In statistics just released by the Office of the Superintendent of Bankruptcy, the total number of consumer insolvencies filed in Brantford in the twelve months ended September 30, 2011 dropped by almost 20%!  That’s a massive drop, when you consider that the drop in Ontario was only 11%.  Here’s the breakdown:

There were 291 personal bankruptcies filed in Brantford over the twelve month period ending September 30, 2011, as compared to 476 in the same period in 2010, so personal bankruptcy filings dropped by almost 40%!  That’s amazing when you consider that in all of Canada the bankruptcy rate only dropped by 14% in the same period.

Doug Hoyes, Brantford Bankruptcy Trustee

There were 304 consumer proposals filed in Brantford over the twelve month period ending September 30, 2011, as compared to 264 in the same period in 2010, so consumer proposals increased by 15%.

This is good news for Brantford residents, as it appears that there was some improvement in our economy in the last year.  It’s also good news that Brantford residents are choosing to file consumer proposals as an alternative to bankruptcy.

How can you stay out of trouble in 2012?  Manage your money wisely, as I discussed last week in my post on Budgeting in Brantford the Easy Way.

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In statistics released today by the Office of the Superintendent of Bankruptcy, the personal bankruptcy rate in Brantford is down, but consumer proposal filings are up significantly.  Here are the numbers:

In the first six months of 2011, residents of the Brantford region filed 253 personal bankruptcies, and 279 consumer proposals, for a total of 532 filings.

In the first six months of 2010, residents of the Brantford region filed 350 personal bankruptcies, and 206 consumer proposals, for a total of 556 filings.

Here’s what interesting about those numbers:

First, in percentage terms, personal bankruptcies dropped by 28%, which is a significant drop.  That shows the local economy is improving.  However, consumer proposal filings increased by over 35%, which is a significant increase.  That shows that Brantford residents still have debt problems.  Overall filings (bankruptcies and proposals combined) were down 4%, which in a region the size of Brantford is not a huge percentage swing.

More interesting is that this is the first time in history that there were more consumer proposals filed than personal bankruptcies in Brantford.

In the first six months of 2010 only 37% of filings were consumer proposals.  This year it was 52%.  That’s a massive swing.

So, what’s going on?

It’s possible that the Brantford economy has improved slightly compared to 2010.  People have slightly more income, either from better jobs or more hours at their existing jobs, so they have the resources to file a consumer proposal.

A consumer proposal is a legally binding deal we negotiate with your creditors.  For example, if you have $50,000 in credit card and other debts, we might be able to negotiate a settlement where you repay $20,000 (say $400 per month for the next 50 months).  Each case is different, but the point is that you have enough income to make partial, but not full, payments.  A proposal is a great solution.

In my experience if the economy really gets into trouble, people can’t afford to make a deal, and bankruptcy becomes the more likely solution.

What will happen for the rest of 2011?  I predict we will see a further drop in filings in when the numbers are reported for July and August, but we will have to wait to see how the economy goes to find out what will happen in the Fall.

Stay tuned…….

If you are interested in statistics for the rest of Canada, you can see these links to bankruptcy Canada statistics, bankruptcy Ontario statistics, and Canada consumer proposals statistics.

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As I reported earlier this month in my post on the Face of Bankruptcy in Brantford, high debt levels lead to bankruptcy.  But just how many people go bankrupt in Brantford?

The Office of the Superintendent of Bankruptcy reports that in 2010 337 residents of Brantford declared bankruptcy, and a further 225 people filed a consumer proposal, for a total of 564 filings.  Here’s a summary by postal code for the City of Brantford:

This is a significant drop from the massive increase in Brantford bankruptcy filings in 2009.  In 2009 there were 701 total filings, so a decrease to 564 filings represents a drop of almost 20%.

The good news is that the rate keeps falling.  In the first six months of 2010 in Brantford there were 306 bankruptcy and consumer proposal filings in Brantford.  If that rate had continued there would have been 612 filings for the year; the fact that we had “only” 564 filings shows that the rate dropped even further in the second half of the year.

Why the drop?  One explanation may be that the economy is gradually improving, so Brantford residents are more able to service their debts.  A pessimist would tell you that so many people have already gone bankrupt or moved out of town that there’s no-one left!

