Why are bankruptcies are up to record levels in Cambridge? 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. I meet with many people each week who are actively looking for a job, but jobs are not easy to find at the moment.

Second, residents of Cambridge, and in fact in all of Canada, are carrying record levels of debt. Canadians have household debt of 141% 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 917 people who filed last year in Cambridge, 634 filed bankruptcy, and 283 filed proposals. In other words 31% of Cambridge 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 Cambridge my firm, Hoyes, Michalos & Associates, filed more about a third of all consumer proposals filed in Cambridge, 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 $50,000 on credit cards and loans, you may pay $350 per month for four years, and once the proposal is completed your remaining debts are discharged. It’s a great way to avoid bankruptcy.

So why are more residents of Cambridge filing proposals? Most people don’t want to file bankruptcy, but it is also due to the fact that 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 Cambridge 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 very dangerous, and unless residents of Cambridge take steps to deal with their debt, an increase in interest rates, or having hours cut back at work, will lead to a continued trend of higher personal bankruptcies.

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 friends or co-workers. Unfortunately many debtors are now turning to less than reputable debt consultants, who charge a fee and then simply refer the debtor to a bankruptcy trustee. We strongly urge everyone 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 treading water, trying to service your debts, please call my office in Cambridge at (519) 622-3773 or 310-PLAN, or e-mail me, and I 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 Cambridge bankruptcy statistic.

Douglas Hoyes, Cambridge Bankruptcy Trustee

One of the keys to financial success is to be skeptical: don’t believe everything you read, hear or see. There is an infomercial on television where the product is only $19.99, but if you call within the next twenty minutes we’ll send you a second one absolutely free, "just pay separate shipping and handling." A free offer sounds like a great deal. But if it’s free, and if they are sending me one of the products already, why do I need to pay "separate" shipping and handling? Can’t they put both of them in the same box? How much is separate shipping and handling? $20? That doesn’t sound like such a great "free" deal.

When watching commercials, or any form of advertising, we need to be skeptical. We need to ask questions. "What is the true cost of that "free" offer?"

When a credit card company sends you a "low introductory rate" offer, be skeptical. Why are they giving you a low introductory rate? Why is it only an introductory rate? Why isn’t it a permanent rate? Obviously the answer is they want to entice you with the low rate, and then once you have signed up they will increase the rate, perhaps to a rate even higher than what you are paying now. That doesn’t seem like such a great deal after all.

What about those ads you see telling you that "we can get rid of your debt without the need to declare bankruptcy in Canada"? How can a debt consultant just get rid of your debt? If all the debt consultant will be doing is calling your creditors and asking for a deal, you can probably do that on your own.

Of course you should be skeptical of everything I say on this website. How do you know if I’m telling you the truth? How do you know if I’m making an offer that is too good to be true? Ultimately, you have to be skeptical, and decide for yourself.

I can tell you that my firm, Hoyes, Michalos & Associates Inc. has provided personal insolvency services to residents of Cambridge since 1999, and a large portion of our work comes from referrals, so we must be doing a good job. We are licensed by the federal government of Canada, and regular government audits ensure that we are following all of the rules.

But don’t take my word for it: do your own research. Ask your friends. Read my previous bankruptcy Cambridge blog posts. Read our list of Frequently Asked Bankruptcy and Proposal Questions. Watch our bankruptcy and proposal videos. Read one of the dozens of articles I have written, or watch clips from me on TV, and listen to interviews I’ve done on the radio. You can even follow me on Twitter for up to the minute information.

There are many other good bankruptcy trustees, credit counsellors, and financial advisors in Cambridge. Do your research on all of them, and then decide who has the expertise to help you deal with your financial problems. Be skeptical. Then, when you are ready, give my office in Cambridge a call at (519) 622-3773 or 310-PLAN, or e-mail me, and we can arrange a no charge initial consultation to review your situation.

And when we meet, ask questions. And be skeptical.

Not surprisingly, the numbers from across Canada are dismal. There was also a massive increase in the personal bankruptcy rate throughout Canada, with bankruptcy filings up about 36% across Canada. Why is the bankruptcy rate increasing faster in Cambridge than in the rest of Canada?

