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I’ll start with an important reminder: a consumer proposal is a legal debt settlement process available through the Bankruptcy and Insolvency Act. This process can only be administered by a Licensed Insolvency Trustee.

Unfortunately it’s often difficult for a consumer, already under stress as a result of their financial situation, to decipher who they are dealing with when looking for debt relief. I recently came across a typical website someone looking for debt solutions may stumble across – credit720.ca. If you will notice from this screenshot, under their services tab they advertise consumer proposals and bankruptcies.

Telltale Signs

This website advertises consumer proposals and bankruptcies, yet no where on their site does credit720.ca identify itself as a Licensed Insolvency Trustee. All Licensed Insolvency Trustees and firms are required to identify themselves as an LIT under directive 33 governing advertising for Licensed Insolvency Trustees.

If you use their debt calculator you are provided with a cost comparison of different debt relief options. Theirs includes a consumer proposal, which is not unlike our own debt relief calculator on hoyes.com.

What We Found

To understand who the company was, and who potential debtors would be dealing with, we decided to inquire about their services through their online chat. Below is a reproduction of our live chat dialogue, which took place on March 22, 2017 (You in this conversation is Hoyes Michalos).

You — Please update your info

Who are you

Credit 720 joined the chat

Credit 720

Hi, how can we help you today? =)

You — Please update your info
what type of services do you offer?

Credit 720
we offer credit counseling, debt management, consumer proposal and bankruptcy.

You — Please update your info
oh – are you a bankruptcy trustee then?

Credit 720
we are a credit counseling firm.
we have trustees working with us.

You — Please update your info
will I see a credit counsellor or trustee?

Credit 720
initially you’ll be seeing a credit counselor and if required you may see a trustee later on in the process

You — Please update your info
how will you know if I have to see a trustee?

Credit 720
Depending on your situation and your file the counselor you in meet in our office will decide
would you like to book an appointment in any of our nearest office?

You — Please update your info
I’m not sure, I’m still not sure who will help me. Do the trustees work for you or are they another company. I’ve already run into this before

Credit 720
trustees are independent license holders. They work with us

You — Please update your info
OK I understand. What do you charge?

Credit 720
we don’t charge for the consultation.
after we go through the complexity of your file the counselor will decide on the fees.

You — Please update your info
What would he be charging me for?

Credit 720
The work required to get your file go through and to administer you file.

You — Please update your info
Go through who – the trustee? What if I don’t need a trustee?

Credit 720
There are other options available other then trustee
i would suggest that you come and our counselor so they can respond to your queries in an appropriate & satisfactory manner

You — Please update your info
Still uncertain – if the counselor is not a trustee what they will do for me. What kind of education do they have?

Credit 720
credit counselor are BIA licensed holders and trustee are CAIRP & LIT.

You — Please update your info
??? – the person I will meet with is a BIA licensed holder? What is that?

Credit 720
yes they are BIA License holder. BIA stands for Bankruptcy and Insolvency Act
you can ask your questions when you see them in person

You — Please update your info
OH so bankruptcy again. They BIA person works for you? And that’s who I would meet with?

Credit 720
All licensed credit counselors working in any credit counseling company or trustee firms are BIA accredited.
yes they work for Credit 720

You — Please update your info
OK I still am not sure as I want to file bankruptcy and that seems like all you are going to do is refer me to a trustee. So I’ll think about it

Credit 720
BIA license is not just limited to bankruptcy. As said earlier in the chat it includes debt management, consumer proposal and orderly payment of debts programme
once you decide you’re more than welcome to book your appointment with us.
Is there anything else i can help you with?

End chat.

As you can see, these companies advertise the services of a Licensed Insolvency Trustee, but are somewhat unclear when it comes to stating who will be working on your case, and how fees will be charged for the services. They advertise services that can only be administered by a Licensed Insolvency Trustee, and they are not Licensed Insolvency Trustees. This is very confusing to the public and can prove costly for consumers. Without the right knowledge, the debtor ends up paying unnecessary, and often very high, consulting fees.

We strongly recommend that anyone looking for debt help investigate the company, and individual they are dealing with before entering into any payment agreement. Confirm that you are working with, and only making payments to, a Licensed Insolvency Trustee, and not an unlicensed debt consultant.

The post Debt Consultants or Licensed Insolvency Trustees? Who to Trust? appeared first on Hoyes, Michalos & Associates Inc..

A Short History of Bankruptcy in Canada

The first federal bankruptcy legislation was enacted in Canada in 1869 – almost 150 years ago. At the time it was called An Act Respecting Insolvency and only applied to businesses, not consumers. In 1919, the federal government passed the Bankruptcy Act for both individuals and business. Trustees at the time were appointment by the government until, in 1932, the Office of the Superintendent of Bankruptcy was created and given power to grant licenses to bankruptcy trustees.

This short history lesson about bankruptcy and bankruptcy trustees in Canada is interesting because after 84 years, the federal government is officially changing the designation of a person who administers bankruptcies in Canada from ‘bankruptcy trustee’ to ‘Licensed Insolvency Trustee‘.

Given these changes, on today’s show we talk with licensed insolvency trustee Ted Michalos about how bankruptcy law in Canada works, who the players are and why the government may have made this change.

Office of the Superintendent of Bankruptcy Canada

The Office of the Superintendent of Bankruptcy (OSB) is directly responsible for licensing, monitoring and controlling all aspects of insolvency in Canada. This means they supervise the administering of estates and license and oversee the conduct of trustees.

Their role is to ensure that the bankruptcy process is fair and equitable for all stakeholders. As Ted says:

The system is designed to be fair to the individual; it’s designed to be fair to the people that you owe money to.

To maintain this system, the OSB sets standards and policies that all trustees have to follow. This includes releasing directives such as the annual surplus income guidelines and the new directive 33 changing our name to Licensed Insolvency Trustee or LIT for short.

The Bankruptcy & Insolvency Act

The purpose behind the Bankruptcy & insolvency Act (BIA) is to:

• provide a sense of structure, framework and legal protection so creditors can’t sue you, garnishee your wages, freeze your bank account or take advantage of you;
• debtors get simplification – one monthly payment to one place;
• creditors get fairness in terms of their financial recoveries

Ted explains that debtors are:

automatically entitled to this protection as part of the law. And the reason they do that is to make sure that all of the people you owe money to are treated the same way and that you are treated fairly.

Regulating Trustees

It is trustees who are regulated and licensed by the federal government to provide insolvency services through the BIA. Unlicensed debt consultants do not have these powers:

[debt consultants] don’t have the power to stop a wage garnishment [for example] but a licensed insolvency trustee does.

The Office of the Superintendent of Bankruptcy provides a regulatory framework that oversees trustees.

Everyone is subject to the same rules, responsibilities, it’s equitable and it’s supposed to be transparent

For example, an LIT can, but usually does not charge up front fees for a consultation. That is because by law any fees they would charge up front would have to be rolled into the payments you would make if you filed anyway. Not so with unlicensed debt consultants. Consultants charge fees up front then refer you to a trustee to file. You don’t get those fees back or have them applied to the cost of your bankruptcy once you do file.

By including the term licensed in our name, the government is making it clear to the public who can legitimately provide insolvency services under the Bankruptcy & Insolvency Act.

So why did the government remove the term bankruptcy and return to the use of the word insolvency when referring to trustees? As Ted explains bankruptcy often has a bad reputation:

Not everyone knows what bankruptcy is but they’re pretty sure that it’s not a good thing. I don’t believe that statement is correct but it does have the negative connotations.

Insolvency is potentially a better term to explain the fact that trustees can offer more than a bankruptcy as a form of debt relief. An individual looking to eliminate their debt can talk to a licensed insolvency trustee about two insolvency services to eliminate debt:

• personal bankruptcy and
• a consumer proposal

Ted explains that a trustee is like a referee in a hockey game.

we’re the fellows that make sure both sides, so the individual that’s in trouble, plus the creditors, play by the rules and that everyone works in a fair and equitable manner.

That’s why a Licensed Insolvency Trustee will explain how the bankruptcy process works and what the implications of each option will be for you before you sign any paperwork.

To become a Licensed Insolvency Trustee requires that an individual:

• successfully complete a series of courses about the technical aspects of bankruptcy and insolvency;
• be employed for a period of time with a practicing Licensed Insolvency Trustee in order to gain practical experience;
• pass both a written and oral examination

This process is very rigorous and in fact only one in four candidates succeed.

It may take time before the average consumer understands the term insolvency and the new designation, however regardless of the name, the bankruptcy process is well maintained and the public protected through the licensing and monitoring process of the Office of the Superintendent of Bankruptcy.

You can learn more by listening to the podcast or reading the transcript below.

Resources Mentioned in the Show

• Office of the Superintendent of Bankruptcy
• Find a Licensed Insolvency Trustee

FULL TRANSCRIPT show #82 with Ted Michalos

On April 1st, 2016 the federal government is changing the rules and the term bankruptcy trustee will no longer exist. That’s right, in few short days bankruptcy trustees will no longer exist. So, is this an April Fool’s joke? No, this is the truth.

The first bankruptcy legislation in Canada came into force in 1869 it was called An Act Respecting Insolvency but it only applied to businesses. In 1880 the act was repealed and it was left for the provinces to deal with. Then in 1919 the federal government got back into the bankruptcy legislation business passing the Bankruptcy Act of 1919 and it covered both companies and individuals. The trustee was appointed by the government under that act. The act was amended again in 1932 and the Office of the Superintendent of Bankruptcy was created with the power to grant licenses to bankruptcy trustees. So, the bankruptcy act has existed in Canada for 97 years and the federal government has granted licenses to bankruptcy trustees for 84 years.

So, why now on April Fool’s day, 2016 is the federal government doing away with bankruptcy trustees? To find out please help me in welcoming back to the show my typical guest on the last show of the month Ted Michalos, my Hoyes Michalos co-founder and business partner. Ted, how are you doing today?