I believe the answer is somewhere in between.  Yes, Brantford has had hard times over the years, and yes, the economy did improve somewhat in 2010.

The fact remains that there are still a large number of people with financial problems, so if you are feeling the crunch, feel free to give my office a call in Brantford at (519) 770-4440 or e-mail me to set up a no charge initial consultation, and let’s get started making a plan to deal with your debts.

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What does the typical person who files bankruptcy in Brantford look like? As reported in an article in The Brant News titled The Face of Bankruptcy my firm just released a study where we profile a person we call “Joe Debtor”, the average person who who files a consumer proposal or bankruptcy in Ontario.

Jason Teakle, the reporter on the story, wanted to know what the typical person who files bankruptcy in Brantford looks like; here’s what I told him:

The average person in Ontario who files a consumer proposal or bankruptcy has total unsecured debts (not including mortgages or car loans) of just under $60,000 at the time they file. In Brantford total unsecured debt is just over $51,000, so Brantford residents have slightly less debt than the provincial average.

However, $51,000 in debt is still a massive amount of debt, so it’s not surprising that with that level of debt a bankruptcy or a proposal is often the only solution.

Here’s another scary statistic. In Ontario “Joe Debtor” owes $24,390 on four credit cards. In Brantford the typical person I meet with is also carrying a balance on over four credit cards, owing a total of $23,358. As you can see, credit card debt in Brantford is a problem, just like it is throughout Ontario.

Another interesting finding deals with a popular misconception about bankruptcy. Many people believe that people who go bankrupt don’t have a job, and don’t own a house. We found that most people who file bankruptcy in Brantford are working, and about a quarter of them own a house. The average mortgage balance owing at the time of filing in Brantford was $187,000, which is lower than the provincial average of $210,000, due primarily to the more reasonable house prices in Brantford.

I was asked what individual residents of Brantford should do if they have more debt than they can handle. My advice is this:

First, make a list of your debts, and make a budget, and crunch the numbers to see if it’s possible to repay your debts on your own. If you need help with budgeting, or just want someone to talk to, the credit counsellors at Brant Family Counselling here in Brantford can help; they are a not for profit agency dedicated to helping you find solutions to your problems.

If budgeting alone won’t eliminate your debt, give me a call in Brantford at (519) 770-4440, or e-mail me, and we can discuss whether a consumer proposal is the correct solution for you. As a Brantford consumer proposal administrator and bankruptcy trustee, we can use a proposal to negotiate a settlement with your creditors, where you make monthly payments to eliminate your debt, often for less than the full amount owing.

Give me a call to discuss your options today.

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In the first six months of 2010, 306 residents of the City of Brantford filed a consumer proposal or personal bankruptcy. If that pace of filing remains consistent for the balance of this year that would project out to 612 filings for the year, which would be about 13% less than the 701 filings in Brantford in 2009. Here is a map showing where the filings have occurred, by postal code:

Why have the number of bankruptcy filings in Brantford dropped this year? The obvious explanation is that the economy in Brantford has improved since last year. In many respects that’s true; unemployment levels remain stable, and with interest rates remaining low, we are more able to pay the interest on our debts. That’s good news for Brantford.

What lies ahead? I predict that as the government releases bankruptcy numbers over the next few months the bankruptcy rate will continue to remain at these improved levels. July and August will show lower levels than last year. As long as unemployment rates and interest rates remain low, the bankruptcy rate will remain lower as well. That’s good news.

Here’s more good news: the number of Brantford residents filing consumer proposals continues to increase. Of the 306 filings so far this year, 113 of them, or 37%, were consumer proposals. As time goes on the percentage of proposals filed will continue to increase, and that’s also good news, because most people prefer a consumer proposal as an alternative to bankruptcy.

To find out more about consumer proposals, feel free to e-mail me, or call us in Brantford at (519) 770-4440 to arrange a no charge initial consultation and I’ll explain your options, and help you decide which option will work best for you.

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In statistics just released by the Office of the Superintendent of Bankruptcy, 1,319 residents of Brantford filed a consumer proposal or personal bankruptcy in 2009. In the City of Brantford there were 701 filings, and in rural Brantford, including Caledonia, Delhi, Dunnville, Paris and Simcoe there were a further 618 filings. That’s an increase of 38% from last year. Ontario was up about 32%, so Brantford fared slightly worse than the rest of the province.

