Debt, Bankruptcy & Consumer Proposals with Jillian Taylor-Mancusi

  • By Jillian Taylor-Mancusi

bankruptcy trustee in winnipeg

When people think of bankruptcy, words like ‘shame,’ ‘embarrassment,’ and ‘failure’ often come to mind. Words like ‘compassion,’ ‘fresh start’ and ‘new beginning’ are rarely considered, but they are the words Jillian Taylor-Mancusi, Licensed Insolvency Trustee  and Managing Partner at LCTaylor, wants people to think of first.

Jillian has over 20 years of experience in bankruptcy and insolvency and personally meets with people from all walks of life in Manitoba and Northwestern Ontario. With offices in Winnipeg and Kenora, she works to change the way people think about bankruptcy.

First, she meets with them in a free, no-obligation consultation, where she listens with compassion to the specific circumstances surrounding their money trouble. Next, she explains the different solutions available to consumers who find themselves unable to manage or pay back their debts; And then, Jillian ensures they understand exactly what she’s really offering them: a fresh start and a new beginning for their financial lives.

In an interview with Bankruptcy Canada Inc., Jillian talked about the various reasons people find themselves in financial trouble and the different solutions she and the team at LCTaylor can offer them, to help them find their financial footing again. Highlights of the interview are included below.

What are top three causes of debts problems?

  • Marital trouble often leads to financial trouble. When a marriage breaks down, a household that was supported by two incomes becomes two separate households being supported by two separate incomes. This is a huge shift and people have a hard time navigating the new reality, which can lead to increased debt and often an inability to handle the debt that was already there before the separation and divorce.
  • Self-employment can lead to tax debt. There are a lot of self-employed people in the Manitoba and Northwestern Ontario areas, and therefore a lot of people need to pay income tax personally. This can lead to trouble if someone who is a self-employed professional or self-employed construction worker isn’t sure how to budget their money properly in order to pay their income tax on time. The hole created by tax debt is difficult to get out of, and Jillian meets with a lot of people who need help finding a solution to their tax debt.
  • Gambling and other addictions are hard on the pocketbook.Whether it’s video poker, slots, betting, or online gaming, gambling can lead to a lot of money lost which, in turn, leads to tough financial situations that can be difficult to solve without professional help.

For whom does a licensed insolvency trustee work?

Licensed insolvency Trustees work for the creditors and work to help the consumer find their way out of their money trouble. Licensed insolvency trustees work for creditors to make sure they get the most money back from the debtor when they go bankrupt. However, that doesn’t mean the trustee isn’t working just as hard for the consumer. When a trustee first meets with someone, they are working as the expert who can explain all of their options for their particular situation. Whether it be filing a bankruptcy, filing a consumer proposal, or just helping a client find a way to budget themselves out of their difficulty, “that’s one of the hats that a trustee wears”.

What are people most worried about when going to see a trustee?

Most people worry about the stigma attached to bankruptcy. Although the world of debt, with readily available credit cards, lines of credits, and loans has changed drastically since 40 or 50 years ago, the stigma attached to being unable to pay back debt has not. As more and more people now carry large debt loads, more and more people are filing consumer proposals and filing for bankruptcy, because it often becomes too much to handle.

More people than you realize are going through financial trouble. There shouldn’t be any embarrassment surrounding money trouble – a lot of people are struggling to pay bills and manage their debt. And when you walk into a trustee’s office, know that you weren’t the first one to do so, nor will you be the last – needing a solution for debt trouble is more common than you think.

What is bankruptcy, and what is a consumer proposal?

Bankruptcy means you are cashing in your assets to pay your debts. When you sit down with a trustee, they will go over everything you own, have a right to, or an interest in. From there, they will discuss what you would need to sign over to the trustee for them to sell or cash out in order to pay back a portion of your debt to your creditors. They will also explain to you which assets are exempt in a bankruptcy.

A consumer proposal means a debt repayment plan. When you file a consumer proposal, you offer to pay back the creditors in full or a percentage of what you owe to them. You and your trustee are presenting a proposal to the creditors that will determine how much you will pay back and how you will pay it back over a specific timeframe. Your creditors get to then vote on whether or not to accept the proposal. If they accept it, it is legally binding.

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What does bankruptcy cost?

How much a bankruptcy costs is determined with a formula. The cost of a bankruptcy is calculated based on your ability to pay. This calculation takes into account things like your income, your household size, and whether or not you make non-discretionary payments, such as child care or medical expenses. If you don’t have any surplus income, you may not have to pay anything to the trustee if you go bankrupt but, as Jillian explains, “normally most trustees will charge a minimum monthly payment to help cover the cost involved in bankruptcy, as well as to get the person going bankrupt used to making a regular payment”.

What does a consumer proposal cost?

How much a consumer proposal costs is based on your individual situation. A consumer proposal is a plan to pay back a certain amount of money owed over a certain amount of time. This amount is based on how much money you owe, how much money you make, and whether or not you have any assets. The idea is that your creditors will want to get back more than they would receive in a bankruptcy. This is why it so vital that you sit down with a trustee who knows what a bankruptcy and what a consumer proposal would look like in your situation.

How long does each, a bankruptcy and a consumer proposal, last?

If it’s your first bankruptcy, you can expect it to last either 9 or 21 months, while in case of a second-time bankruptcy, it will last either 24 or 36 months. In both cases length of bankruptcy will depend on whether or not you have surplus income.

A consumer proposal lasts for a maximum of five years. Proposals can vary widely in how long they will last, as it really depends on the plan you and your trustee come up with. There isn’t a minimum timeframe. The maximum length is five years.

State of personal bankruptcy in 2015

Although there have been more bankruptcies in 2015 than in 2014, it isn’t a large but rather a slight increase in bankruptcy filings. The economy in Manitoba is very stable right now with government-funded construction projects and job creation on the rise.

Jillian further explained that something like an increase in interest rates could change the small increase in bankruptcies to a larger increase. A lot of people turn to the equity in their homes when looking for a debt solution. This means that a lot of homes have no equity in them and that if interest rates were to jump even 1%, the number of people who wouldn’t be able to pay their bills would rise. This would lead to an increase in the number of personal bankruptcies in Manitoba.

A licensed insolvency trustee can help you find the relief you need. Money and debt trouble and needing help are nothing to be ashamed of. Meeting with a trustee like Jillian Taylor-Mancusi could be the moment everything turns around and a solution is found to give you your very own fresh start.

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