More Money Podcast - 049 Everything You Need to Know About Bankruptcy - Doug Hoyes, Licensed Insolvency Trustee

Episode Date: May 11, 2016

I talk with licensed insolvency trustee Doug Hoyes about the key things everyone should know about debt and bankruptcy. Long episode description: I haven’t personally had much experience with debt, having only had a very small student loan to pay off after university (which I was able to crush in less than a year), but the fact is I’m the exception not the rule. Most households have debt, and so I wanted to make sure I did a podcast episode all about it. I’ve known Doug Hoyes for a little while as I’ve been a guest on his podcast Debt Free in 30 a few times. He is seriously the nicest guy, and also incredibly knowledgeable when it comes to the world of bankruptcy and insolvency (two very hard words to say if you’re me, apparently!). In this episode, we go through the basics of debt and bankruptcy, such as the difference between secured and unsecured debt and what a consumer proposal is and then Doug shares some of his tips on what you can do now to avoid going into bankruptcy. Doug brought up a really good point in the show – you can either look at life and say it’s all about choices, or look at it and say it’s all about circumstance. The reality is life is about choice and circumstance, but I think no matter what your circumstances are, you can always make the choice to better yourself, change courses and rid yourself of debt once and for all. Like I told Doug, I’ve been debt-free for years and there is seriously no better feeling. If you’re still on your journey to be debt-free, I commend you for your hard work and promise you that life after debt is the best kind of life you could lead. Helpful Resources & Books Debt Repayment Calculator Surplus Income Payment Calculator My Favourite Debt Free in 30 Podcast Episodes Should You Pay of Debt or Invest? How to Rebuilt Credit: 5 Simple Steps Debt Problems? It’s Not Your Fault How to Plan for Big Life Changes with Jessica Moorhouse Best Budgeting Apps Round-up with Jessica Moorhouse & Other Guests Follow Doug on Social Follow Doug on Twitter Like Doug on Facebook Subscribe to the Debt Free in 30 podcast Subscribe to his YouTube channel Shownotes: jessicamoorhouse.com/49 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, welcome to a new episode of the Mo Money podcast. This is episode 49 and I am your host, Jessica Morehouse. Thank you so much for joining me for another fabulous episode. This episode is all about debt and bankruptcy and I'm talking to licensed insolvency trustee Doug Hoyes, who kind of knows everything about the subject, but he also has a blog and a fabulous podcast called Debt Free in 30, which I may have been on a few times. We're going to be kind of talking about all the nitty gritty, what you need to know when it comes to bankruptcy. And I think you're going to learn a lot because guess what? I learned a lot. So without further ado, let's start the show. Thank you, Doug, for joining me on the show today.

Thanks for having me, Jessica. You're welcome. So why don't you let the listeners know a little bit more about yourself and how you got into the insolvency bankruptcy interest. Okay, let me start that again. It's hard to say bankruptcy and insolvency. Those are hard words to say. Yes. And they've in fact changed our name now. So we used to be called bankruptcy trustees up until I think it was, yeah, it was April Fool's Day, 2016. The government changed our name to licensed insolvency trustees so that it more accurately reflects what we do. By way of background, I've got a degree from the University of Toronto. I became a chartered accountant and gravitated away from auditing, which I found quite boring.

I became a chartered business valuator and what was then called a trustee in bankruptcy. I spent a number of years with the big firms working on corporate receiverships and corporate bankruptcies, which wasn't particularly fulfilling. Not that I didn't want to try to raise lots of money for the bank, but it just wasn't my thing. So in 1999, I broke off from the big firms with a guy I was working with, Ted Michaelisis and we formed Hoyes Michaelis and Associates. And all we do is deal with actual people. So we don't do any corporate work at all. It's individuals who are in financial trouble. That's who we deal with.

And most of our work is either personal bankruptcies or consumer proposals, which have actually become even bigger than personal bankruptcies. That's what we do now. What's a consumer proposal? I've never heard of that before. A consumer proposal is an alternative to bankruptcy. So bankruptcy is a legal way to deal with your debts. It's covered by the Bankruptcy and Insolvency Act in Canada.

