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.