The attached postal code map shows where each bankruptcy occurred. Not surprisingly, more bankruptcies happen where more people live, in the center of the Brantford. (We assembled this map based on our analysis of filings by postal code; the government does their math slightly differently, and they calculated 822 filings in Brantford and some of the outer areas, for a total increase of 40% for the year).

Why are bankruptcies are up to record levels in Brantford? There are two reasons:

First, we are in a recession. Unemployment is high, and when you are out of work it’s harder to pay your debts.

Second, residents of Brantford, and in fact in all of Canada, are carrying record levels of debt. Canadians are carrying household debt of 140.8% of their personal disposable income, the highest level in history. This means that for every dollar a Canadian earns, they have $1.41 in debt. Two years ago Canadians carried “only” $1.28 in debt for each dollar earned. When debts are high, bankruptcy rates rise.

Interestingly, Of those 1,319 people who filed last year in Brantford, 960 filed bankruptcy, and 359 filed proposals. In other words 27% of Brantford residents filed a proposal last year, the highest percentage on record.

A consumer proposal is a deal made with creditors to avoid bankruptcy. Last year in Brantford my firm, Hoyes, Michalos & Associates, filed more than a third of all consumer proposals filed in Brantford, making us the largest filer of consumer proposals in the area. In a typical proposal you may pay back about a third of your debt, so if you owe $40,000 on credit cards and loans, you may pay $300 per month for four years, and once completed your remaining debts are discharged. It’s a great way to avoid bankruptcy.

So why are more residents of Brantford filing proposals? One reason is that the government of Canada changed the bankruptcy rules on September 18, 2009 when new bankruptcy rules came into force, increasing the cost and length of a bankruptcy for bankrupts with surplus income. The debt limit for eligibility to file a consumer proposal was increased, increasing the attractiveness of a consumer proposal as a debt management option.

In other words, a bankruptcy is now more expensive for some people, making a consumer proposal an even better alternative.

What will happen in 2010? If the economy recovers, the number of bankruptcies filed in Brantford may fall. However, if the economy recovers, it is likely that interest rates will increase, and if the cost of carrying debt goes up, more bankruptcies may result.

So what’s my advice? Excessive personal debt is a ticking time bomb, and unless residents of Brantford take steps to deal with their debt, an increase in interest rates or a further reduction in employment will lead to a continued trend of higher personal insolvencies.

For many people this recession is the first time in their lives they have experienced debt problems, and they don’t know where to turn for advice. They are embarrassed to talk to family or friends or co-workers. Unfortunately many debtors are now turning to unscrupulous debt consultants, who charge a fee and then simply refer the debtor to a bankruptcy trustee. We strongly urge debtors to investigate their advisors before paying anything. Confirm that they are licensed by the federal government, or a provincial agency. At Hoyes, Michalos & Associates we do NOT charge any up-front fees; no reputable trustee charges an up front fee. More information is available in this article on Debt Consultant Scams.

If you are having debt problems, please call my office in Brantford at (519) 770-4440, or contact me by e-mail, and we will review your situation and help you make a plan to deal with your debts; we will do our best to help you avoid becoming a Brantford bankruptcy statistic.

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As a follow up to my blog post about a record month for bankruptcy in Brantford, an interesting article appeared yesterday on brantford.com. The article, part of their series on Tough Times, discussed the record rate of increase in personal bankruptcies in Brantford. I liked the article because rather than emphasizing the bad news, the articles authour, Jennifer McCarthy, explained the options I discuss with everyone to help them deal with their debts.

I believe bankruptcy may be necessary, but it should not be considered until you have looked at your other options:

• Work through the problems on your own, perhaps by making a budget and cutting expenses.
• Get a debt consolidation loan to lower the interest you are paying, so you can pay off your debts faster.
• Talk to a credit counsellor at the Family Counselling Centre of Brant, Brantford’s only not for profit counselling agency
• Consider a consumer proposal;
• If none of those options are possible, bankruptcy may be the final option.

For an interesting discussion of the pros and cons of bankruptcy, Greg McMillan wrote and interesting article asking whether or not residents of Brantford are jumping the gun by filing for bankruptcy?

