The numbers are out; the Office of the Superintendent of Bankruptcy has just announced that the number of individuals who had to claim personal bankruptcy in Scarborough has gone down when compared to last year. 

From January to June of this year, 723 people living in Scarborough filed personal bankruptcy.  There were also 800 people who filed consumer proposals, for a total of 1,523 individuals who filed for protection in the first half of this calendar year.  If this trend remains the same, we project that 3,046 residents of Scarborough will either file a bankruptcy or proposal this year.  So how do these numbers compare to last year? 

In 2009, 1,887 people went bankrupt in Scarborough, and 1,509 proposals were filed, for a total of 3,396 filings.  That would indicate that we may see a drop of 10% in the number of insolvencies filed this year in Scarborough.  This number compares to a 13% provincial wide projected decrease in filings. 

For the economy in general, a reduction in the personal bankruptcy rate is good news.  It means more people are working and are able to pay their debts. 

What can we expect for the remainder of 2010? 

It is my belief that bankruptcies will continue to decline in Scarborough for at least the next few months.  There are no signs of interest rates rising, or unemployment numbers changing.  If there is a dramatic change, the bankruptcy numbers could go up.  Also, if consumer spending is negatively impacted by the new HST, we may also see higher bankruptcy rates. 

One more important point to note:  the good news is that more and more people in Scarborough are choosing to file a consumer proposal as an alternative to bankruptcy.  In 2009, 44% of filings in Scarborough were proposals (the rest filed bankruptcy).  This year, that percentage has increased to 53%.  That’s a big jump.  And it’s a good sign, as more people are choosing to negotiate a settlement with their creditors than file for bankruptcy.

If you would like some more information about filing a consumer proposal in Scarborough as an alternative to claiming bankruptcy, call me at 310-PLAN (310-7526, no area code required) or email me today to arrange a no charge initial consultation.

I am considering bankruptcy. I have old debts that I just can’t seem to keep on top of.

Will we lose the house?

I also absolutely need a car to get to my job due to the location. I have a leased car. Will bankruptcy effect my lease? I have not missed a payment on my car.

Thank you

Answer: If you file bankruptcy in Scarborough, or in fact if you file personal bankruptcy in Canada, you are permitted to keep your leased car, provided you continue to make your lease payments.

You can also keep your house, provided you continue to make the payments on your mortgage.

A bankruptcy trustee can provide you with more information.

Many people made the choice in the past to move to the suburbs where housing was more affordable and they could commute to work. Now, many of these people are finding out that the costs savings have been wiped out by the higher transportation costs. It may even cost them more to commute than what they are saving by living in a less expensive home. If they looked at the numbers now, it may make more sense to pay for the higher cost of real estate in the GTA, but be able to take public transit to work, or better yet, cycle or walk.

And the higher costs of transportation affect us in a lot of other ways. Pretty much everything you buy at the supermarket these days made its way there by a truck. The higher transportation costs are being passed on the end user.
You may think that these transportation costs issues are putting you in a hopeless situation. What you need to do is keep a close eye on your personal budget to avoid falling into debt. You may have to make some sacrifices, but you have to be realistic. If you are finding yourself in financial trouble, you should be calling (or e-mailing) us today at 310-PLAN (310-7526), no area code required, and arrange for a personal meeting so that I can review your finances and outline your options.

Two changes became law this week:

Student loans now discharged after 7 years

If you have been out of school for 7 years and still can’t manage your student loans, they can now be included in a bankruptcy or a proposal. The old rule required you to wait 10 years.

Your RRSP is now protected

RRSPs are now exempt from seizure; this means you can keep them (except for any monies you invested in the last 12 months; this prevents people from abusing the system). Before this change, most RRSPs would have been seized by the trustee in a bankruptcy.

Questions?

These rule changes are significant. If you would like more information on how they impact you, contact one of our offices to schedule a consultation.

This change will allow people who have to file for bankruptcy a better chance of starting over without any additional pressures being put on them.

If you would like some more information about this topic or have any other bankruptcy related questions, e-mail or call us at 310-PLAN.

So, what are the options we discuss?

Budgeting – maybe this is all the person really needs help with
Debt Consolidation – this could be their solution
Debt Management Plan – these are administered by credit counsellors
Consumer Proposal – “Let’s make a Deal”
Bankruptcy – the final solution

No two people have the same fact situation; my job is to meet with you and work out a plan that’s right for you. If you would like to take that step, e-mail or call me at 310-PLAN.

We are located at 55 Town Centre Court, Suite 700, Scarborough.

If you would like to schedule an appointment to discuss your options, e-mail or call us at 310-PLAN.