Ted Michalos: Not bad. My children will tell you I was around in 1869 when that first legislation was passed and was there voting for it.

Doug Hoyes: There you go, two years after federation is when it all began. Well, I think it’s kind of interesting that we went without federal bankruptcy legislation there for a couple of decades in between the different legislations.

So, let’s go through this step by step then. So, Ted you and I and every trustee in Canada are regulated and licensed by the federal government.

Ted Michalos: That’s correct.

Doug Hoyes: We’ve been known as trustees in bankruptcy or bankruptcy trustees for 85 years when the Office of the Superintendent of Bankruptcy was created. So, first question what is the Office of the Superintendent of Bankruptcy?

Ted Michalos: So, it’s a government agency that licenses, monitors and controls the insolvency community in Canada. So, it’s directly responsible for reviewing the legislation and making recommendations to Parliament for training, well not necessarily training, but definitely licensing and authorizing people to administer bankruptcies on behalf of the Canadian public. That’s a pretty important distinction. Lawyers don’t handle bankruptcy work in Canada, only licensed trustees do. Although on April 1st I guess that’s not the case anymore either.

Doug Hoyes: Well and we’ll talk about the new title. So, give me some examples of policies and procedures that are set by the Office of the Superintendent of Bankruptcy?

Ted Michalos:  Well, probably the one that impacts people the most is every year the federal government establishes a threshold for how much income they think families of different sizes need to have a reasonable standard of living in Canada. It’s called the Surplus Income Guideline, it’s directive 12R if there’s anybody out there that really wants to read into this. But that’s the thing that says I think a family of two needs $2,500 a month to live on the entire cost of bankruptcy is based on these government guidelines so it’s a pretty important number.

Doug Hoyes: And that obviously gets updated and there are other directives that get changed as well. And in fact the Office of the Superintendent of Bankruptcy has issued a new directive, directive number 33 for people who are scoring at home. And that’s the one that where this new name comes into effect on April 1st, 2016. It’s changing our name from bankruptcy trustees to licensing insolvency trustees, which I guess in a way is kind of a throwback ’cause like I said in 1869 the first legislation was called an act respecting insolvency. So, we’re kind of going back to the old word as opposed to the bankruptcy word. But Ted, tell me why do think the government has made this change from bankruptcy trustee to licensed insolvency trustee?

Ted Michalos: Well, my suspicion is that the government was rather indifferent, that this is something that members of our industry, members of our profession have petitioned them to do. There’s really two branches of insolvency work in Canada. There’s those of us that deal with individuals, families, households, trying to help people get relief from their debts. And then there’s trustees or licensed insolvency trustees that deal with corporations and businesses. And they’re distinctly different entities, but from a marketing standpoint I think the corporate trustee community was looking for a different name.

Doug Hoyes: And because there is a negative connotation to the word bankruptcy?

Ted Michalos: That’s the reason they got support from some of the fellows who practice with individuals. Not everyone knows what bankruptcy is but they’re pretty sure that it’s not a good thing. I don’t believe that statement is correct but it does have the negative connotations that you were saying. And so, by changing the name to something that sounds much more technical, licensing insolvency trustee, you’ve removed that term that has those negative connotations. Whether or not that’s actually good for the public, I’m not certain.

Doug Hoyes: So, let’s break it down then and see if we can analyze and figure out whether it’s good or not. So, the word licensed is a new thing. It used to be called bankruptcy trustees now it’s licensed insolvency trustees. What does that mean? What does license mean? Who gives a license? What’s the process? Tell me about that.

Ted Michalos: Well, effectively by telling someone that you’re licensed you’re saying that someone has set up a regulatory framework. There’s someone responsible for overseeing the things that you do. And so, I guess the implication is by not telling people we were licensed, so that it was less clear that we’re reporting to a higher authority. So, a bankruptcy trustee by definition had to be licensed by the federal government but the public may not have known that. So, now we’re explicitly saying yes, we are licensed, which differentiates us from the people that are not licensed. And unfortunately there are an awful lot of people praying on the public that aren’t licensed these days.

Doug Hoyes: So, how hard it is to get licensed, what’s the process?

Ted Michalos: Well, if you ask any of our students they’ll tell you it’s near impossible. There’s a series of courses that you have to take. You have to be employed by a trustee, so think of it like articling, the same way that students that want to become lawyers or doctors that want to, what’s the term for doctors that are – residency, right? You have to be practicing with someone that oversees your work to get you to the point where you can sit in an examination and convince the licensing body that you are qualified and competent.

Doug Hoyes: And so, there are two in effect year long courses. We’re kind of over simplifying the process. It finishes with a final written exam where you have to be both examined ons corporate and personal bankruptcy and insolvency technical issues, tax issues and so on. And then the final piece of the puzzle, the final piece of the exam is called the oral exam.

It’s called the oral board and I happen to be quite familiar with it ’cause I’ve been on the board for the last three years as an examiner. It’s a hour and a half long exam where you are given half an hour to read the questions and then you sit in a room with three other people, the trustee, representative of the government and an insolvency lawyer. And you’ve got an hour to answer all the questions. That’s a pretty intimidating process for a lot of people to go through having never done an oral exam before. But that show you how hard it is to become licensed. It’s not a simple thing.

Ted Michalos: And this is not a secret. The failure rate, the number of people that are not successful at this program is pretty significant. There’s a 50% failure rate at the written examination level and a 50% failure rate at that oral board. So, one out of four people that start the program might successfully get a license. It’s much more difficult than anybody realizes.

Doug Hoyes: Yeah and in fact the last two years, 2014 and 2015, the success rate on the final written exam was in the 30 some percent range so it has been considerably less than 50%. So, it’s a very difficult thing to become licensed. So, why should the public care about that? So, great you’ve gone through all this training to become licensed but hey all we’re talking about is debt here, why can’t I just go see anybody else on the street? Why is this license thing so important?

Ted Michalos: Well, there’s more to just dealing with this debt than just saying, you know, I’m just not going to pay people back. The system is designed to be fair to the individual; it’s designed to be fair to the people that you owe money to. And by fair I mean the government sets standards that we all have to follow. It’s not a question of you going to the cleverest guy on the block or a lawyer that knows somebody; he knows a guy and he can get you a deal. Everyone is subject to the same rules, responsibilities, it’s equitable and it’s supposed to be transparent. One of the problems we’ve had in the past is there’s a whole new industry that cropped up about seven or eight years ago they call themselves debt consultants. And I’m not going to get off on this too badly ’cause you know it pushes my buttons.

Doug Hoyes: That’s why I asked.

Ted Michalos: But these people aren’t licensed by anybody, they aren’t regulated. And they’ve been preying on the public. And what they do is they run advertisement saying we can help you reduce your debts, avoid bankruptcy, we’re not a trustee, ’cause they’re not. You go to them, you pay them a fee and then they have to refer you to a trustee to actually deal with the problem.

Doug Hoyes: And so, is that one of the reasons then that the government has changed the name to take the word bankruptcy out of it? You’ve got all these guys out there saying don’t go bankrupt, we’re not bankruptcy, guys, bankruptcy, bankruptcy, bankruptcy, we’re not that, come see us. When really all it is, is a ruse. They’re getting you in the door and they can’t actually solve your problem. They cannot legally do a consumer proposal for example

Ted Michalos: That’s right.

Doug Hoyes: Unless they’re licensed. So, is that what’s really driving this name change to get that bankruptcy out of there that has been scaring people?

Ted Michalos: I think that’s defiantly one of the arguments that was advanced. That you want to get bankruptcy out to try and level the playing field with all these debt consultants.

Doug Hoyes: Well and in fact I guess it’s a negative thing to be called a bankruptcy guy. These guys are able to use it as a marketing advantage to say they weren’t that, when in fact no, it’s actually a positive thing. And I guess that’s where the word licensed comes in now, that you have to have a license to be able to do this. So, what are the services then that a licensed insolvency trustee can provide that one of these unlicensed debt consultants can’t provide?

Ted Michalos: Well, first and foremost the only folks that can perform some sort of legal insolvency service for you are license insolvency trustees. And there really are two big classes of work. There’s something called a proposal to creditors, which is a program where you offer to repay a portion of what you owe or there’s an actual bankruptcy filing. And they’re very complicated rules for both of them but the concept is simple enough. You need relief from your debts. And then depending on your circumstances are you able to repay a portion, which would make the proposal more attractive or do you need complete relief, there is no ability to repay, in which case you’d be looking at bankruptcy.

Doug Hoyes: Well, see I’ve talked to these debt consultant guys and they say look it’s not that complicated. You owe a bunch of money on credit cards, here’s what we’re going to do, we’re going to phone the credit card company up and say we’re offering you 30 cents on the dollar, that’s it, that’s the deal. You don’t need some fancy high falutin guy who’s gone to school and has all these courses and done all this licensing thing, it ain’t that difficult.

Ted Michalos: Unfortunately let’s say you owe five or six different people and so somebody offers to do this for you. That would be a debt settlement company, don’t get me going on them. You call the first fellow and you say I’ll give you 30 cents on the dollar and let’s say he says yes. Call the next guy and he says no. You call the next guy and he says no, I’ll take 50 cents. You call the next guy and he says nah, I’m going to garnishee your wages ’cause I want to get paid ’cause now you told me that you’re broke.

The idea behind a consumer proposal is provide a structure, framework, something that provides the individual with legal protection so people can’t try and garnishee your wages, they can’t freeze your bank account, they can’t take advantage of you when they know you’re in trouble and it provides you with a simplified solution. You’re going to make one monthly payment to one place. There won’t be any interest on your debt. It’s going to deal with the problem to everyone’s advantage. That’s what the real purpose of the act is.

Doug Hoyes: Well, I guess that phrase legal protection is really the whole key to it.

Ted Michalos: That’s right.

Doug Hoyes: You can’t be offering legal protection unless you’ve got some legal background to do that. Does the – so, when I think of the word legal I think of the word court. So, does the court system come into any of this at anytime?

