taking them to court and garnisheeing their wages. So here’s the most important point:

If you are not working, you have no wages, so your creditors cannot garnishee your wages, so you may not need to go bankrupt now. That’s right, most people who go bankrupt are working, because they need to protect their wages from garnishment.

Of course if you are off work for a number of months, and then return to work, you then run a greater risk of having your wages garnisheed; that’s why my typical advice is this:

While you are unemployed, use your cash to pay your living expenses; don’t use your scarce cash to pay a trustee.

When you go back to work, if you don’t think you can get caught back up, consider going bankrupt or filing a
consumer proposal to deal with your debts.

I’m not saying you shouldn’t go bankrupt if you’re not working. I have done many bankruptcies over the years in Brantford for unemployed people. What I am saying is consider your options carefully.

Feel free to give my office a call in Brantford at (519) 770-4440 or e-mail us to ask a question or arrange for a no-charge initial consultation to review your situation.

In statistics released by the Office of the Superintendent of Bankruptcy, the number of Brantford residents filing a personal bankruptcy or a consumer proposal increased by 30% in the first three months of 2006, as compared to the first three months of 2005.

During the first three months of 2005, 61 Brantford Ontario residents filed personal bankruptcy or a consumer proposal. During the first three months of 2006 that number increased to 79, for a 30% increase.

If you live in Brantford and are experiencing financial problems, you are obviously not alone. Many other people are in the same situation. Financial problems usually don’t get better on their own, so if you are losing sleep over your financial situation, feel free to e-mail us a question or call us in Brantford at 519-770-4440 to arrange for a no-charge intitial consultation.