That was a question I was asked today on the Gary Doyle show on 570 News (you can listen to my thoughts here). I said that I believe that other areas of Canada got hit in the recession earlier. For example, in the bankruptcy rate in Windsor was up about 44%, which is very high, but still less than our area, presumably because the automotive industry in Windsor got hit a year ago. In Cambridge, and in Waterloo Region, we have more white collar jobs, and we are closer to Toronto, so we haven’t suffered quite as much. Until now.

As I explained to Gary Doyle, the September numbers spiked upwards due to the new bankruptcy rules that made bankruptcy more expensive for some, so some people rushed to file before the new rules came into force on September 18. The main reason for the higher numbers, of course, is the fact than unemployment is high, and debt levels are high.

What does this mean to you? You are not alone. If you have more debt than you can repay, there is help available. Give my office a call in Cambridge at 519-622-3773 or 310-PLAN, or e-mail us and we will review your options and help you determine a solution. Call us today.

Doug Hoyes, Cambridge Bankruptcy Trustee

I had an interesting meeting with a man this week in my Cambridge office. As with everyone I meet, we talked about his options for dealing with his debts, including a consumer proposal or a personal bankruptcy. In his case, due to his reduced income and some health factors, he decided that filing personal bankruptcy was his best option. At end of our conversation, I asked him why he chose today to make an appointment to meet me; why not last week, or last month?

He said that he had been struggling to pay his debts for a long time, and he finally got to the point where he couldn’t take it any more, and he wanted a fresh start. I told him that I’m not surprised; most people I meet with are "at the end of their rope", and want a fresh start.

But then he said something even more interesting: he said that he had decided he wanted a fresh start, not just dealing with his debts, but in many other aspects of his life as well. He gave me two examples: he wants to quit smoking, and lose some weight.

Earlier in our conversation we had reviewed his budget, and it was obvious that his two-pack-a-day smoking habit was costing him a lot of money. He new it was bad for his health, and his wife had been after him to quite for quite a while, and know that he added up what smoking was costing him every month, he knew that now was the time to quit. He was spending about $400 per month on smokes, so quitting will help his health, and significantly improve his monthly cash flow.

He also said he wanted to lose some weight and start eating better. Less trips to the fast food store will help his budget, and going for a walk every night will help his overall health.

I told him I was proud of him. It’s a difficult decision to decide to make changes, but as he said, "in for a penny, in for a pound." He decided that dealing with his debt while not dealing with smoking or unhealthy eating didn’t make sense. He wants a fresh start, and that’s what he will get.

Don’t misunderstand what I’m saying: I don’t give advice on healthy lifestyles; I’m no expert in that. My job is to help you deal with financial problems. But, I agreed with his approach: if I’m going to fix it, let’s fix everything.

Are you looking for a fresh start? Start by making a budget to see where you are spending money, and you may decide to quit smoking or cut other expenses as well. Either way, once your budget is done, give my office a call in Cambridge at 519-622-3773 or 310-PLAN (no area code required), or e-mail me to set up a no charge initial consultation, and let’s get started.

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 310-PLAN, 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.

Tuesday is one of my normal days in my Cambridge office, and today was no different. Early in the afternoon I met with a young couple in financial trouble. She is home with their newborn child, and up until a few weeks ago he had a good job, until he got laid off. They met with me to ask for my advice on how to deal with their debts. Towards the end of our meeting my cell phone began to ring, but as I always do when I’m in with someone, I ignored it.

After they left my office I checked my voice mail message to find that a producer from BNN – The Business News Network wanted to do an interview in two hours about the massive increase in personal bankruptcies, and to get my thoughts on the new bankruptcy rules coming into force on September 18, 2009. I called the producer back, and they said they wanted me on camera at 4:05 this afternoon. Fortunately my colleague Howard Hayes was available to cover our appointments this afternoon, so I got into my car and headed for the CTV studio in Kitchener. BNN is based in Toronto, but they use CTV facilities across Canada for many of their interviews.

