Sunday, May 31, 2009

Failure


Wikipedia explains failure using the following description:



Failure refers to the state or condition of not meeting a desirable or intended objective, and may be viewed as the opposite of success. Product failure ranges from failure to sell the product to fracture of the product, in the worst cases leading to personal injury, the province of forensic engineering.


Bankruptcy is a terrible thing. Not many people know, but I filed for it about 4 years ago because my bills became massive, and my income dropped dramatically. My brother's dollar store is going bankrupt this month; customers were no longer buying much since a new competitor opened across the street. With Chrysler in bankruptcy and GM about to file, people are worried about lots of things. But you shouldn't have to worry if you research what you need to know about bankruptcy.

In Canada when you file personal bankruptcy you have a specific process that is filled out. All your bills, income, assets and liablilities are tabled up. A lawyer or Bankruptcy Trustee validates this information and begins contacting creditors. For debts under $25,000, most never get back to the trustees. In my case only one creditor ever answered my trustee; they were simply told "You're getting % of this bankruptcy filing and that's that". IF they choose to fight it, more meetings have to be setup within a specific deadline. It never happened. 


Depending on your income and assets, you might be forced to sell vehicles, furniture, or even your house.  Bankruptcy should only be used as an option of last resort. Should you file, this black hole will stay on your credit record for up to 6 years, depending on the province where you live.


Bankruptcy can be a social stigma. "Ooohhh... you must have trouble paying bills" is a common misconception. People get laid off, let go, fired, or sick. Their income can drop and when you live paycheck to paycheck, it's quite easy to become insolvent.


If you live in the United States of America and don't have health insurance, you are living a very risky life. For example, say you had a heart attack or stroke. A 5-day stay in the hospital with drugs and any medical procedures, can land you in the hundreds of thousands of US dollars. The cost of healthcare is that crazy in the USA.

In Canada, we have public health with company-subsidized drugs. We have it pretty easy compared to the USA. In Canada, when a new drug comes to market, it's a law that says a generic version must be available to the public within a certain period of time. In the USA this would never happen; the pharmaceutical companies would fight this using their own lobby and have the law crushed.



Bankruptcy isn't as bad as you might think it is. But before considering it, please consider a consumer proposal before you even go down that road. A consumer proposal is a legal framework that means you're going to negotiate with your creditors and pay them off in a specific time frame (over a maximum of 4 years). Be warned that if you choose a consumer proposal, it makes a black mark on  your credit history. It's not as bad as a bankruptcy filing but it'll still make obtaining new credit nearly impossible.


Question: "If I file bankruptcy and I have a leased car. Can I keep the car?"


Answer: Yes, usually you can. I did when I filed my bankruptcy years ago. 


Question: "So I filed bankruptcy a few years ago, now I need a new car. What are my options?"


Answer: Very limiting. No bank will lend you any money, and if they do, they'll usually demand an insane down payment (like 60% instead of the usual 20%). When I tried to lease a Mazda 3 at the local dealership, their finance arm wanted me to deposit $14,500 dollars before I could get approved. My jaw hit the floor. So what did I do? Since I was a GMAC customer and leased GM cars before, I was going to go back to GM. But before I did that (as a last resort), I asked at the local Subaru dealership who they use for their leasing company. They told me it was GMAC. I was in luck. After a quick phone call, I managed to get a lease on a 2007 Impreza for about the same amount of money as my old 2003 Chevy Cavalier.


My lease is due in March 2011, about the same time when my bankruptcy comes off my file. I am hoping I will be able to obtain a loan for a car during that time. I know leasing won't be much of an option because by that time, I'll want to own a car instead of rent it.


If you have any questions about consumer proposals or bankruptcies, just drop me a line. I can get you in touch with some decent folks - WBLI if you're in Atlantic Canada. I heartily reccomend them. (http://www.wbli-bankruptcy.ca/).

Good luck.

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