Each situation is different, so if you have questions about your situation, call my Brantford office at (519) 770-4440, or e-mail me to set up a free initial consultation.

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I hate to be the bearer of bad news, but June was a record month for the number of personal bankruptcy and consumer proposals filed by my firm in Brantford. Since we opened our Brantford bankruptcy office in 1999, we have never had a busier month than we just finished. In fact, our volume in June, 2009 was more than twice as high as it was in June, 2008. The bad news for Brantford residents is that June is not normally a busy month; we are usually busy in March, April and May, and then as the summer approaches we slow down. Not this year. Our Brantford help line is busier than ever, with no slow down in sight.

Why is this happening?

First, more people in Brantford are losing their jobs, or having their hours reduced at work, so they just can’t make ends meet.

Second, house prices continue to fall in Brantford, so it’s no longer possible to re-finance your house to pay off your debts, or sell your house at a profit to raise cash. An increasing number of Brantford residents are finding themselves “under water” (the value of their house is less than the amount owing on the mortgage), so they are letting the bank foreclose, and they are finding a place to rent, and then dealing with the resulting shortfall.

Finally, a large number of the people I meet are no longer optimistic. They believe that the recession won’t end tomorrow, so they are deciding to go bankrupt now to deal with their debts, in the hope that by 2010 the economy has improved, and they will have a fresh start.

I can’t predict when the recession will end, or when house prices in Brantford will start to increase, but I can tell you that debt problems don’t go away on their own, so if you are struggling with debt, now is the time to act. Call my Brantford bankruptcy office at (519) 770-4440, or e-mail me today with your questions, and let’s get started making a plan for dealing with your debts.

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Each week I meet with about a dozen people in my Brantford bankruptcy office. The Office of the Superintendent of Bankruptcy released statistics this morning showing that personal bankruptcies are on the rise in Brantford.

In the first three months of 2009 there were 125 residents of Brantford that filed bankruptcy, and a further 47 people filed a consumer proposal. That’s a total of 172 filings, as compared to 124 filings during the same period last year.

That means that personal insolvencies in Brantford increased by 38.7% in the first three months of this year.

How does that compare with the rest of the province?

Brantford’s insolvency rate increased by a similar amount to Kitchener (36%), Toronto (39.9%)Windsor (39.5%) and fared much better than Hamilton (47.2%) and London (62.5%).

The Ontario rate was up by 40.7%, so Brantford fared slightly better than the entire province. In Canada consumer insolvencies increased by 35.9%, so Brantford was slightly worse than the national average.

However, the statistics only tell part of the story. In the last week I’ve met with a number of people in Brantford who are worried about losing their home, and they are worried about further job losses. The numbers are bad now, and they worry they may get worse. My message to them is that there is help available, so if you don’t want to be a statistic, give my office in Brantford a call at (519) 770-4440, or send me an e-mail, and let’s talk about ways to deal with your debts so you can avoid becoming a statistic.

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After experiencing a decline in the personal bankruptcy rate in Brantford in 2005 and 2006, the number of personal bankruptcy filings in Brantford increased by 13% in 2007. In total, 384 residents of Brantford went bankrupt in 2007.

In addition, a further 112 Brantford, Ontario residents filed a consumer proposal in 2007, a 12% increase from the 100 people in Brantford who filed a consumer proposal in 2006.

While the unemployment rate declined slightly in 2007 in Brantford, employment growth was a tepid 1%. Similar to other communities in Ontario, Brantford has lost higher paying manufacturing jobs and replaced these with lower paying service jobs. In early 2007, Genfast Manufacturing Company was just one company to close resulting in the loss of 210 jobs in Brantford. In August, Canadian Blue Bird closed affecting a further 130 manufacturing jobs. The list of plant closings also included Easton Coatings, Dura Automotive and Kester Canada.

By way of contrast, personal bankruptcies increased by 5.2% in all of Ontario, and by only 0.7% in all of Canada, so obviously Brantford has been hit harder than other cities in Canada.

If you have lost your job, or had your hours cut back at work, or if you are just faced with more debt than you can handle, please call me in Brantford at (519) 770-4440, or e-mail me to set up a meeting to review your options, and let me help you find a solution to your debt problems.

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