As reported in the Hamilton Spectator this morning, The Office of the Superintendent of Bankruptcy released statistics that show the total number of personal bankruptcies and consumer proposals filed in the Hamilton area has declined by more than 14% in the last three months.
The statistics for the second quarter of this year show that 908 consumers either filed a personal bankruptcy or consumer proposal which is down from 1,060 for the same period last year.
More specifically, there were 553 personal bankruptcies filed in the Hamilton area which is down from 729 and there were 355 consumer proposals filed, up from 331 last year. Combined, this accounts for an overall decline of 14.3% over the same period last year.
The decline in personal bankruptcies gave rise to consumer proposals which is not surprising given the changes made to the rules last September which make filing a bankruptcy more complicated and more expensive than in the past. The effects of the rule changes have made people reconsider filing a bankruptcy and opting to file a consumer proposal instead. This is good news because it means more people in Hamilton are choosing to negotiate a settlement with their creditors in order to avoid filing a bankruptcy.
Will this trend continue? I believe we may see it continue for a short time but as my colleague, Doug Hoyes, commented in the article we have not yet felt the ripple effect of the new Harmonized Sales Tax which was introduced in July. The new tax has driven up the prices of some goods and services in which only the GST previously applied to. This caused many consumers to make big ticket purchases in the months leading up the new tax and the effect of this is just starting to filter through the economy. The impact could see reduced production from the manufacturers as sales start to decline which could lead to job losses forcing individuals to consider restructuring by way of filing a personal bankruptcy.
If you find yourself faced with a layoff or you are living pay cheque to pay cheque due to a rise in interest rates or increased living expenses due to the HST, and you have a lot of debt, the time to take action is now. Look at your budget and see if you can cut some of your expenses and use the extra money to pay down your debt. If that’s not enough to solve your problems, you should consider getting some professional help and finding out about your options including credit counselling, filing personal bankruptcy or consumer proposal.
Want to find out more? Please email me or call my office in Hamilton at 310-PLAN and Wendy, Sue or I would be happy to answer your questions or book an appointment for you to meet with me personally to review your situation.
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