Ted Michalos: It’s interesting, bankruptcy – license insolvency trustees, I’m going to keep using the wrong term for the next three years – are officers of the court. I used to tell people to think of us like junior judges. I mean we don’t have that kind of power but the license means we can administer consumer proposals and bankruptcies as representatives of the court. And the court only comes into play when there’s some complicating issue.

Let me give you an example. Let’s say a young man went out and borrowed $20,000 to buy a pickup truck. And of course he didn’t use the $20,000 to buy a pickup truck; he used it at casinos, which unfortunately is happening more and more often. Well, he files bankruptcy, he wants relief from his debt, he tells the court well, I can’t pay these bills. The creditor says, well I loaned him money for the pickup truck, where’s my pickup truck? Well, that would be a complicating matter that probably a judge would want to look at. And they would have to decide well, was this fellow honest? Did he really do what he said he was going to do when he borrowed money? Or was he less than honest and maybe we have to look at some penalties?

Doug Hoyes: Well, I think an even more common example of a legal issue would be what you said earlier, where you didn’t pay someone, they took you to court and started garnishing your wages.

Ted Michalos: That’s certainly simpler to understand.

Doug Hoyes: So, these guys that are advertising they can settle your debts, just come and see us, they don’t have the power to stop a wage garnishment but a licensed insolvency trustee does. Why? How does that work?

Ted Michalos: Well, so the law specifically says and this is the Bankruptcy and Insolvency Act, that when you file a consumer proposal or you file an assignment and bankruptcy, there’s a provision called an automatic stay of proceedings. So, it’s not that you have to apply to the court for protection; you’re automatically entitled to this protection as part of the law. And the reason they do that is to make sure that all of the people you owe money to are treated the same way and that you are treated fairly. Obviously if somebody’s gone to court and they’re taking 20% of your paycheque, you’re not in a position where you can deal with all the other people that you owe. So, we put a stop to that wage garnishee and everyone gets treated the same way.

Doug Hoyes: And only a licensed trustee can do that. So, a licensed insolvency trustee, there you got me saying the wrong terms too.

Ted Michalos: That’s right; we’re going to change your name later.

Doug Hoyes: That’s right. So, who does a licensed insolvency trustee work for? So, they go to hoyes.com, they hear our ads on the radio or they go to some other licensed insolvency trustee and they say yeah we need to do a proposal can you help me? We say yeah, sure. Are they hiring us?

Ted Michalos: No, so it’s much more complicated than that. The way to think of a licensed insolvency trustee, literally the reason I used that junior judge analogy is it’s a pretty safe one. Think of us as a referee in a hockey game. So, we’re the fellows that make sure both sides, so the individual that’s in trouble, plus the creditors, play by the rules and that everyone works in a fair and equitable manner.

I’m trying to think of a good way to describe this that doesn’t step on toes anywhere, well, maybe there isn’t. So, it’s complicated because you go to the trustee’s office and you’re looking for help. But legally we’re actually appointed by the Office of the Superintendent, their employees which are known as official receivers. And so, our duty is to apply the law fairly and to see that everyone complies with their duties and responsibilities. Most of the people that owe money and more importantly the creditors so they stop lawsuits, they stop wage garnishes, they stop all that sort of stuff.

Doug Hoyes: And that’s why we’re completely up front with people when they come in. We say okay here’s the deal. You eluded to earlier this concept of surplus income in a bankruptcy. Where the more money you make the more you’ve got to pay. Okay, before you sign any paperwork with us, we’re going to explain how that process works. Here’s how all the math works, here’s what the implications of it are. We’re going to go through all the different issues with you.

So, we are certainly doing our best to help you through the process, to explain everything so there are no surprises but what we are doing is explaining the rules so that you can then know what all those rule are that you have to follow.

Now a lot of people say wait a minute, it really sounds like who you’re really working for is the creditors, the people I owe money to because in the proposal or the bankruptcy you’re going to collect money from me and give it to them. If you’re giving money to them you must be working for them not to me. And that’s what these debt consultants are always saying. Oh, you don’t want to go see a licensed insolvency trustee because they work for the creditors, they’re collecting money for the creditors. Is that true? What do you say?

Ted Michalos: Well and so, again you’re right. That’s the argument thatthe other side makes, the people that, sorry the debt consultants. And you can see why they say that but quite frankly, the truth is, we work for ourselves. It’s the trustee’s responsibility, we’re independent businessmen. So, we’ve got to try and secure clients to provide our services to. The same way a lawyer would or a doctor or a dentist. And we’ve got to maintain a reputation in the community, particularly in the insolvency community so that the creditors will allow us to deal with people. Creditors have the right to call a meeting and replace a trustee if they don’t find them trustworthy.

Doug Hoyes: Yeah, so our reputation and any other licensed insolvency trustee’s reputation is very important because we have to – if we’re the referee in the hockey game we’ve got to get both sides on the same page. So, I’ve got to come up with a solution that’s going to work for you but it also has to be acceptable to the creditors. And unfortunately in my experience with the debt consultants they don’t really care about what the bank is going to say because the bank doesn’t even know their name. They’ve sent the person to see a trustee and if it doesn’t work, oh well the trustee looks bad. In our case we want to make sure that everyone’s on the same page with it, that’s pretty key.

Ted Michalos: Well and we kind of missed something here, one of the requirements of the law, so a licensed insolvency trustee is required to review all of your options with you. So, a debt consultant’s trying to sell you something, in nine cases out of 10 they’re trying to sell you a proposal to creditors, they just don’t call it that. Half the people that come and talk to a licensed insolvency trustee don’t actually file an insolvency engagement. So, they don’t follow a proposal or bankruptcy. What they needed was somebody to help them assess their financial situation and give them honest answers about options and alternatives. What can I do to get out of debt? And quite frankly more than half the time the solution isn’t to file bankruptcy or to file a consumer proposal, it’s to take a look at some of the other things that they can do.

Doug Hoyes: Like refinancing their house, getting your taxes filed to get up to date on that, cutting some expenses.

Ted Michalos: Just becoming more disciplined with your finances. I mean no one’s really taught how to balance a cheque book anymore. Nobody’s taught to look at what they’re paying for things. You want to know what your monthly payment is but not everybody takes the time to figure out how much interest are you paying because you’re buying this thing over three or four or five years or worst you’re putting it on your credit card. A trustee’s going to look at all of the things before they suggest to you these are the solutions that would make the most sense to your family and then you make the decision yourself based on good information.

Doug Hoyes: So, final question for you, what is the cost upfront to meet with a licensed insolvency trustee?

Ted Michalos: There shouldn’t be any cost whatsoever. I mean the law allows licensed insolvency trustee to charge a fee for people to come in and have a consultation. But I’m not aware of any licensed insolvency trustee that does it. In fact if you’re sitting down with somebody and the first thing they say after talking to you for 15 minutes is you know what? You need to sign his piece of paper and write a cheque for $250 before we can do anymore work, you’re sitting in the wrong office.

Doug Hoyes: Yes because even though the law allows a licensed trustee to start charging upfront, if they do those fees have to be rolled into the eventual procedure anyway.

Ted Michalos: That’s right so they apply to your bankruptcy or your proposal.

Doug Hoyes: They apply to your bankruptcy or your proposal, which means really there’s not a whole lot of point in a trustee charging you anything up front. It’s all going to get rolled in. So, I think that’s I guess the final key point to remember here. A licensed insolvency trustee is licensed by the federal government and they aren’t charging upfront fees. And those are two things you can look for. If someone’s offering to help you and they aren’t licensed and they’re looking for upfront money they’re probably not the people you want to be dealing with.

Ted Michalos: Yeah the first question you should always ask is are you a licensed insolvency trustee or are you simply going to refer me to one to solve my problems? And if they are, why are you going to pay this person any money at all? But that’s a whole different show.

Doug Hoyes: I totally agree and I will put a link in the show notes to all of this information so if you’re trying to figure out if the person you’re dealing with is a licensed insolvency trustee all the names are listed on the government’s website. So, it’s easy enough to do a search.

Great, thanks very much Ted for that. I’m going to take a quick break and then I will be back with the next segment. You’re listening to Debt Free in 30.

It’s time for the Let’s Get Started segment here on Debt Free in 30. As Ted and I discussed in the first segment on April 1st, 2016 the rules are changing and the term bankruptcy trustee will no longer exist. To understand how long the word bankruptcy has existed let’s review some history.

One of the earliest mentions of a process for settling debts is contained in the code of Hammurabi, which as I’m sure you know is written by King Hammurabi who ruled Babylon from 1792 to 1750 B.C. That’s over 3,700 years ago. In Hammurabi’s code of laws he says if anyone fails to meet a claim for debt and sell himself, his wife, his son and daughter for money or give them away for forced labour, they shall work for three years in the house of the man who bought them or the proprietor and in the fourth year they shall be set free.

In other words if you incurred debt you and your family could become slaves for up to three years to repay the debt. Ancient Greece had a similar approach but by the seventh century B.C the wealthy people in and around Athens had so many poor people in bondage that economic collapse and rebellion appeared likely. So, the lawmakers granted amnesty to many of those in bondage and outlawed using a person’s freedom as collateral for a debt. Julius Caesar a few hundred years later enacted laws against extreme interest rates. And he enacted laws of bankruptcy that are not that different to what we have today.

Many people think bankruptcy is a modern concept but it isn’t. The word bankrupt is taken from the Italian word bankarupta, and my apologies to my Italian friends I’m sure I totally mispronounced that word. It means bench broken. There have always been bankers or what in biblical times were called money changers. If you went to the marketplace in Ancient Athens or the forum in Rome or the temple in old Jerusalem, the money changers would set up a table or a bench to serve their customers. If someone had currency from a foreign country ’cause there was a lot of travelling amongst countries and they all had different currencies, they could see a money changer to change it into the local currency.

Fast forward to the middle ages where the financial centre of the modern world were cities like Florence and Venus and the table or bench was known in Italian as banka, which is the source of our modern world bank. The money changers would exchange your money from one currency to another but these guys would sometimes take money from their wealthier clients and lend it others at a profit. They would charge what even today would be considered a very high rate of interest, think pay day loan interest.

