Debt Solutions

What Are Debt Solution Options? Client Spotlight: Howard Landau

What is the current state of consumer debt in Canada?

In December, it was reported that Canadians carried record debt last year.  According to Statistics Canada, household credit-market debt (mortgages, consumer credit and non-mortgage loans) rose to 162.6 percent of disposable income in the third quarter of 2014.  The debt continues to rise as the rate at which consumers borrow for home purchases outweigh the tepid growth of disposable income.


How does being in deep debt affect someone’s life?

Debt can have a major impact on your life.  The uncertainty and stress related to debt can cause depression and lack of focus and can affect your home and work life.  The fear of being “found out” also creates avoidance which can also be destructive.


What type of consumer clients does Dodick Landau serve?

Every day we see people struggling with debt issues.  These are unfortunate persons who either had no choice but to use credit or persons who underestimated the pitfalls of credit.  Recently, we are also seeing a number of individuals who have been hit with large tax assessments or former corporate directors with large tax liability due to directors’ obligations for unpaid HST and payroll deductions.”.


What are the signs that an individual is carrying too much personal debt and when should that person seek professional financial help?”

Most people know they are in trouble when they can’t pay their bills without using credit or when cash-flow dries up and you have to resort to using other credit sources to pay credit card debt.  This is a classic “robbing Peter to pay Paul” situation, and is usually a trigger to seek help.  Seeking help for credit debt issues early on can help avoid lawsuits for unpaid debt, or even worse, an account freeze by the Canada Revenue Agency.


How does Dodick Landau help clients with credit debt issues?

We offer a free situation assessment for our clients where we evaluate the state and level of debt, identify what makes their situation unique, and explain how we can best apply our knowledge and expertise to assist them.  A lot of people also come to us with preconceived ideas of what the next steps are and we are able to clarify what’s accurate and what’s not when it comes to what they have heard about their situation from others.  Whatever it is, we usually have the answers.


What are debt solution options?

Debt solutions include informal settlements, consolidation loans, consumer proposals, community credit counseling and bankruptcy.


What is a consumer proposal?

A consumer proposal is a very commonly used way to settle your debts, without declaring bankruptcy or filing for “full” bankruptcy, as it is referred to by many of our customers.

The consumer proposal, often referred to as a “consolidation,” is basically a way to consolidate your unsecured debts for an amount that the creditors will agree to and usually results in you having to pay a significantly lower monthly payment – a huge relief when you have been used to scrambling every month to keep yourself above water.  The consumer proposal is a very powerful, legally binding way to settle your debt, which normally puts an end to garnishments and other legal actions against you, stops collection calls and allows you to maintain control of your assets.


What is personal bankruptcy?

Personal bankruptcy is a legal process that provides an honest and fortunate debtor relief from debt obligations.  It is a legally binding process that puts an end to collection calls, wage garnishment, proceedings and other threatened legal action.  Most debts are included (with some exceptions such as spousal support or fines levied by a court, amongst a few others), and unlike a consumer proposal, there typically is not a payback to the creditors of any significance (again, with some exceptions).


What are the pros and cons of declaring bankruptcy when you have serious debt problems?

Bankruptcy is the right choice when the circumstances call for it.  We weigh the pros and cons of bankruptcy as an option and determine what makes sense for each client’s particular situation.  Bankruptcy can give the debtor protection from lawsuits and offer an honest resolution to the problem.  Bankruptcy does hurt your credit rating, but we find that most people in large debt situations are behind on their payments and already have poor credit ratings. The biggest negative of the bankruptcy route is it often causes people to harbour feelings of failure.

Contrary to popular belief, though, there are very few assets that are lost in bankruptcy since most individuals often cash out what they have to avoid debt problems in the first place.  In addition, furniture and personal effects are not subject to seizure, and RRSPs (except the previous year’s contributions) are exempt.   Other financed assets like cars and homes can be retained if you continue to make monthly payments on that debt.


How did you get into this field?

Like many of us, I didn’t seek to become a trustee when I was young.  I came aware of the profession in a roundabout way.  As an MBA graduate, I got a job with the federal civil service because I spoke French and had some summer job experience working in the field.   I was considering the foreign service when an opportunity came up to get licensed as a trustee while working for the government.   I became even more interested when I had the opportunity to meet with real people with real problems and was able to make a difference in people’s lives.  It was then that I decided to make this my career.


How does it make you feel when you are able to help someone out of financial debt? 

It is extremely satisfying when an individual tells me that I helped them through the darkest financial moment of their life.  To see someone who first showed up scared, often with the wrong information and not knowing where to turn, who then looks  you in the eye and says that they feel more ‘normal’ again,  is incredibly rewarding.


Howard Landau is a Partner at Dodick Landau Partnership.  As a licensed trustee and a certified insolvency and restructuring professional, Howard has helped thousands of individuals take control of their finances. The Dodick Landau Inc. head office is located in the Sloan Group building with access to, and affiliation with, Sloan Partners LLP, licensed public accountants.

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