After a very long wait, the new bankruptcy rules are here, and the bad news is this: for many residents of Cambridge, Ontario, bankruptcy will cost more.

As I reported back on August 11, the new bankruptcy rules were scheduled to come into force on September 18, and they did. In fact, in the two days leading up to September 18 my bankruptcy office in Cambridge filed three times our normal number of bankruptcies. In fact, across Canada the number of bankruptcies filed was about three times the normal level, so obviously a lot of people wanted to file bankruptcy in Canada before the new rules came into effect.

Here’s why: under the old rules, if you had surplus income it was still possible to be discharged from bankruptcy in nine months. Now, if you have more than $200 per month in surplus income on average each month, your bankruptcy is automatically extended for an extra 12 months, and you are required to make payments for an extra twelve months.

How are we handling these new rules here in Cambridge? First, my associate Howard Hayes and I are are doing some very detailed math with each potential bankrupt to help them calculate whether or not their surplus income will exceed the $200 limit. We consider all sources of income, and look at months where you have an extra paycheque or might get a bonus. If it appears that you will have excess surplus income, we explain the costs in detail.

We will also explain that it may be best to avoid bankruptcy by filing a consumer proposal. If you file a consumer proposal that is accepted by your creditors, your income can increase, but your payments remain the same. Fortunately one of the new rules makes it easier for some people to file a consumer proposal, so at least there is some good news for residents of Cambridge in financial trouble.

What should you do? You may need to file a consumer proposal or go bankrupt, or there may be another solution. To find out more, call my Cambridge office at (519) 622-3773, or e-mail me, and Howard or I will explain your options, and then book a time for us to meet to go through your options in more detail. The new rules are complicated, so now is the time to get some expert advice to deal with your debts, and get a fresh start.