As with all loans there’s a risk. Just like today the borrower might lose his property or even his life and be unable to repay the loan. If the lender has a few bad loans it would cause the failure of the banker, he would be unable to repay the people he borrowed from. And what would the creditors do if a banker couldn’t pay them back? In the middle ages the creditors may break his table or bench to show the world that he was no longer in business. His bench was broken, he was bankarupta. This expression made its way in the 16th and 17th centuries from Italy to England and over time the expression morphed into our current word, bankarupta has become bankrupt.

As I said in the opening the first bankruptcy in Canada came into force in 1869, it was called an act respecting insolvency but it only applied to businesses. In 1880 that act was repealed and it was left to the provinces to deal with. Then in 1919 the federal government got back into the bankruptcy legislation business passing the bankruptcy act of 1919 and it covered both companies and individuals. The trustee at the time was appointed by the government.

The bankruptcy act was amended in 1923 and the estate’s creditors were given the power to select a trustee. The act was amended again in 1932 and the Office of the Superintendent of bankruptcy was created with the power to grant licenses to bankruptcy trustees. A further amendment in 1950 created summary administration bankruptcies, which are the most common form of personal bankruptcies today and a proposal process was also created. In 1992 the name of the legislation was changed to the bankruptcy and insolvency act and consumer proposals were created. So, there’s the background on bankruptcy legislation in Canada.

So, why am I telling you all of this? Well I’m making the point that the word bankruptcy has existed for many hundreds of years and bankrupt trustees have been licensed by the federal government since 1932.

For over 80 years we’ve been called bankruptcy trustees but that’s about to change. On April 1st, 2016 the term bankruptcy trustee will no longer exist in Canada. The federal government is changing our name. And no, this is not an April fool’s joke, although you’ve got to hand it to the federal government for picking April Foot’s day as the day to introduce new rules. Affective April 1st, 2016 bankruptcy trustees in Canada licensed by the Office of the Superintendent of Bankruptcy, a division of the federal government will be known as licensed insolvency trustees.

I guess in a way it’s somewhat fitting because the first bankruptcy legislation in Canada in 1869 was called an act respecting insolvency so in a way we’re going back to our roots. Of course it will take the public a bit of time to get used to the word insolvency and stop thinking about bankruptcy, which is the word we’ve used in Canada for 97 years. Time will tell how long it will take to get used to the new term licensed insolvency trustees.

That’s the Let’s Get Started segment. I’ll be back with some final thoughts right here on Debt Free in 30.

Doug Hoyes: Welcome back, it’s time for the 30 second recap of what we discussed today. On today’s show Ted Michalos and I discussed the new term licensed insolvency trustee, which effective April 1st, 2016 replaces the old term bankruptcy trustee. That’s the 30 second recap of what we discussed today.

So, what’s my take on the new term? Well, I’ve got mixed feelings. On the one hand everyone knows what the term bankruptcy means because we’ve been using that term in Canada for 97 years. The average guy on the street has no idea what the term insolvency means so, it will take a period of time for the public to become familiar with the new designation. I am however pleased that the word licensed is part of the new name because that’s an important distinguishing feature between licensed insolvency trustees and unlicensed debt consultants.

That’s our show for today. Full details on these new rules are available on our website at hoyes.com. Thanks for listening, until next week I’m Doug Hoyes and that was Debt Free in 30.

The post Bankruptcy Trustee now called LIT in Canada appeared first on Hoyes, Michalos & Associates Inc..

A bankruptcy trustee is now called a licensed insolvency trustee in Canada. The Office of the Superintendent of Bankruptcy of Canada recently changed the trustee designation from bankruptcy trustee to licensed insolvency trustee to help consumers better identify persons licensed to perform insolvency procedures under the Bankruptcy and Insolvency Act of Canada (BIA) including both personal bankruptcy and consumer proposals.  We used to be called bankruptcy trustees or trustees in bankruptcy, but with the increased popularity of consumer proposals in Canada a trustee’s work is now much more than administering personal bankruptcy and so bankruptcy trustees are now called Licensed Insolvency Trustees or LIT.

Only persons and bankruptcy companies licensed by the government are legally allowed to use the term licensed insolvency trustee. Hoyes, Michalos & Associates Inc. are licensed insolvency trustees.

We know that people are often afraid to talk to a licensed insolvency trustee (or bankruptcy trustee if you still prefer). We also know that non-trustees take advantage of, and even promote, this fear through confusion and misinformation. So to clarify, I’m going to answer a few common questions about licensed insolvency trustees, the services we provide, who licensed insolvency trustees work for, and what work we do.

Who regulates licensed insolvency trustees?

The Office of the Superintendent of Bankruptcy (OSB) is the federal agency responsible for licensing, monitoring, and regulating licensed insolvency trustees.  The authority to do so is set out in the BIA, which is reviewed and updated by Parliament on a regular basis.

The OSB sets policy and procedures for the industry, like rules around surplus income limits, court proceedings, even a code of ethics for trustees. It is the licensed insolvency trustee’s job to administer bankruptcy and consumer proposals in accordance with these policies and procedures.

It is important to realize that an LIT is not a government employee.  Many are accountants by trade that have specialized in dealing with debt and have completed an extensive program of training and examination to become licensed insolvency trustees.

Many are also licensed credit counsellors and become Chartered Insolvency and Restructuring Professionals (CIRP), passing and maintaining these designations through the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).

What bankruptcy services do they provide?

Licensed insolvency trustees are the only persons permitted to administer bankruptcy and insolvency procedures in Canada.

Services include assignments in bankruptcy and consumer proposals.  In fact, proposals to creditors now account for a significant portion of most licensed insolvency trustees work (that’s one of the reasons they changed the name from bankruptcy trustees).

While there are a vast array of non-trustees advertising consumer proposals (sometimes disguised as government debt relief programs) only a licensed insolvency trustee can file either of these proceedings.

Who does a trustee work for?

While most licensed insolvency trustee work with a bankruptcy firm or company, every consumer proposal or bankruptcy filing in Canada is assigned to a specific individual trustee.  At the end of the day, if a trustee makes an error, it is their personal license that is at stake – that’s why the training, educational, and practical experience requirements to become a licensed insolvency trustee are so high.

Having said that, an LIT has a duty of care to all of the stakeholders involved in the insolvency process.  This includes the debtor who has filed a bankruptcy or a consumer proposal, their creditors, as well as the community at large and the “insolvency system”.  Licensed insolvency trustees are officers of the Court and as such are held to a higher standard of responsibility than the average debt adviser.

Do you hire a licensed insolvency trustee?

No. You don’t hire a licensed insolvency trustee but you do choose the trustee you want to work with. You attend at a licensed insolvency trustee’s office and they assist you with the process of filing either bankruptcy or a consumer proposal and file the documents with the government.

You should never have to pay to see a licensed insolvency trustee. All reputable licensed insolvency trustees in Canada offer a free initial consultation. A referral is not necessary so if someone asks you to pay them to refer you to a trustee (or an officer of the court) know that this is not necessary. Pick up the phone and contact a licensed insolvency trustee directly.

What does a licensed insolvency trustee do?

Licensed insolvency trustees are required by law to meet with individuals before they may file an assignment in bankruptcy or a proposal to creditors.  The purpose of the meeting is to perform a debt assessment, to allow the trustee to review the debtor’s situation and all of the various options that may be available to resolve their problems.

A significant portion of the people that meet with a licensed insolvency trustee don’t actually need to file bankruptcy or a consumer proposal.  They needed someone to help them understand their problem and provide guidance on how to resolve their debts.  One of the greatest concerns about the non-licensed debt counselling businesses offering consumers debt relief is they often counsel people into the solution that generates additional, unnecessary fees, or one that may not succeed, as opposed to the best solution for the individual.

Who is not a licensed insolvency trustee?

Anyone can offer debt relief advice or services in Canada but not all are licensed by the federal government to act as a licensed insolvency trustee.

Licensed insolvency trustees are required by law to disclose their licensed status in all of their advertising.  If you are speaking to someone that hasn’t told you they are a licensed insolvency trustee it is probably because they are not licensed. If their website does not specify that their firm or company are licensed insolvency trustees, then they are not, no matter that they have information about bankruptcy or consumer proposals on their website.

This is important because the most powerful debt relief tools available in Canada – an assignment in bankruptcy and a proposal to creditors – may only be administered by a licensed insolvency trustee.  As I stated earlier, it is quite common for non-licensed debt counselling businesses to charge people a fee and then refer them to a licensed insolvency trustee for help.  This begs the question, what services are they providing to debtors for the fees they charge?  In my opinion, very little.  Most licensed insolvency trustees do not charge people for their initial meeting.  The session is designed to provide individuals with options and help them decide which solution makes the most sense for them.

What is the difference between trustees and other debt consultants?

Read Transcript

What is a bankruptcy lawyer or bankruptcy attorney?

While in the US a bankruptcy trustee is a bankruptcy lawyer or bankruptcy attorney, in Canada, licensed insolvency trustees cannot be practicing lawyers. A bankruptcy lawyer in Canada specializes in insolvency law and may act as an advocate for a client in court. The majority of cases involving a bankruptcy lawyer in Canada are business bankruptcies or business insolvencies. In those situations a lawyer may represent the company or a creditor. However in personal insolvency, this adversarial role does not take place. Instead it is the licensed insolvency trustee who interprets the bankruptcy legislation, and if needed, can apply to the court for further direction. It is very rare than bankruptcy lawyers or attorneys become involved in the personal bankruptcy or consumer proposal process.

How does a licensed insolvency trustee get paid?

