Debt, Bankruptcy & Consumer Proposals with Doug Stuive

MNP LTD Trustee Doug Stuive was interviewed by Bankruptcy Canda Inc. to discuss debt, bankruptcy and consumer proposals.

Debt and financial difficulty often go hand-in-hand. Sometimes, carrying too much debt can put pressure on your finances, leading to further debt and further issues. Other times, life events and circumstances can lead to sinking deeper into to debt to cover shortfalls. Whichever comes first, carrying a high-debt load, or being debt-poor is stressful for anyone.

Doug Stuive, a Trustee in Bankruptcy with MNP Ltd., oversees the Personal Insolvency practice in the Niagara region and has been helping people solve debt and financial issues since 1998. With offices located in St. Catharines, Niagara Falls, Fort Erie, Grimsby, Port Colborne, and Stoney Creek, Doug and the staff at MNP are available to sit down with Niagara-residents and discuss their personal, unique situations during a free, no-obligation consultation.

Doug personally enjoys these meetings with people, not because of the stress and trouble clients find themselves in, but because he prides himself in being able to provide relief to people’s debt and the assistance they need to find their financial stability again. In his 17 years of experience, he can attest to the fact that while people come into his office feeling overwhelmed and oftentimes hopeless, when they leave they know that they have someone on their side and solutions that can make a difference in their lives. Recently, Doug sat down with the editor of Bankruptcy-Canada to discuss the various debt issues plaguing people in the Niagara region and the types of solutions he can offer them. Some of the highlights of the interview are listed below.

Unexpected life events and debt often accompany each other.

Debt is usually a symptom of an event that wasn’t planned for. The top 3 such events include income loss, either due to job loss or a medical emergency; separation or divorce; and addictions, such as gambling.

Marital breakdown is not only emotionally stressful, it can also be financially devastating.

Sometimes debt was a cause of the marriage falling apart, and sometimes the debt becomes overwhelming afterwards. In both of these scenarios, though, while two people are together they generally provide two incomes to manage a household’s debt. When the couple splits up, singular incomes are now expected to pick up the slack, which leads to further stress. On top of that reality, separation comes with a lot of expenses, such as moving, establishing two new households and paying legal fees, among other things.

Bankruptcy trustees work for the court.

Trustees are licensed by the federal government to make sure debts are resolved according to the Bankruptcy and Insolvency Act (BIA). Their role is to ensure both the rights of the person who owes the debt and the organizations they owe money to are respected and adhered to. It is not the same relationship someone has with their lawyer or other professional, but it is a working relationship filled with respect and fair treatment.

People fear losing it all in a bankruptcy.

The number one fear Doug encounters when meeting with people is the thought of losing everything – the house, the car, the belongings – and never recovering financially. The truth is bankruptcy and consumer proposals are both ways to start over and get a second chance financially. And they come with support and resources, like debt counseling, where people can learn how to budget and manage their money wisely and safely. Many people that Doug has worked with personally have gone on from their bankruptcies and qualified for vehicle financing and home ownership.

People fear everyone knowing about their financial hardship.

A lot of people worry their employer, family or friends will find out that they’re declaring bankruptcy or filing for a consumer proposal. Generally, unless the trustee has to contact the employer to stop wage garnishments, employers have no idea their employees are having financial trouble. Bankruptcies are not published in the paper or made general knowledge, so there is a level of confidentiality.

People should not feel embarrassed about their money trouble.

Financial difficulty is not something people seek out or aim for. It can happen to anyone in any income bracket in any region across the country. Doug wants people to know that when they come into his office they don’t need to feel ashamed; they will be listened to and treated with the utmost respect.

Consumer proposal or bankruptcy?

It depends on your situation. If your income is only enough to take care of your household with very little left over to pay down your debt, then a bankruptcy is the best solution. If you can afford monthly payments, which a consumer proposal requires, but you just can’t handle the monthly payments on all of your debt, plus the interest, then a consumer proposal is the best solution for you. Talking to a Trustee in Bankruptcy like Doug will help you figure out the best solution for your circumstance.

The cost of a bankruptcy is based on a variety of factors.

It is impossible to state exactly how much your bankruptcy would cost without looking at the following things: your specific situation, income level, family size, the assets that you own, and whether or not this is your first bankruptcy. That being said, trustees charge a reasonable fee to cover the administrative costs of the bankruptcy, which is usually around $2,000. It is vital to understand, though, that the first meeting is free and during that meeting all of your options, including the costs, will be laid out for you. In general, the fee is only a fraction of what you owe to your creditors, and the trustee will make every effort to work with your monthly budget to make the payments as affordable as possible.

The cost of a consumer proposal is based on your budget and what you’re able to pay.

When you meet with a trustee like Doug, your situation will be laid out in detail and many factors will be taken into consideration to find the best solution. For a consumer proposal, the only factors that will be used to determine the cost will be your budget and how much you can afford to pay. For the proposal to be successful, the payments have to be proven affordable. The fee for a consumer proposal is taken from that payment amount – there are no additional costs and the amount a trustee is allowed to keep back from the payments to cover their administrative costs is regulated by the government.

The length of a bankruptcy varies.

Depending on your specific situation, the length of your bankruptcy can range from 9 months to 21 months. In general, a first term bankrupt will be in bankruptcy for at least 9 months. Their income level could increase the bankruptcy to 21 months. The good news is once these government-regulated periods are over, and all of the duties of the bankruptcy have been met, the bankrupt person will receive their discharge certificate, their debts will be gone, and their bankruptcy will be over.

The length of a consumer proposal generally spans 3 to 5 years.

Once you have made all the payments of your consumer proposal, you are discharged and your debts are gone.

Bankruptcy and consumer proposals stay on credit bureau reports for a period of 6 years from the discharge date.

It sounds like a long time, but during those 6 years, you are not considered bankrupt and you can rebuild your credit.

There are fewer new filings of bankruptcy and consumer proposals in the Niagara region.

For the offices that Doug serves, he has seen a measure of stability greater than that of recent years, which is hopeful. This is not a good indicator of trend across Canada, but it does point to greater financial stability in Niagara.

More people are filing consumer proposals than bankruptcies.

The rise in the number of consumer proposals over bankruptcies is proof that people are becoming more aware of this option. While they may be debt-poor but income-rich, they can find relief from minimum payments and ever-increasing interest with a consumer proposal and finally be debt-free, a reality not easily realized before filing.