When I opened my Brantford office more than a decade ago the I filed about five bankruptcies for every consumer proposal. Today the ratio has narrowed, and in a typical month I file about the same number of consumer proposals and bankruptcies. Why? Because for many people in Brantford, a consumer proposal is a better option than bankruptcy.

I’ve made a list of the five reasons why a consumer proposal might be a better solution to deal with your debts than a bankruptcy in Brantford.  The reasons are listed below, or you can watch the video:

1 Your bankruptcy payment each month is based on your surplus income.  If your pay goes up, you pay more.  In a consumer proposal, your payment never changes, even it your income increases.  If you expect your pay to increase, or if you simply want the certainty of knowing what your payment will be each month, a proposal may be the solution for you.

2 In bankruptcy you lose some assets, like your tax refund, RRSP contributions in the past year, RESPs, investments, and possibly any equity in your house or car.  In a consumer proposal, you keep all of your assets.

3 A consumer proposal is simple.  Unlike a bankruptcy where you are required to submit proof of your income (paystubs and budgets) each month, in a consumer proposal there are no monthly reports required.  You will meet with your administrator to work out a plan, and once it’s approved, that’s it!  You simply make your payments each month until your plan is completed.

4 If a creditor objects to your bankruptcy ending (your discharge), you are required to attend a court hearing.  Since a proposal is approved by the creditors at the start of the process, there is no court hearing.

5 Bankruptcy is a last resort.  You file bankruptcy as a reaction when you have no other options.  A consumer proposal is pro-active.  You are taking charge of your situation.  You are deciding what you can afford to offer your creditors, so you know you can handle whatever you propose.

A consumer proposal is not the correct solution for everyone, but if you have more debts than you can handle, and you want to avoid bankruptcy, arrange a no charge initial consultation with a licensed consumer proposal administrator and find out if a consumer proposal is the right solution for you.

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Over the last two weeks I have met with five people (yes, I counted) in my Brantford office who have told me a very similar story.  It goes something like this:

I’ve been struggling with debt for a while, ever since I lost my job, or had my hours cut back. I was using credit cards and my line of credit to survive. Then, one day, I got this phone call from a telemarketer who said they could solve my debt problems. It sounded too good to be true, but they seemed nice, and I was desperate, so I signed up with them.

Unfortunately they weren’t able to make a deal with two of my credit cards, and now I am so far behind I’m afraid my wages at my new job are going to be garnisheed.

This is a sad story I’m hearing the debt consultant horror stories all too often.

Doug Hoyes, Brantford Bankruptcy Trustee, Consumer Proposal Administrator

We’ve all heard ads on the radio by debt consultants promising to reduce your debt.  But over the last six months some of them have started telemarketing.  It’s a brilliant strategy.  They have a bunch of people sitting at a call center in California, or wherever, and they have a computer auto-dial hundreds of telephone numbers every hour.  If you answer, you hear a recorded message offering to solve your debt problems; just press “1″ to be connected to an operator.

It’s brilliant, because having a computer doing most of the work is very inexpensive.

If you get one of these phone calls and you are tempted to talk to them, here are some questions I would ask:

1. What company are you calling from?  (You want to know exactly who you are dealing with).
2. What city are you calling from? (If they are calling from Brantford, or even somewhere in Ontario, fine.  If they are calling from California, or overseas, that’s a big warning signal).
3. When can we meet to discuss this? (If they are calling from California, they don’t have an office here in Brantford to meet with you.  Do you really want to trust someone you will never meet?)
4. Who licenses you? (It’s quite possible they have no licenses at all).
5. How do I know if I pay you this money that my debts will go away?

Here’s the truth: At my firm, Hoyes, Michalos & Associates Inc., we never use telemarketers.  The only time we will ever phone you is if we are returning your call.

My office is here in Brantford (and has been for over ten years).  Here it is (we share space with the Investment Planning Counsel):

View Larger Map

If you want to meet with me in Brantford, no problem.  I’m licensed by the federal government of Canada.

How do I know I can help you deal with your debts?  I won’t know if I can help you until we meet to review your situation, so give me a call in Brantford at 519-770-4440, or use the yellow box on the right to send me a message, and let’s get started.

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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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Question (submitted by a reader): If your house is taken over by the bank, is your line of credit automatically paid off?

Answer: If you have a line of credit secured by your house (like a mortgage), and the bank forecloses on the house and sells it, the line of credit is no longer secured by the house, since the house is sold.

If the bank recovers enough money to pay off the line of credit, then yes, it is automatically paid off. However, if the bank does not get enough to fully pay it off, they can pursue you for the shortfall, which in some cases may require you to file a consumer proposal or bankruptcy to deal with the debt.

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Each week I meet with about a dozen people in my Brantford bankruptcy office. Over the past few weeks, I have been hearing a number of stories that lead me to believe that the economy is really slowing down in Brantford. We are in a recession in Brantford.

I spoke to a car salesman at one of the local new car dealerships. He told me that he sold half as many cars last month as he did in the same month last year. I met with another person who told me that his factory has now gone to a work share arrangement, so instead of getting five days per week of work, he only gets two or three days per week, with a partial top up from unemployment insurance for the rest.

Lots of other Brantford residents have told me that they are having a hard time finding a job, and those with a job have had their hours cut back at work.

I have also heard lots of stories about house prices in Brantford. One person this week told me that last year their house in Brantford was appraised at $195,000, but a recent appraisal for mortgage purposes put the value at $175,000. This means it is now harder for people in Brantford to re-finance their mortgage if they need to raise extra money to deal with their debts. And, of course, it is now harder to sell your house to get enough money to pay off all of your debts.

The good news is that there is still hope. Since opening our office in Brantford ten years ago I have helped hundreds of Brantford and area residents file a consumer proposal or bankruptcy to deal with their debts.

That may not be the correct solution for you, but there is no charge or obligation if you call my office in Brantford at (519) 770-4440, or e-mail me to set up a free initial consultation. I will review your options and help you decide what you need to do to protect yourself in this down economy.

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Most people are not surprised when I tell them that the casino in Brantford is a significant source of work for my personal bankruptcy practice here in Brantford, Ontario. What is surprising to everyone is that it is rare for me to meet with someone who lost a lot of money gambling at the casino in Brantford. Most of my work comes from people who are employees at the casino.

The job market has been tough in Brantford over the last few years (you can read my post about the increase in the bankruptcy rate in Brantford last year). One of the few places that has been hiring over the last few years is the OLG Casino in Brantford. Here’s a common scenario:

A Brantford resident is out of work, so they apply for a job at the casino. By the time they are hired they have fallen behind on their debts, so to prevent their wages from being garnisheed they file a consumer proposal or bankruptcy in Brantford to deal with their debts. (If you are not working you have no wages for creditors to garnishee, so most people wait until they return to work to go bankrupt).

The strike at the casino has caused problems for many of the employees at the casino. I met with one person who was going to go bankrupt, but has delayed the filing until the strike is over. I am working with other debtors who work at the casino and are either in a proposal or a bankruptcy who are now having a tough time making ends meet without their regular paycheque (strike pay is only $180 per week).

On behalf of the many employees at the casino that I work with every month, I hope for their sake the strike is settled soon and they can get back to work.

If you work at the casino, or if your hours have been cut back at work and you are now feeling financial pressure, I encourage you to call my office in Brantford at (519) 770-4440, or e-mail me to set up a free initial consultation to review your situation and help you decide which options will best help you deal with your debts and get a fresh start.

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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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