Technically, licensed insolvency trustees are paid by the creditors involved with the bankruptcy or consumer proposal.  They are paid out of the proceeds of payments submitted by the debtor into their bankruptcy for the benefit of their creditors.  For example, in a bankruptcy, an individual may be required to make monthly payments into their bankruptcy based on their income.  The money is collected by the trustee and kept on account for the bankruptcy.  At the end of the bankruptcy, there is an established formula for how any funds held on account are handled – government fees are paid first, then trustee fees, and then payments to the creditors of whatever moneys are left in the account.

Recall what I said earlier – licensed insolvency trustees are not government employees.  They work for themselves or for a firm of trustees.  This was done to keep the trustees independent from the government and the creditors.  That independence is critical to keeping the insolvency process in Canada fair for all parties – the individuals in financial trouble, the creditors and the community.

If you are looking for debt relief, contact a Licensed Insolvency Trustee near you today for a free, no-obligation consultation. Our friendly, qualified, licensed debt professionals will help you build a plan to become debt free.

The post Who Do Licensed Insolvency Trustees Work For? appeared first on Hoyes, Michalos & Associates Inc..

• it allows the trustee to fully review your situation and provide you with personalized advice regarding your options, and
• it gives you the opportunity to ask questions and to fully understand your options before you make a decision about whether or not bankruptcy is right for you.

The initial bankruptcy assessment is really a chance to get to know you, it’s information gathering.

We want to understand who you owe money to, how much you owe, how much you can afford to pay towards your debt and what assets you might have. With this information we can recommend options to deal with your specific debts.

If you decide to file bankruptcy, at that time you will need to gather information which will be needed to complete the necessary filing documentation (I’ve provided a list at the bottom of this post). 

Do you need to bring this documentation to your first bankruptcy consultation? No. Your trustee will work with you to gather and prepare this documentation. This actually makes people feel a lot better knowing that they don’t have to decide and sign up at that first consultation. 

There are many factors that will impact your decision on whether or not you should file bankruptcy or a consumer proposal so it is important to disclose everything to your trustee, and to ask a lot of questions so that we can give you the best debt advice possible. In addition to providing a basic picture of your financial situation, you should also disclose to your trustee any other factors that will help them to advise you about your options. 

• Do you have a wage garnishment or lawsuit pending?
• Are any of your debts co-signed?
• Are you considering a separation in the future as this may affect who is responsible for debts in a separation.
• If you are off work for medical reasons, or if you expect to be off work in the future, explain your medical situation to your trustee. In some cases it may make sense to delay filing bankruptcy until you return to work.  In other cases, a quick bankruptcy is a better option.  With full information your trustee can help you make the decision.
• If you expected employment or income changes. If you expect to start a new job, or get a raise in the future, discuss it with your trustee.  The cost of a bankruptcy is based on your income, so if your income will be increasing, a consumer proposal may be a better option.  On the other hand, if you expect to be laid off or have your income reduced, that will also impact the bankruptcy process, so you want to be prepared for either possibility.
• If you are a student, how long has it been since you have been out of school?  Your last date of study is important in determining if student debt can be included in a bankruptcy or proposal.

When you are ready to file bankruptcy, information that can help in the preparation of the necessary bankruptcy filing documents can include:

1. A list of all of your debts.
2. Recent statements so you know roughly how much you owe to each creditor
3. A copy of your credit report is a great resource if you don’t know who you owe
4. Details about any assets you own, including a house, car and any investments like RRSPs and RESPs;
5. Your most recent pay stub.
6. A list of your household expenses.
7. Identification, like a birth certificate to confirm the correct spelling of your name
8. Information about your bank account if you want to go on automatic deposit to cover your bankruptcy payments.
9. Copies of your tax returns if you have tax debts.

If you are considering bankruptcy, talk with a Licensed Insolvency Trustee. The initial debt assessment process usually takes between 30 and 60 minutes depending on how complicated your situation and how many questions you may have. At Hoyes Michalos we won’t rush you. You can always book a second, free consultation with our trustees or converse with them via e-mail until you are ready to make a decision about what debt relief option is right for you.

The post What Do I Need To Disclose To My Bankruptcy Trustee? appeared first on Hoyes, Michalos & Associates Inc..

So technically, any bankruptcy trustee across Canada can help you file your bankruptcy, but should they?

How do I know which bankruptcy trustee to choose?

I suggest you “interview” your prospective bankruptcy trustee by asking these five important questions:

1. Are you licensed by the Federal government? This is a trick question; we just said all trustees are licensed by the Federal government, but it’s important to confirm that you are dealing with a licensed trustee and not an unlicensed debt consultant who advertises information about personal bankruptcy. Many companies will offer bankruptcy and consumer proposal advice, but are in essence middlemen charging you a fee to eventually refer you to an actual trustee to file.
2. What information should I bring to my initial consultation? At Hoyes Michalos, we want to give you advice specific to your situation, so we will suggest you bring information about your debts, assets, and monthly income. If a trustee firm books a consultation without asking for specific information, your meeting may not be very productive.
3. When will I meet a licensed bankruptcy trustee? At Hoyes Michalos you will meet with a licensed trustee for a full debt assessment of your situation BEFORE you sign any paperwork. At many firms you deal only with a “sales person,” and only meet with a trustee for a very short time when you sign the paperwork. We believe that it is important that each and every person who files with us is absolutely sure that the choice they have made is the right one. That means that our trustees talk with you in detail, not review a file, sign and move on.
4. Once I file, who will I be dealing with at your firm? At Hoyes Michalos you have access to our entire team of professionals. We will give you a list of the key phone extensions for your important contacts, including our payments, statements and tax department. That way, if you have an issue during normal business hours you can dial directly to a LIVE PERSON.  We also provide you with important e-mail addresses if you prefer e-mail as a main contact method.  Of course, your trustee is also available if you have specific questions, or if you want to arrange a meeting to discuss any aspect regarding your file.
5. What assistance will you give me to get me back on track once I’m discharged? As with all trustees, we provide two credit counselling sessions, but we also provide you with many additional resources. Once you file we will give you access to our “for clients only” website that contains information about re-building your credit, getting a free credit report, budgeting and saving money. We also offer a free “fresh start” program to help you learn to re-build your credit.

If you are struggling with debt, I encourage you to contact us for a free consultation. Once you meet with us, you will have many other questions about the cost of filing bankruptcy or a consume proposal, and you’ll want a detailed explanation of all of your options. In fact, we encourage you to ask as many questions as you need; we won’t limit you to just the above five questions.

The post Pick the Right Bankruptcy Trustee By Asking These 5 Questions appeared first on Hoyes, Michalos & Associates Inc..

Case in point – bankruptcy advice.

A not so little industry has been created in the last decade made up of people who, for a fee, will explain to you everything they know about bankruptcy law. They call themselves Debt Consultants and Credit Counsellors but they are not licensed trustees in bankruptcy (now known as Licensed Insolvency Trustees).  If the fees were modest and the advice was accurate, then I wouldn’t mind.  Unfortunately, the fees are not modest and the advice is frequently wrong.

In the interest of full disclosure, I need to tell you that I am a chartered professional accountant and a licensed insolvency trustee so I have a definite bias about who you should talk to for bankruptcy advice. Not surprisingly, I think the advice should come from the right bankruptcy trustee and here’s why.

Only Trustees Can Administer a Bankruptcy or Consumer Proposal

Trustees are licensed by the federal government to administer proposals to creditors and bankruptcies in Canada.  No other professional, other than a Licensed Insolvency Trustee, may do this.

Accountants can’t.  Lawyers can’t.  Debt consultants most certainly can’t.

Because lawyers and accountants cannot provide these services very few of them have detailed knowledge about proposal and bankruptcy law.  They may have a general knowledge of the concepts, but lack specific details for how the law may affect you, if you decide to file. Every individual situation is unique, and only someone with qualifications and experience can provide advice tailored to you.

Most professionals recognize they have limited knowledge in these areas – their advice will be to call a trustee. Unfortunately, debt consultants and many for-profit credit counsellors take the opposite approach. Since they have some knowledge of debt management options, many feel this gives them license to give out bankruptcy advice.

When you meet with them, these debt consultants will likely know more than you do and therefore they may come across as knowledgeable and helpful.  In reality, debt consultants prey upon common fears: your wages will be garnisheed, your house will be taken away from you, your family and friends will find out about your money problems, and often their final pitch — trustees are not on your side.  The advice these people provide is designed to convince you that your only hope is to follow the plan they lay out for you, including paying them a fee before they will refer you to their “guy” to solve your financial problems.  Their “guy” is often called an officer of the court or a government expert.  The truth is their “guy” will be a licensed trustee since, as I mentioned earlier, only a trustee can help you file a consumer proposal or bankruptcy.

Watch the video below for more information about for-profit financial consultants:

Read Transcript

Here’s The Reality

What you are never told is that the licensed trustee would have met with you for free and explained your options in greater detail. Licensed Insolvency Trustees are required by law to review all of your debt relief options, not just sell you a proposal or bankruptcy.  I know in our own practice, the vast majority of people that contact us do not need to file either a proposal or bankruptcy.  In most cases, they need some frank, but friendly advice on how to re-organize their finances to get out of financial trouble.

I am not telling you that the only place you should seek financial advice is from a licensed trustee.  What I am saying is that if you think you need specific advice regarding filing bankruptcy or a consumer proposal, you should speak directly to a licensed insolvency trustee.  Only a licensed trustee can provide these services, so paying a fee to anyone else before you speak to a trustee is simply a waste of time and money.

If you are wondering who to contact, I encourage you to read more about Hoyes Michalos and our 11-point promise to our clients. Then, when you are ready, book a free consultation where we give you options to be debt free.

The post Bankruptcy Advice Should Come From A Trustee appeared first on Hoyes, Michalos & Associates Inc..

Today I sat down with Scott Schaefer, Chartered Accountant, Consumer Proposal Administrator, and Licensed Insolvency Trustee at Hoyes, Michalos and Associates to discuss the roles of specific parties during a bankruptcy and consumer proposal.  Scott explains the meaning of a debtor, creditor, and trustee, and breaks down the filing process, step by step.

The Main Parties Included In A Bankruptcy Or Consumer Proposal

Debtor – The person that owes money and is financial difficulty.

