This past week of November 14^th to 18^th was Credit Education Week across Canada.  Credit Education Week is a national initiative designed to increase the knowledge of Canadians about how to use credit wisely and avoid taking on more debt than they can handle.  The theme of Credit Education Week this year was “The Sandwich Generation”.  The Sandwich Generation is defined as people who are caring for their aging parents at the same time as they are supporting their own children.  Being in this situation puts a great deal of pressure on family finances, and the goal of this year’s Credit Education Week was to offer suggestions to Canadians on how to handle this pressure, as well as providing more general credit-related information.

Our local Thunder Bay Counselling Centre, as it always does, put together a week-long series of information events and presentations to coincide with the national program.  The events included presentations entitled “Family Finances”, “Protecting My Identity”, and a fun shopping-themed game called “The Price is Right” at Intercity Mall.  These events and presentations were well attended by the community and the efforts of the Counselling Centre staff were much appreciated.  Their team includes two excellent counsellors in Bev Dunnill and Cyndi Sereda.  As credit counsellors, they can help you make a plan to pay off your debts in full and can help you work with your creditors to reduce the amount of interest they are charging you on your debts, sometimes even to zero.  The goal of the Thunder Bay Counselling Centre is to “Help you take control of your financial future”.  They offer a weekly drop-in centre where people can “Ask A Financial Coach” for some assistance.  The Thunder Bay Counselling Centre provides a great service to our community, and we often refer clients to the Centre that contact us but whose financial situation is not dire enough to require a bankruptcy or consumer proposal under the Bankruptcy and Insolvency Act.

Tax debts owing to Canada Revenue Agency (CRA) include personal income taxes, HST or payroll source deductions.  Often individuals running a business get themselves into trouble when not making the required tax installments or remittances for HST and source deductions.  Tax debts continue to grow until reaching a point when the debtor realizes he will have difficulty paying it back.  CRA will not willingly accept less than full payment of tax debts because they are afraid of setting a precedent that would force them to accept less from everyone else.  Consequently, a debtor must take tax debts owing to the CRA very seriously because if not dealt with in a prompt manner, the CRA has powerful tools to significantly disrupt your life.

The tools/powers that the CRA can use include withholding income tax refunds and HST credits, garnishing your wages or accounts receivable, taking funds from your bank account and/or placing a lien on your house until your tax debt is paid in full.  CRA can act very quickly as these “super” tools don’t require the permission of the courts in order to implement them.

You can only make a deal with the Canada Revenue Agency for tax debts owing by filing a proposal under the Bankruptcy and Insolvency Act (BIA) rather than filing for bankruptcy.  A proposal enables you to make a settlement offer to your creditors to pay them a percentage of what you owe.  A proposal allows a debtor to keep their assets and to get a fresh start.

If the debtor is unable to offer a proposal then the remaining option is to file for bankruptcy.  A bankruptcy will also be able to compromise the tax debts and release the debtor from the tax debt responsibility.

Overall, it is important to understand income tax debts and the options available to individuals to deal with them.  If you are in this situation you would definitely benefit from seeking professional advice from a licensed bankruptcy trustee who will review your options.  The initial consultation is FREE with no obligation.

Many people dream of purchasing and owning their own house.  However, they often don’t carefully consider the cash flow commitments required to keep the house running.  Often individuals become cash-strapped from home ownership and don’t even realize it.  Before filing for personal bankruptcy, a person must decide whether or not they can afford, from a cash flow perspective, to keep their house.  If they decide they can afford to keep it, then the issue of whether or not a person can keep their house in bankruptcy all depends on how much equity exists in the house when they go bankrupt.  Equity is calculated by subtracting the mortgage balance, outstanding property taxes, and any other liens from the value of the house.  The value of the house must be confirmed by an independent professional hired by the Trustee.

If the house has little or no equity then a bankrupt can usually make arrangements with his or her financial institution to continue making mortgage payments and retain the house after filing for bankruptcy.   Furthermore, a person could decide to not keep their house and return the keys to the secured creditor and have any shortfall in the mortgage released in their bankruptcy.

