Hoyes Michalos Cambridge Rotary Run Team

For the last ten years we have sponsored the Cambridge Times Rotary Classic, a 2.5 km and 5 km fun run, to raise money in support of KidsAbility. I strongly believe that if you are in the community, you should support your community.

This year we decided to kick it up an notch, and actually enter a team of nine Hoyes Michalos team members from both our Kitchener and Cambridge offices. We all started and finished the 5km run, which was quite an accomplishment for some us, considering the temperature on George Street topped out at 30 degrees in the middle of the run. (That’s me in the yellow shirt).

Walter Gretzky and the Hoyes Michalos Team

After the race we were pleased to receive a trophy for the best team time, and a plaque from official race starter Walter Gretzky. The team award is given to the team with the fastest cumulative time, calculated based on your fastest three runners. Fortunately I have three fast people on the team, so we won. (My time was very slow, so fortunately they didn’t need to rely on me to win).

Doug Hoyes Finishes the Race

But yes, I did finish the race (nine minutes slower than Adam, our fastest runner, but I finished).

That’s a picture of me giving the “thumbs up” sign just before I collapsed at the finish line, gasping for air. So, if you see some guy running slowly around Cambridge, gasping for air, it might be me.

And if your debts are making you gasp for air, and you want help from a local person, feel free to e-mail me, or call our Cambridge office at 519-622-3773, and let’s get started.

Mark Silverthorn

Last week I attended a presentation that Mark gave to the Cambridge Self-Help Food Bank and other social agencies at the Cambridge Centre For the Arts here in Cambridge. He discussed various strategies for dealing with collection agencies. He explained that in some cases, if your debts are old, you can simply refuse to pay, and there may be very little the collection agency can do to collect. In other cases, a settlement with a collection agency may be an option, or it may be necessary to file a consumer proposal or even file a bankruptcy in Cambridge. You can read a full report on his talk in the Cambridge Times article about The Coming Debt Storm.

I was familiar with many of these strategies, since I have read his new book, The Wolf at the Door: What to Do when Collection Agencies Come Calling.

In fact, he interviewed me for the chapters on Consumer Proposals and Personal Bankruptcy, so I have spoken to Mark on many occasions. He did however make one comment that surprised me: He said that borrowers in Canada are often victimized three times.

First, borrowers often get caught in predatory lending practices, paying excessive rates of interest, or signing contracts they don’t understand. Interest rates in Canada are at historic lows, but interest rates on credit cards and finance company loans are as high as ever.

Second, if a borrower can’t pay, they are often victimized by abusive collection agency practices. Collectors call at all hours of the day and night, and often make threats to collect the money. It’s hard to deal with a collection agent if you don’t know the rules that govern them; they can intimidate, which is often unsettling.

Mark Silverthorn and Doug Hoyes

Finally, borrowers are often victimized by "helpers"; people who earn their living by "helping" people, even though they really aren’t helping them at all. You have probably seen their advertisements: "We will reduce your debts by 70% without bankruptcy; call us today!" Unfortunately most of these ads are nothing more than Debt Management Scams. These unlicensed "helpers" take your money, but they have no legal ability to actually reduce your debt. They might be able to convince your creditors to accept a deal, but more often than not the only person who profits is the helper.

Mark’s advice: if you meet with a debt management professional, ask them to explain all of your options, not just the option they are selling.

I am proud to say that whether you meet with Howard Hayes or me in our Cambridge office, we will explain all of your options. If we think a debt consolidation loan will solve your problems, that’s what we will recommend. If you need credit counselling, or a lawyer, or a tax accountant, or if you can deal with the problems on your own, we will tell you that, too. If the solution is a consumer proposal or personal bankruptcy, we will explain the advantages and disadvantages of all options, so that you can make an informed decision.

To find out more about Mark Silverthorn, you can visit his debt help web site. To find out more about your options, feel free to call my office in Cambridge at 519-622-3773, or e-mail me, and we can arrange a no charge initial consultation.

A report issued today by the Certified General Accountants Association of Canada called Where Is the Money Now: The State of Canadian Household Debt as Conditions for Economic Recovery Emerge finds that household debt in Canada reached $1.41 trillion in December 2009, or $41,740 on average per Canadian. That personal debt level means that Canadians, including residents of Cambridge, have the most per capita debt of all advanced countries.

I was interviewed today on 570 News, and I made the following comments:

To start, I agree with the findings in the study. I meet with Cambridge residents each week, and there is no doubt we are carrying more debt than ever, and certainly more debt than when I opened our Cambridge Ontario bankruptcy office back in 1999.

I also commented that it’s not just the level of debt that’s a problem. The real problem is the carrying cost of our debt. Here’s what I mean: You might have a $1 million mortgage, but if the interest rate is low, and you have a great job making lots of money, making your mortgage payment may not be a problem. However, if you have a $100,000 mortgage with a high interest rate, and you lose your job, you may have trouble making your mortgage payment. It’s not the size of the debt that matters; it’s whether or not you can carry the debt.

Most of the people I meet with here in Cambridge are worried about two potential risks:

First, they worry about interest rates increasing. Mortgage interest rates, which have been very low for the last few years, are now starting to increase. That can be a huge problem if you have a variable rate mortgage, because if rates go up, your monthly payment increases.

The second worry is income. Ask yourself this question: if I lose my job, or if my hours get cut back at work, could I still make the payments on my credit cards, bank loans, and my mortgage? For the last few months the people I’ve met in Cambridge have told me things are going reasonably well. Toyota employees are back to full shifts, and the construction industry has picked up. But will it last?

Construction workers tell me they are worried about interest rates increasing, which will reduce demand for homes. I’m also hearing that people are worried about the HST that comes into effect on July 1; higher taxes generally are not good for the economy.

I concluded the interview with the following advice:

If you are living paycheque to paycheque, and you worry about losing your job, and you have a lot of debt, the time to take action is now. Start cutting your expenses, and use the extra money to pay down your debt. If that’s not enough to solve your problems, get help. Talk to a credit counsellor (Mosaic Counselling in Cambridge and Kitchener is a not for profit agency that can help with budgeting and debt management plans), or consider filing a consumer proposal or even personal bankruptcy.

Want to find out more? Please call my office in Cambridge at 519-622-3773 or 310-PLAN, and Howard, Gaye, Danielle or I would be pleased to answer your questions over the phone, or book a time when you can meet with me personally to review your options. There are options for dealing with debt, so call or e-mail me today for a fresh start.

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.