Creditor – The person or company that has loaned money and is owed money back.  For example, credit card companies, banks, payday loan companies, the government, or even your mother.

Trustee – Trustees are appointed and licensed by the government to administer bankruptcies and consumer proposals.

Becoming a licensed insolvency trustee takes time and experience.  Most trustees have a university degree or many, many years of work experience.  The process involves many courses and exams; and once you have completed those, you sit before the Board of Examiners which includes a trustee, a lawyer, and a government representative for an oral exam.  The entire process takes between three and five years on average.

What is the trustee’s role during a bankruptcy or consumer proposal?

To gain a better understanding of your situation, your trustee will sit down with you to discuss who you owe money to, what your income is, and what is going on in your life that is causing you stress. Next, they will explain all of your options to help you find the best solution for your personal needs. This consultation is free and there is no obligation to make your choice on the spot.

Once you have made a decision about which debt solution works best for you, your trustee will file your paperwork with the government, in return, receiving confirmation that they have officially been appointed to administer your file.  After your paperwork is filed, your payments will begin.  Your trustee will be paid from this pot of money as regulated by the government.

When you file the trustee acts as a middle man between the debtor and their creditors.  As Scott explains,

…[Trustees are] the ones to make sure all the rules get followed.  [Trustees are] the ones that make sure both the debtors and the creditors do what they’re supposed to do throughout the process.

What is the government’s role during a bankruptcy or consumer proposal?

The government enforces the Bankruptcy and Insolvency Act to ensure that all rules and regulations are being followed. The Office of the Superintendent of Bankruptcy (OSB) monitors all trustees and maintains records of all insolvency filings. The OSB closely monitors and reviews all bankruptcy and consumer proposal files on a regular basis.  Scott puts their role in perspective by using the analogy of a hockey game,

If you equate it to a hockey game, the referees are the ones who are calling the game, who make sure everything happens [the trustee].  But up above, there’s somebody watching, making sure that the referees are doing their job as well [the government].

One division of the government is Canada Revenue Agency (CRA) who review and process all tax related documents.  CRA is commonly listed as a creditor in many bankruptcies and consumer proposals.  The Bankruptcy and Insolvency Act (BIA) does govern tax debts in the bankruptcy or proposal process so these are included just like any other debt when you file.

What is a meeting of creditors?

It is possible for a meeting of creditors to be called during a proposal or bankruptcy.  If a meeting includes the trustee, the debtor, and the creditor.  The meeting is held to gather more information so that creditors can come to a decision about those debts.

In a bankruptcy it’s rare, and only if the creditors have extra questions. During a proposal, creditors will be deciding whether they will vote to accept the terms of the proposal (each creditor gets one vote for every dollar that they are owed), or to counter the proposal terms to request more money.  In the majority of proposals, a settlement is reached prior to the meeting and no parties actually attend.

What are credit counselling sessions and why do I need to attend?

It is mandatory that the debtor attends a minimum of two credit counselling sessions.  During these sessions, your trustee will help you to make a plan moving forward; to rebuild your credit and to use credit wisely.  Scott points out that,

…It’s actually giving people some tools for themselves, for themselves to move forward and get a fresh start.  They’ve cleared their debts, they’re moving forward and they’re making things a lot better.

All credit counselling sessions are done one-on-one and not in a group session as each individual’s circumstance is different.  The trustee’s goal is to provide you with practical, real-life advice.  Scott used the example of setting up an emergency fund in an account that does not include fees and is in a different place than your regular banking; that way, your emergency fund is “out of sight, out of mind” and will only be used for emergencies.

Scott’s number one rule for this new account is to pay yourself first.  When you receive your pay cheque, make sure that a portion is contributing to your savings.  Whether you contribute a lot or a little each time, the main point is that you are putting that money aside so that it can grow and benefit you in the future.  This savings account should be started right away.  Many worry that they will not be able to pay themselves first while also paying off their debt; but what they haven’t factored in, is that once you file a consumer proposal or bankruptcy, you are making a one time payment each month, for example $300, that is much lower than trying to pay the minimum payments at $700 a month.  The extra money that you will be saving can then go into the new account, which will help you to get the fresh start that you need.  Scott’s advice is to,

…put it into an RSP, put it into a tax free savings account.  Make it so there is something benefiting yourself.

About Paying With Cash

Paying with cash instead of credit should be a main priority for staying out of debt. Credit is borrowed money that needs to be paid back at a later date in one lump sum.  Paying with cash is different emotionally than paying with credit cards.  As Scott explains,

There’s proven studies out there that show that we spend more money when we charge something than we do with cash.  I’m already buying this other stuff, I might as well just put it on the credit card and not worry about it.  If you’ve got physical cash in hand or you’re using your debit card, you only buy exactly what you [need].

Resources Mentioned 

• Office of the Superintendent of Bankruptcy (OSB)
• Bankruptcy and Insolvency Act (BIA)
• Canada Revenue Agency (CRA)

You can read more about how a consumer proposal works.

FULL TRANSCRIPT show #26 with Scott Schaefer

Doug Hoyes: Welcome to Debt Free in 30, the show where every week, we talk to industry experts about debt, money, and personal finance. I’m Doug Hoyes.

Today it’s time for yet another Frequently Asked Questions show. This will be show number two. And I’m joined today by Scott Schaefer who is a Chartered Accountant and Bankruptcy Trustee with Hoyes, Michalos & Associates. Welcome to the show.

Scott Schaefer: Thanks for having me.

Doug Hoyes: One of the questions we get a lot is, who are all these players? When someone has to do a bankruptcy or proposal, people get confused. What’s a debtor? What’s a creditor? How does the trustee fall into this? How is the government involved? So, let’s go rapid fire, piece it together and go one by one. So, who’s the debtor?

Scott Schaefer: The debtor is the individual that owes the money. So, the person that is in financial difficulty.

Doug Hoyes: Okay, so if you’re listening to this show right now and you have debts, well you’re a debtor. So, what’s a creditor?

Scott Schaefer: A creditor is a person who is owed the money to, so, the person who has lent the money and is owed money back.

Doug Hoyes: So, a common example would be a credit card company, a bank, a payday loan company, the government these are all creditors, taxes, all those things are creditors.

Okay, so that’s what debtors are and what creditors are. A trustee, what is a trustee? What’s their role in the whole insolvency process?

Scott Schaefer: A trustee is the person who is appointed by the government who’s been given a license to perform the duties within the bankruptcy and insolvency act, which means that we are the guys who are able to do a bankruptcy, to administer it, to do the consumer proposals, who are licensed to complete that process.

Doug Hoyes: So, just on a bit of a tangent here but how does one get their trustee’s licence from the government?

Scott Schaefer: It’s a long process. So, you have to have a background that gets you into the program. You’ve got to have lots of experience and you go through a program to develop your skills and knowledge in the different resources and at the end of the day you sit and exam before the government, an oral board exam, and they decide whether to give you a licence to be a trustee.

Doug Hoyes: Cool and I’m actually quite familiar with how the process works because I am actually one of the Oral Board of Examiners and have been for a couple of years now.

So, in order to get a trustee’s licence you typically have to have a certain amount of experience. Most trustees have university degrees. If you don’t have a university or college degree then you have to have extended work experience, literally many years. There are many courses that you take and there are exams at the end of those courses and then you do a final exam and if you complete that then you get to sit before this oral board of examiners, which is exactly what it sounds like. There’s a trustee, a lawyer and a representative from the government in a room, you talk and if you get the right answers then they give you a licence.

So, you can’t get a trustee’s license in 30 minutes. This is a multiyear process. The average person who has a trustee’s license, it took them between probably three and five years to get that license. So, once you’ve got that license you are able to administer a bankruptcy or a proposal. So you’re kind of the middle man in the process.

Scott Schaefer: Absolutely. You’re kind of like the referee. So, we’re the ones to make sure all the rules get followed. So, we’re the ones that make sure both the debtors and the creditors do what they’re supposed to do throughout the process.

Doug Hoyes: So, walk me through it chronologically then. So, someone’s in financial trouble. They can get on the phone, they can call you, they can email you, whatever. You sit down you meet with them, the first step is what?

Scott Schaefer: To understand their situation. So, we understand who they owe money to, what their income is, what’s going on in their life, what’s causing them the stress of the situation? From there we sit down and we analyze the options; whether someone needs to do something for a bankruptcy or consumer proposal or if there are other ways of getting out of their debts through working with banks or paying the debts. We look at all the options for them to find out what’s right for that person going forward.

Doug Hoyes: And what does it cost for you to figure out all these options?

Scott Schaefer: Nothing. As a referee in the process we can’t be paid by the individual. So, there’s no cost for those meetings.

Doug Hoyes: So, once the proposal or the bankruptcy is filed – so let’s assume that that was the decision that resulted from it – you become the trustee, as you say you’re appointed by the government so you actually file the paperwork with the government. They send you back something officially appointing you to administer the process, at that point the debtor (the person who owes the money) is going to start paying money. It’s putting money into the pot. Your fees come out of the money that’s in the pot. And of course that’s all set by the government, right?

Scott Schaefer: Absolutely. It’s all set, regulated.

Doug Hoyes: Now we talked about the government, so we’re going through who all the players are here in an insolvency. What role does the government have when someone goes bankrupt? And let’s talk about different divisions of the government. So, the Office of the Superintendent of Bankruptcy, what role do they have in the process?

Scott Schaefer: They’re the ones – I like to refer to them as the legal guardians. They’re the ones who ensure that everyone is following the rules within the act. So, they follow up with the trustee. The trustee is the one that reports to them. They’re the ones who have the stewardship of the information, the record keeping and the filing of all the information. The trustees the one that handles all the paperwork and operates the game but it’s the head office that has the paperwork at the top.

Doug Hoyes: So, they are the regulator. They’re the ones that make sure as the trustee, you’re doing your job. And they keep a pretty close eye on you I assume.