If the house has considerable equity then a Trustee must get that equity out of the house for the general benefit of creditors.  One option would be for the bankrupt to purchase back their portion of the house equity.  This option is often difficult to attain as a bankrupt usually does not have access to this amount of money.  Another option would be for the Trustee to sell the house.  The Trustee must ensure that there is equity after all selling costs have been accounted for.

The rules governing houses and bankruptcy are complicated, thus it is best to review all of your options regarding your specific situation by contacting a bankruptcy trustee.

How Many People Go Bankrupt in Thunder Bay Ontario?

You are not alone.  In 2010 there were 452 people in Thunder Bay that filed a bankruptcy or a consumer proposal.  Full details can be found on our Thunder Bay bankruptcy and consumer proposal statistics page.

That’s a drop from the 600 people who filed in 2009, but it’s still a much higher number than who filed prior to the start of the recession in 2008.

It’s encouraging that almost 100 people choose to file a consumer proposal in Thunder Bay as an alternative to bankruptcy.  It’s a good choice if you have a job but can’t pay your debts in full.

Here are the full numbers:

To find out if a bankruptcy or a consumer proposal is right for you, please contact us today.

Question: My husband and I lost our jobs within a week of each other in November, 2006. He had worked at the Norampac Mill for 25.5 years and I had worked in the service industry for about 12yrs. Up until then our monthly income was about $4000.

We both returned to school in spring of 07 so we lived on his severance and my E.I while we both went to school, he as a heavy equipment operator/truck driver and I as a Personal Support Worker. I have since found fulltime employment with Dilico in Thunder Bay and make about $1800.00 a month but my husband has not been able to find fulltime employment anywhere and cause of this we have used all of our savings, our RSP’s and our 2 lines of credits so we wouldn’t lose anything we have worked so hard for. Well with the savings all gone and our line of credits to the max were not sure what to do. My husband has been to Yes Employment and to Lakehead Employment for direction and help to find employment, he drives to Thunder Bay at least once a week to apply for jobs, he faxes and e-mails his resume numerous times per week and he still has not found employment.

We know that jobs in Thunder Bay and surrounding area are hard to come by these days but we have not worked this hard for the past 2 and half decades to lose everything overnight cause we have to claim bankruptsy. The husband seems to think that cause we own our house and vehicles free and clear we have no way of consolidating our lines of credit. We have been to our bank (Royal Bank) to consolidate and because my husband is not working we cannot consolidate. Please give us some ideas of what we can do so we don’t have to lose everything.

Answer: Thanks for your question.  To give you a complete answer we would need to know the value of your house and vehicles, and the total amount you owe.  If the value of your house is worth more than your total debts, a consumer proposal or a bankruptcy is not a good option for you, because you would lose your house in a bankruptcy.  If the value of the house is less than the total owing on your debts, a proposal may be an option.

Consolidating may be a good option, but you are correct; the bank won’t consider it until your husband is back to work.  For now, one option may be to simply wait until he is working, and then re-apply.

This site provides free information about bankruptcy and bankruptcy alternatives to residents of Thunder Bay and the surrounding areas of Ontario.

Find answers to bankruptcy questions about bankruptcy in Thunder Bay and Thunder Bay bankruptcy trustees.

The sponsors of www.bankruptcy-thunderbay.com, Grant Thornton Limited, are licensed by the federal government of Canada to provide personal bankruptcy and consumer proposal services to residents in the Thunder Bay, Ontario area. Grant Thornton Limited bankruptcy trustee office in Thunder Bay, Ontario helps Thunder Bay and area residents review options to deal with their debts, including consumer proposals and personal bankruptcy.

We believe it is important for you to research your options regarding bankruptcy and bankruptcy alternatives. Please contact our Thunder Bay Canada bankruptcy trustee office today to arrange for a no-charge initial consultation or for answers to your questions about personal bankruptcy and dealing with financial problems that might lead to bankruptcy. We’re here to help!