Category Archives: Supporting Clients and Patients through Divorce Debt

Is a Direct Referral to a Bankruptcy Trustee a Good Idea?

If you have clients that are dealing with debt, they may have questions about consumer proposals and bankruptcy. Both are important options for those that are struggling to make their monthly payments, but there are important things that need to be considered before you clients choose to take either route.

One of the most important is to let them know that going directly to a bankruptcy trustee is not the smartest choice. Instead, having independent financial representation will allow your client to have their best interests represented, rather than relying on the advice and work of a court appointed official whose responsibility is to both the client and the creditor.

The problem with going directly to the trustee is that they are not obligated to find your client the best deal or to try and save them the most money. Furthermore, trustees will often collect equity in your clients’ assets or surplus income for the benefit of the creditors.

Consumer proposals are also administered by trustees in bankruptcy. When your client goes directly to a trustee for a consumer proposal, the trustee will propose an amount and present it to the creditors to be paid back. If this amount is agreed on, your client has no recourse for negotiation, and must accept whatever deal is made – regardless of whether or not it is the best.

If any of your clients are considering filing for bankruptcy or a consumer proposal, and you want more information to be able to support them, please contact me by emailing kgoldenberg@debtcare.ca, call me at 416-907-2582 ext 2587 or visit www.debtcareservices.ca.

How to Help Your Clients Face the Financial Problems that Come with Divorce

Debt and financial problems are one of the leading causes of divorce in Canada, and all too often debt and divorce go hand in hand.  If your clients are in the midst of a divorce, providing them with information about how to deal with the financial repercussions can be very important.

There are several things that a financial professional can help with, including:

–          Learning how to manage a budget: figuring out how to best prepare for life on one income. Budgeting also plays a key role in ensuring that all payments to creditors get made on time each month.

–          Dealing with the debt that already exists and being able to manage the monthly payments in order to keep credit in check. This may involve helping choose a solution to getting rid of the debt altogether.

–          Working with your client to consolidate that debt or file a consumer proposal to reduce monthly payments and keep credit payments from being neglected.

The best advice you can give to your clients to deal with the aftermath of a divorce and the debt that has resulted from it is to seek financial guidance from a financial professional who can represent them in the restructuring of their debt.

Being able to provide your clients with the support that they need is important, and if they are going through a divorce, this so often includes financial information.  If you have clients that are dealing with divorce debt, please reach out to me. I can be reached at 416-907-2582 ext 2587, or by email at kgoldenberg@debtcare.ca.

When People Divorce Credit Card Debt Can Become Difficult to Manage

When people divorce many different financial problems can emerge. Both spouses will find themselves dealing with their finances on a single income. If one spouse wasn’t previously managing the household finances, she will now have to learn how to manage bills. Individuals may find it difficult to manage debt, such as credit card debt, on their own. One spouse may end up with the responsibility of paying the marital credit card debt on his own.

Divorce is one of the leading causes of bankruptcies and consumer proposals in Canada. Those who don’t end up in bankruptcy or in a consumer proposal still may be struggling with debt and may have damaged their credit as a result.

If you help people who are going through a divorce, a conversation about their debt and how they are managing their finances should take place. Even if you don’t deal with the financial aspects of a divorce it is important to know if your client is struggling with divorce related financial problems because your client’s financial problems could be fuelling mental health issues, damaging her quality of life,  disrupting his  employment or ability to gain employment and more.

Helping your client address her financial problems could be the key to a fresh start after a divorce. At DebtCare Canada we are committed to education in this regard. Check out the article we released last month “How to Make a Credit Card Debt Settlement” and feel free to share it with any clients you feel may find it helpful. http://www.debtcare.ca/articles/how-to-make-a-credit-card-debt-settlement/

Also, if you help people who are going through a divorce we can help you to help them address financial problems. Please reach out and I can send you more information about our WeCare Canada initiative and also about a new program for recently divorced individuals, “Budgeting in Transition.” I can be reached at 416-907-2582 ext 2587, by email at kgoldenberg@debtcare.ca and you can find more information about our business to business services at www.debtcareservices.ca

Supporting Clients and Patients with Divorce Debt

Canada has the 8th highest divorce rate in the world. Human Resources Development Canada has reported that the proportion of marriages expected to end in divorce has fluctuated between 35% and 42% in recent years. In 2008, 40.7% of marriages were expected to end in divorce before the 30th wedding anniversary. In 2008, there were 70,226 divorces in Canada or 2.11 divorces per 1,000 people.

Divorce debt in Canada is also very common. Human Resources Development Canada also reported that in 2008, 115,789 Canadians were unable to repay their debts. Serious financial difficulties brought them to file either a consumer proposal or a bankruptcy. Individuals who were divorced or separated were more likely to file a proposal or bankruptcy.

Why is divorce debt one of the leading causes of bankruptcy in Canada? The answer is fairly simple. First, two income households will often accumulate debt based on their “household ability to pay the debt”. The challenge with this is that debt is accumulated based on two people sharing living expenses and when people separate, living expenses will double because now each party has to pay for rent or a mortgage and living expenses separately. When household debt is present this can make it challenging to pay it.

Second, some marriages will involve one person working and one person raising the family. When divorce occurs, the party who hasn’t worked will likely have little to no income but be faced with the immediate expense of having to hire a lawyer and also live. In many cases this forces the party who has been home raising the family back into the workforce. Individuals who have been out of the workforce for a long time often have to re-enter it in junior or entry level positions.

Third, sometimes one party in a marriage may carry all of the debt in his or her name. Much of the debt may have been used by the other spouse. There is nothing worse than getting a divorce and then finding yourself having to pay your spouse’s debt.

Legal protections may result in the party who has the weaker financial positioning receiving support payments, being awarded the house, having the other party take responsibility for the debt, but this can take years. Also, the legal fees that compound over the course of a divorce may end up being more than the debt that was owed to begin with.

We work with marriage counselors, family therapists and even family lawyers to help their clients come up with post-divorce financial strategies.

If you have a client who needs help or if you would like to host a WeCare day where we can come out and speak with your clients/members about coping with the financial aftermath of a divorce, please email me at kgoldenberg@debtcare.ca, call 416-907-2582 ext 2587 or visit www.debtcareservices.ca.