Scott Schaefer: Absolutely. If you equate it to a hockey game, the referees are the ones who are calling the game who are making sure everything happens. But up above there’s always somebody watching, making sure that the referees are doing their job as well.

Doug Hoyes: And that’s where the superintendent of bankruptcy comes in. And I know, having been a trustee for many, many years, they do regular monitoring, they come into our office, they review our files; but they’re also doing it on a very regular basis remotely by looking at every single document that we’re sending them and we’re sending them dozens of documents every day. Anything goes wrong they’re obviously going to pipe up and make sure that there’s not an issue.

So, we talked about one branch of the government, the Office of the Superintendent of Bankruptcy. What about Revenue Canada? How often do you see them involved in either a bankruptcy or a consumer proposal?

Scott Schaefer: Well, they’re regularly involved because tax debts are a common thing. People have tax debts from being self-employed from working two jobs, from receiving pension income and not enough taxes coming off. So, Revenue Canada or Canada Revenue is involved in a lot of files because they are a creditor, they are owed money. That debt is because of Federal law. The Bankruptcy and Insolvency Act is Federal law. So those two laws kind of marry up. So, the Bankruptcy and Insolvency Act does include income tax debts or tax related debts, because it’s Federal law. So, they are not a unique or special creditor in that sense that they have special rights for the common credit card debts – sorry income tax debts – they are very much like a credit card for income tax.

Doug Hoyes: So, if you go bankrupt in a normal situation – I mean I’m ignoring a situation where you committed some massive fraud or something, – but in a normal situation, Canada Revenue Agency, debts that you owe for income taxes or for overpayments of GST or something like that, HST, those are regular unsecured debts, just like a bank loan, just like a credit card, they go away.

Scott Schaefer: Absolutely.

Doug Hoyes: Okay, so you filed all this paperwork and the bankruptcy or the proposal is up and running, it is possible that a creditor’s meeting could be called. So, let’s talk about the case of a consumer proposal, a creditor’s meeting – I guess it’s exactly what it sounds like. It’s a meeting for the creditors to do what? What happens?

Scott Schaefer: To learn more information.

Doug Hoyes: So, they can ask questions?

Scott Schaefer: Absolutely. So, in the room is the trustee, the debtor and the creditor. Remember that the process is about both sides. You know understanding it and going through the process together. So, the debtor has the right to get a fresh start but the creditor has the right to understand that.

So, if it’s a proposal, they’re deciding whether they’re going to accept it or not. If it is a bankruptcy they’re giving the direction to the trustee if there’s things that need to be done. But if it’s in a consumer proposal, a creditor’s meeting is for the acceptance of that proposal. In most cases a creditor’s meeting is just discuss a counter offer in between there. So, an offer is made, the creditors want a little bit more and most times that’s actually resolved before the meeting so nobody actually comes to the meeting.

Doug Hoyes: So, a creditor’s meeting is really a formality. It very rarely amounts to anything because as you say it’s already been decided in advance. And in my experience, again over the last 25 years or so, I don’t ever recall a case where a representative of a major bank or a major credit card company or in fact any credit card company, ever physically showed up at a creditor’s meeting. Have you ever had a case where one of them did?

Scott Schaefer: Not for a consumer proposal, not for a general, every day situation.

Doug Hoyes: It just doesn’t happen. In my experience the creditor’s meetings, the most common attendee would be Canada Revenue Agency.

Scott Schaefer: Absolutely. And so, what they’re looking for in that case, somebody owes a bunch of tax debts. Normally it’s because they’ve been self-employed. So, they’re going to say, let’s consider the offer you’re making but what’s changed? How are you now not going to have a tax debt going forward? How are you going to make this good for you going forward and we’re not back at the table three years from now owing a bunch more tax debt.

So, for an individual to get Canada Revenue back on board when they are the majority creditor has to have a plan to ensure that they’re not going to be a tax debtor going forward, that they have a plan to deal with their tax debts going forward and then they can deal with the consumer proposal for the past debts. So, it’s really about the plan for all for them.

Doug Hoyes: Got you. And as you said in most cases these things are going to be sorted out in advance. If we filed a consumer proposal and one of the creditors, people you owe money to, isn’t happy, which means they want more money, then you’re going to have discussions with them right away. Hey, guys what do you want? What’s it going to take? What can the debtor afford? Everybody signs off on it. So, by the time you get to the creditors meeting, yep we’ve already agreed, sign here.

Scott Schaefer: And the other part too, is looking at a creditor’s meeting it means a majority. So, either the majority of the creditors have to be part of it. So, one creditor by themselves generally can’t make a difference, it’s the majority of the dollar value. So, each creditor gets one vote for every dollar they’re owed in a consumer proposal.

Doug Hoyes: And so very rarely does anyone have to show up at a creditor’s meeting. That’s kind of what we’re saying. Okay, well those are some good answers. We’ve got a bunch of other things we’d like to cover but we’re going to take a quick break here. This is the Frequently Asked Questions show here on Debt Free in 30.

We’re back on Debt Free in 30. My name’s Doug Hoyes and I’m joined today by Scott Shaefer, who is a Chartered Accountant and a consumer proposal administrator and Bankruptcy Trustee with Hoyes, Michalos & Associates.

Before the break, here on our Frequently Asked Questions show, we were going through some of the processes, some of the players who exist in a bankruptcy or consumer proposal filing. One of the things that you have to do if you owe money and you file either a bankruptcy or a consumer proposal is attend two credit counselling sessions. Why is that?

Scott Schaefer: Well, the laws are set up to give people a fresh start and to help them through that. So, part of the helping of it, is that people have a couple one on one meetings to talk about the future. Two are the minimum. People can actually meet with their trustees several times if they needed to. But they’re required to meet two times to discuss what’s happened and to ensure that things can move forward, that they have plan to rebuild credit, that they have a plan to use credit wisely. Kind of cover all the things that people need to, to make a better and brighter future for them.

Doug Hoyes: So these credit counseling sessions are for the benefit of the person who’s got the debt problems.

Scott Schaefer: Absolutely, they are.

Doug Hoyes: They’re not designed to be some kind of punishment. It’s we want you to have a fresh start. We don’t want you to get into this mess again. So, let’s give you some tangible, practical things that you can do to not have this problem again.

Scott Schaefer: Yeah, I think sometimes the word itself is scary to people, the word counseling. It’s not directly counselling, it’s actually giving people some tools for themselves, for themselves to move forward and get a fresh start.  That they’ve cleared their debts, they’re moving forward and they’re making things a lot better.

Doug Hoyes: So, do you do these personally yourself?

Scott Schaefer: Absolutely.

Doug Hoyes: And are they a one on one session?

Scott Schaefer: One on one. There’s no group sessions at all that we do. It’s purely one on one.

Doug Hoyes: One on one. So what you’re trying to do is give the person you’re meeting with some very practical, real life advice then. So, can you give me an example of some real life practical kind of advice that you’ve given someone in one of these credit counselling sessions?

Scott Schaefer: Absolutely, so when we sit back we look at okay you’re now on a cash based system. You don’t have credit cards anymore. You’re now moving forward with cash in hand and what happens if something goes wrong? So, it’s planning for the events that could happen, the unexpected items.

So, everybody I like to work with is to ensure they’re truly setting up emergency funds, reserve accounts, separate bank accounts that can accumulate interest and that they can set money aside. So, when the car breaks down, when Christmas time comes around, when the kids need something, they have an account that’s available for them. So, they can use real cash without incurring debt. In the past, they were relied on credit cards for those items. Now they don’t have to worry about having credit cards, they now need to make some money for themselves. So, it’s kind of building up the budget so they can actually handle those things going forward.

Doug Hoyes: And that’s kind of the starting point for it, right? I need to know where my money goes. And in a lot of cases I get into trouble because I don’t know where my money went.

Scott Schaefer: And so much of it is just going to credit cards and paying this and using that, then paying this. It’s just a shuffle of paying the different credit cards that makes it hard.

Doug Hoyes: And so, for an emergency fund, how do you recommend that people set that up then? Is it a separate bank account? Should it be an envelope with some cash under my mattress? What’s the best way to do that?

Scott Schaefer: I personally like having people set them up in a separate bank account, quite often such as President’s Choice Financial or Tangerine account, out of sight, out of mind. They put the money over there. It’s a bank that they can transfer money to. They have access to it through either CIBC or Scotia Bank or any of the credit or any of the bank machines. But it’s a separate account that’s used for just that.

People can keep it in the same bank as their savings account but they see it every single day it becomes so available for them. So, I always like to say put it in a safe spot where there’s no service fees, grows with interest a little bit, but you know that money’s available to you.

Doug Hoyes: So you mentioned a couple of different banks there. Do you get a kick back or any kind of commission from any of those banks or are you associated with any of those banks?

Scott Schaefer: Not at all. What I like about them is there’s no bank fees.

Doug Hoyes: So, that’s what it comes down to. There’s no service charges therefore you can put your money there. You’re not going to lose five dollars every month from what you’re putting away.

Scott Schaefer: Correct because part of life is reducing our costs and not spending any extra money than we have to. Paying a larger service fee to hold your money doesn’t make a lot of sense.

Doug Hoyes: It doesn’t make sense. Unless you absolutely need the extra service then why would you? And let’s face it, everything’s electronic these days. Most of us get our pay cheque deposited electronically, we pay all our bills online, so using a bank like that, a virtual bank as it were, is a good way to do it.

Scott Schaefer: Any savings account at any bank would work but the key is to know that that money is set aside for special items. It’s not meant for every day spending. It’s not meant for just anything else. It’s truly meant for those other accounts, for other items.

Doug Hoyes: And so would you recommend then, if I get paid every week I put a little bit of money every week into one of those accounts?

Scott Schaefer: Absolutely. It’s a – the old principle pay yourself first. A little bit of every pay cheque should go into that. Sometimes it’s a bigger chunk, sometimes it’s a small chunk. But the key is that it is one of the bills you pay. You pay yourself into that savings account.