I arrived a few minutes before the live interview. The technician clipped the microphone on my lapel, and gave me the earpiece, and I sat there staring at the camera in the same studio they use for the evening news. The interviewer, Andrew Bell, was in the studio in Toronto; I couldn’t see him; I could only hear him in my earpiece. My picture was beamed by satellite to their Toronto studios, and then on air.

Mr. Bell asked me about the speed that people’s finances are collapsing, and I related the story of the young couple I had met in my Cambridge bankruptcy office two hours earlier who had lost their job and were facing bankruptcy. We talked about options, and I explained why a consumer proposal is often a great way to avoid bankruptcy if you have the income to support it. (I didn’t say this on air, since I never disclose any names or exact facts to the media, but the couple I met with will cut their expenses and decide whether or not bankruptcy is necessary when we meet again next week).

Whether I’m appearing on national television or meeting in private with someone in my Cambridge office, my message is always the same: there are options, and in many cases it’s possible to avoid bankruptcy, but you need to understand your options, so call my Cambridge office today at 519-622-3773 or 310-PLAN, or e-mail me, and let’s get started.

And if you are interested, you can watch the interview on the BNN web site.

Fairness is my number one priority, because without a fair process it’s impossible to get a fresh start.

This may get me into trouble, but today I’m writing to tell you that I don’t believe the federal government is being fair to everyone. Here’s why:

On November 25, 2005 Bill C-55 was passed, making it easier for you to file a consumer proposal. On December 14, 2007 Bill C-12 was passed which makes it easier for you to keep you car or house if you go bankrupt.

However, even though both of these laws were passed by all members of Parliament, these laws are not yet in force!

Yes, you read that correctly. Almost three and a half years have passed, and laws designed to help people sit there gathering dust.

What’s the government waiting for? I have no idea.

As readers of this blog will know, we experienced a significant increase in the number of personal bankruptcies in Cambridge in 2008, and 2009 has started with even higher bankruptcy rates. Most people don’t want to go bankrupt, so a consumer proposal is the perfect solution.

Here’s the catch: you can only file a consumer proposal if your total debts, not including the mortgage on your house, are $75,000 or less. If your debts are more than $75,000 you can only file a proposal under Division 1 of the Bankruptcy & Insolvency Act, which is more complicated, more costly, and less likely to be successful. For many people with bank loans, credit cards, lines of credit and car or truck loans, the $75,000 limit is simply not high enough.

The good news is that the government recognized this, and in December, 2007 passed new consumer proposal rules raising the limit to $250,000. I strongly support this new rule, and Ted Michalos and I even went to Ottawa last year to testify before the Senate Banking Committee about the importance of consumer proposals. (You can watch our testimony by clicking on the video, or you can go to our Senate Video page to see our entire testimony).

Unfortunately, they have not implemented the new rules, which is of no help to anyone. (You can read the transcript on the Senate of Canada web site, or you can watch the video of my introductory remarks).

Raising the limit on consumer proposals is great, but if the government doesn’t actually bring the new rule into effect, it’s of no use. I have dealt with a number of people in Cambridge, and throughout Ontario recently, who have had to file bankruptcy or a more complicated Division 1 proposal simply because their debts are too high. That is in no-one’s best interest.

I also meet with many people who have car loans through a bank; the loans are up to date, and they want to keep the car, and keep making payments, since they need the car for work. Unfortunately two of Canada’s biggest banks automatically repossess cars in a bankruptcy. (Sorry, I can’t print who they are; I don’t want to get sued, but if you call my office at 310-PLAN my staff can tell you which banks are the problem banks). Again, there is a rule to prevent that problem, but unless the government implements the rule, it’s not helping anyone.

I’m doing my part. Over the last week I have sent e-mails to the Minister of Industry, and to the Prime Minister, asking them to implement these two new rules immediately. It will cost the government nothing, and everyone supports it, so there is no downside.

I’m still waiting for a response. If I get one, I’ll report it here.

In the meantime, if you have financial problems, call me in Cambridge at 519-622-3773 or 310-PLAN, or e-mail me, and we’ll get started on a plan for year, with or without the new rules.