Doug Hoyes: And these are the kinds of things you would talk about one on one to someone in a credit counselling session.

Scott Schaefer: Absolutely.

Doug Hoyes: And the people you’re meeting with, you’ve already met with them before, probably on multiple occasions. You’re already familiar with their budget because as part of the bankruptcy or consumer proposal process, they have to prepare a budget. So, are you then following up then with them? Okay, so here’s what your budget looked like at the start, where are we at now? What changes have you made? Is that the process that evolves?

Scott Schaefer: Absolutely. And most times they tell me. Most times when we sit down and talk people tell me – the first meetings are within the first two months, the next one depends on when we want to have it, anywhere from 30 days to four months later. So, we have some time to do these meetings. They key is, what’s right for that person.

So we sit down and say, okay you’re two months into it. How are you? What’s going on with the budget? It’s amazing what difference happens by the time we meet the second time. So, each person will tell me how they’re doing with their budget, whether they’re still pay cheque to pay cheque or whether they’re actually getting some money set aside or whether they’re moving forward. Because when they come out of the process, they need to be ready to be totally debt free and living on the cash based system so that they can rebuild strongly.

Doug Hoyes: And this whole thing about the cash based system, everyone gets scared. How am I going to be doing that? I’ve been robbing Peter to pay Paul. I’ve got to have multiple credit cards because I can’t survive. I think people kind of forget that, well wait a minute, once you do a proposal your debts are wiped out. You’re not paying those credit cards; you’re not paying the bank loans and lines of credit. You’re making one payment on your proposal and that’s it and if we’ve done it correctly, if it makes sense then you’re cash cost each month has gone down. Instead of trying to make $1,000 a month in minimum payments on all your different debts, we do a proposal where you’re paying four or five hundred, there should be some extra cash there. And that’s what becomes the savings plan.

Scott Schaefer: Absolutely. And when they’ve done the process, covert that into a RSP or an RESP for the kids or anything else. When you’re done what you’ve been paying in a bankruptcy or proposal should not be money that you put toward yourself. You’re debt free, you’ve done a bankruptcy, you’re done the proposal, your discharged, you’re released from it, you’re clear. You’ve been paying that amount every month; make it something good for yourself. Put it into a RESP, put it into a tax free savings account. Make it so there is something benefiting for yourself.

Doug Hoyes: And so you talk about benefits, is there life after bankruptcy? Is there life after you do a consumer proposal?

Scott Schaefer: Absolutely. Everything’s about rebuilding and starting over. The banks make so money on interest, they will allow people to finance things again. To get mortgages most times the banks want people to be discharged for two years.

So, the time that they start, they get released either nine months or 21 months, there’s a difference there, but two years after that period of time is when the banks start looking at them again for a mortgage. So, people if they’re able to save up and rebuild, then they’re able to gain mortgages, to gain car loans and that kind of stuff.

Doug Hoyes: But the key is, I have to be able to save up. I’m not going to be able to go bankrupt, finish my bankruptcy and go buy a big house with no money down. It doesn’t work like that.

Scott Schaefer: And the biggest part is going back to this cash. When people have been paying with cash, they’re now very aware of how much money they have. So, to go out there and get a loan they know well okay, if I haven’t been able to save up that three or four hundred dollars a month for a loan, and now I’ve taken a car loan, how am I going to pay it if I didn’t have a budget in the first place?

Doug Hoyes: And that’s a very good point, that cash, paying with cash is emotionally a lot different than paying with a credit card. Paying with a debit card and seeing the money come right out of your bank account immediately is a lot different than, okay I can pay for it at the end of the month. I think that really forces you to be very careful with your money, make sure that you’re not over spending.

Scott Schaefer: There’s proven studies out there that show that we spend more money when we charge something than we do with cash. I’m already buying this other stuff. I might as well just put it on the credit card and not worry about it. If you’ve got physical cash in hand or you’re using your debit card, you only buy exactly what you want.

Doug Hoyes: Yeah you can’t spend it then.

Scott Schaefer: You don’t overspend. Credit cards are a massive incentive to overspend and credit card companies know that.

Doug Hoyes: And so the answer to the question is there life after bankruptcy, well yes there is but, it starts with you.

Scott Schaefer: Correct.

Doug Hoyes: You’ve got to have a savings plan. You’ve got to keep close track of your expenses and that’s how you can recover.

Scott Schaefer: And the other part is when I always say to people, before they start the process where would they be a year, two, three years from now if they kept paying the minimums that they’re paying now? Would they be in a better or worse position? Most people say they would be in no better position; if not they’d be in a worse position with interest.

So, it allows them to deal with their debts to clear it out, so they can have a fresh start. Where if they kept going at the cycle they’re going now, owing $50,000 in credit cards or whatever it is, they’re not going to be in any better position down the road.

Doug Hoyes: And that’s really the whole point of a fresh start. So, fantastic, I really appreciate that. Thanks for joining me Scott.

That was Frequently Asked Questions here on Debt Free in 30. We’ll be right back to wrap it up

Final Segment

Doug Hoyes: My guest today was Scott Schaefer, and we started by reviewing the role played by of all of the people involved in the insolvency process. Scott also talked about creditors meetings, and he gave us some examples of practical tips he gives people during credit counselling sessions.
That’s the 30 second recap of what we discussed today.

I don’t have time today to review every item Scott and I discussed, so I’ll comment on just one of his points. Scott explained that the role of the trustee is as a referee, a “middle man”. The trustee’s job is to ensure that everyone plays by the rules.

This is a key point, because I occasionally here advertising that says “don’t go talk to a trustee, they work for the creditors”. That’s simply not true. Scott doesn’t get hired by the people you owe money to. You walk into his office and ask for help, he helps you, and you and he works out a plan and get the process started before he ever speaks to one of your creditors.

So does that mean he’s working for you?

No, he’s the referee, so his job is to make sure both you and the creditors follow the rules, so that the process is fair to everyone. It’s a win-win situation.

That’s our show for today.

We do a Frequently Asked Questions show every month, so if you have a question you want answered on the show, email us at DFI30@hoyes.com

Full show notes with links to everything we talked about are available on our website at hoyes.com, that’s h-o-y-e-s-dot-com.

Thanks for listening.

Until next week, I’m Doug Hoyes, that was Debt Free in 30.

The post Who Does What In A Bankruptcy and Consumer Proposal? appeared first on Hoyes, Michalos & Associates Inc..

So what happens at that first meeting?  Will we scold you, and tell you not to spend so much?

No, we are not here to judge you.  We are here to do a debt assessment and explain your options.  

A debt assessment starts by asking you three questions:

1. Who do you owe money to?
2. What assets do you own?
3. How much do you earn and what do you spend every month?

With this information we can look at some debt relief options and help you develop a plan to become debt free.

That plan may not even involve filing bankruptcy. In some cases a consumer proposal may be a better than a bankruptcy and in other cases you may not have to file with us at all. That’s OK, we’ll still give you a plan about what to do next.

Read Transcript

Our commercials say “Debt Free in 30”, and that’s what we mean: give us 30 minutes to review your situation and explain your options, and then you can decide what options are best for you. 

I mentioned it in the video, and I’ll emphasize the point again: when you meet with us, you will be meeting with a professional, not a “salesman” or a “clerk”.  We have 19 trustees in our firm, so in most cases your first meeting will be with a trustee, but even if you meet with one of our other accredited credit counsellors you will be meeting with an experienced professional and you always meet with a trustee before you file. 

Is it really possible to explain your options in 30 minutes? Yes, it is although if you want us to spend more time with you, that’s fine too.  We’ll take as long as you need and are happy to book a repeat consultation if that’s what’s best for you.  Many people want to go home and review these option with their spouse or family member.  No problem, we never pressure you to make a decision that day if you want to think about it.

Do you need to bring a list of your debts, a recent paystub, or a list of what it costs you to live each month, and details on any assets you own? No although it does help make sure we have a complete picture.  Don’t worry, our team knows what to look for so we can assess your unique situation, and explain all of your options.  If we need more information down the road, that’s something we’ll work together with you to achieve.

So really, it’s a pretty simple process.

That’s why we say Debt Free in 30.  It works, so let’s get started.

The post What happens at my first meeting with Hoyes Michalos? appeared first on Hoyes, Michalos & Associates Inc..

After our meeting they realized there was no need to worry, because I’m not a judge or jury. I’m not here to find fault. My job is to make a plan to help you with your debts, and that’s why Ted Michalos and I started Hoyes Michalos back in 1999. To help you make a plan.

I don’t judge you because I haven’t lived your life; no-one has (except you).  I haven’t suffered through your unique experience with job loss, marriage break up, medical problems, or whatever combination of circumstances has caused you to have more debt than you can handle.  Sometimes, life happens.

My job is to assess your situation, explain all of your debt relief options, and then help you make a plan to deal with your debts.  That’s why Hoyes Michalos exists, and that’s why I have trained all of our professionals to do the same: listen, and help you make a plan. (And that’s why our phone number is 310-PLAN, and why we advertise that if you give us 30 minutes, we can explain how to be debt free: Debt Free in 30, It’s That Simple).

Read Transcript

I believe our approach works, and to prove it, we periodically post testimonials received from someone we have helped.  These are unsolicited testimonials; we don’t ask for them, or solicit them in any way.  We simply invite the people we help to e-mail Ted and I with their thoughts.  You can read all of them on the Hoyes Michalos Testimonials page.

Here’s one I recently received from Angelo (not his real name), a 44 year old man who got into debt as a result of his separation.  Here’s what he said:

I think all in all it was a good experience. Not good that I had to go bankrupt, but good in a way that I was never made to feel inferior, stupid or what have you. It was a comfortable environment. I was happy I chose this firm. Thanks for all the help. It was appreciated.

As you can see, Angelo wasn’t happy about having debt problems, but we treated him with respect, and he now has his fresh start.  That’s the plan: a fresh start.  I’m glad we could help.

The post Why I Won’t Judge You appeared first on Hoyes, Michalos & Associates Inc..