How many people went bankrupt in Cambridge in 2008? That’s a hard question to answer, because the Office of the Superintendent of Bankruptcy (the "OSB") in Ottawa does not publish statistics for Cambridge. They include Cambridge in the results for Kitchener, so it’s impossible to know from their published statistics exactly how many people go bankrupt in Cambridge each year.

Fortunately, there is a way to find out. Every year (including last year) I request a summary of bankruptcies and consumer proposals by postal code from the OSB. Each year they send me a summary of by postal code (they don’t send me the names of the people who filed; just the number per postal code).

We then take that information and add up all the numbers. You can see the results on a postal code map by going to our Bankruptcy Cambridge Statistics page. Here are the results:

In 2008 there were 477 individuals that filed personal bankruptcy in Cambridge, and another 189 Cambridge residents filed a consumer proposal. There were another 25 commercial proposals filed (filed by people, not corporations in most cases), for total filings of 691 people in Cambridge, Ontario in 2007.

That’s an increase of 30% from last year, which is significantly more than the Ontario increase of 16%, and the 14% increase in all of Canada.

Of course statistics don’t matter; all that matters is your personal situation. I publish these bankruptcy statistics for one simple reason: to show you that you are not alone.

If you would like to discuss your options, please call my Cambridge office at 519-622-3773 or 310-PLAN, or e-mail me a question and my staff will set up a meeting so that I can personally review your situation, because you are a person, not a statistic.

Last week I was asked to appear on the CBC Television CBC News Sunday program to discuss what it’s like to go bankrupt, so on Sunday morning, in the rain, I got into my car and made the hour long drive to the CBC studios on Front Street in Toronto. As the economy worsens, the media is paying more attention to the problems of the "little guy", so we are getting ever more frequent requests to discuss bankruptcy and related issues on the TV and radio.

This interview was a first for me; I was interviewed with a man who declared bankruptcy four years ago. (He did not go bankrupt with me, and I had not met him until we met at the television station). The producers of the broadcast wanted an inside look at the bankruptcy process.

I explained the bankruptcy process, and the gentleman explained how bankruptcy truly did give him a fresh start.

I’m pleased that the media is paying more attention to the problems faced by the average person. Many people I talk to believe they are all alone, and that no-one else is experiencing financial problems. That’s not the case, as an increasing number of Canadians are led to file personal bankruptcy in Canada as a result of their financial problems. I believe it was valuable for the viewers to hear from an actual person who filed bankruptcy.

I then had the opportunity to explain that bankruptcy is not the only option; I always discuss consumer proposals and other solutions with everyone I meet, but in the end it’s up to you to decide which solution is best for you and your family.

You can watch the entire segment about bankruptcy on the CBC web site.

If you want a personal review of your situation, please call my Cambridge office at 519-622-3773, or e-mail me, and my staff will arrange a no charge initial consultation so we can review your options and allow you to decide how to deal with your debts.

In fact, as the recession deepens and the economy gets worse, the media is doing a much better job of reporting on personal bankruptcy, and the implications of bankruptcy.

I want everyone to understand all of the options available, so I will often appear on the radio or TV to discuss the options. (You can see a list of my radio and television appearances on the Doug Hoyes Radio and Television page). For some reason newspapers don’t report on personal bankruptcy as frequently as is done on radio and television, but that is changing.

Last week I appeared on a live question and answer forum hosted by the Globe and Mail. Readers were invited to e-mail in their questions; I answered them, e-mailed the answers back to the Globe, and they were posted immediately. The session lasted for an hour and a half, and in that time I answered 19 questions (and yes, my fingers were tired at the send of the session). You can read the Globe and Mail personal bankruptcy article with Doug Hoyes here.

But you don’t need to watch TV, listen to the radio, or read the newspaper to get the answers to your questions. You can e-mail me directly, or call my Cambridge office at 519-622-3773 or 310-PLAN, and get answers to all of your questions. You are not alone, but you only get answers if you take the first step and call or e-mail, so if you have questions, please contact us today.