And obviously, there's similar types of legislation in other countries. A consumer proposal is an alternative to that. So it's a deal that we make with the people you owe money to. So, I mean, take a typical example of a typical person we would deal with. They've got maybe $50,000 or $60,000 worth of unsecured debt. So this is, I'm not counting mortgages or car loans or anything. I'm just talking about credit cards, unsecured bank loans, income taxes that they owe, payday loans, that sort of thing. And they're at a stage where there is no way they can possibly pay it

back. So the starting point when you have debt is pay it back. And obviously, your site, your show has addressed this in in on many different occasions. And I totally agree. That's the first step. But if you have someone who perhaps was off work for a year or two due to a serious medical issue, they've gone through a separation or divorce, maybe they're burdened with a massive amount of student debt, for example, which is a special case, but we can talk about that. What do you do? What if the creditors are starting to call and yell and scream, and now they're threatening to take you to court and garnish your wages? Well, if you're going to be losing 20 or 30% of your paycheck, you can't survive. You need to do something. One alternative is a bankruptcy, but the other alternative is a consumer proposal where we go to those creditors and we say, hey,

look, I know I owe you $60,000. There's no way I can possibly pay it, but I don't really want to go bankrupt. How about we make a deal where I pay you back, and I'm just making up numbers here, but how about I pay you back $20,000? I'll pay you back $400 a month for the next 50 months. Well, if the creditors agree to it, that's the deal. That's what you pay. They write off the rest, and you can avoid bankruptcy. Why would they? I'm just curious from the company standpoint or whatever.

Why would they agree to that? Because wouldn't they lose out on that $40 or? Yes, but but think about it. So let's pretend I owe you $60,000. Because you're very generous and help me out and loan me a lot of money. And I come to you and I say, you know what, Jessica, I can't pay you back. My only option here is to go bankrupt. And if I go bankrupt, you're going to get pretty close to nothing. I mean, in a bankruptcy, there might not be nothing. And we can talk about that. But in a consumer proposal, the creditors expect to get more. So in your case, where I owe you the $60,000, would you rather have 5,000 in a bankruptcy? Or would you rather have 20,000 in a consumer proposal? Obviously, you'd rather have the whole 60,000 plus interest, but that's not one of the two choices. Okay. So you're just kind of, all right,

sounds, you know, I'll take what I can get kind of thing. Right. That's exactly what it is. That's really interesting. You earlier mentioned different types of debt. So there are secured and unsecured. Do you want to kind of talk about the difference between both of those? Yeah. Secured means something is attached to it. Meaning if I don't pay, they can take that. So a mortgage would be a classic example of a secure debt. If you don't pay your mortgage, they can take your house. A car loan would be the other obvious example. If you don't pay your car loan, they can take your car. There's actual security registered against that particular asset. And the debts that we primarily deal with are the

unsecured debts, which is pretty much everything else, everything where there is no asset attached to it. So if you're having financial trouble and you can't pay your car loan, well, the first step, you know, other than trying to renegotiate it, may be to say, okay, fine, I'm going to give the car back. They're going to sell it. They're going to lose money, but that will discharge a chunk of the loan. You're then just left dealing with the shortfall. We deal with the unsecured debt, which I guess would be the portion after the car goes back. That's what's dealt with in a proposal or a bankruptcy. Interesting. Do you find that most people that are in a situation where they have to look into bankruptcy, they have more unsecured debt than secured?

Or is it kind of just a mix? Well, the people we meet with are almost always up to date with their secured debts. So you think about a car loan. How do you pay your car loan? Well, it automatically comes out of my bank account once a month. How do you pay your mortgage? Same thing. So that debt is usually up to date. Unfortunately, that leaves me short, so I can't service the other debts. That's what gets me into trouble. So it is often the secured debts that cause the problem with the unsecured debts. And certainly in a place like Toronto that you and I are familiar with,

or Vancouver, where house prices are huge, people end up taking on massive secured debt. And then how do I furnish this house that I just bought? Well, I start using credit cards to support it. One kind of debt often leads to the other. That's really interesting. One thing that I think is really great about your website is there's lots of different sections on different people who would have debt. There's Joe Debtor,

there's a student. This is what it kind of looks like and you have lots of information and stats, which I think is super interesting. Just in your line of business, who are kind of the most common people to have to file for bankruptcy or in a kind of a pickle when it comes to their debt? Well, the typical person is older. They would be 40, 50 years old because it takes time to accumulate debt. Very few 18-year-olds are given enough credit that they can get into serious debt. But we have dealt with people who are in their 20s. I've dealt with people in their 80s.

There's a huge range. The most common person we deal with is someone who's actually working. And this is a bit of an unusual thing when people try to wrap their heads around it because they think, oh, if you get into financial trouble, it's because you're not working, you're homeless, you have nothing. Well, no. If I have absolutely nothing, I guess I don't have to worry about the people who I owe money to.

If I have a job, though, but I'm not earning enough to service my credit cards and my bank loans, then there is the risk that the credit card company is going to take me to court, sue me, and try to garnish my wages. And that's when I start thinking, okay, maybe I need to do a bankruptcy or a proposal to deal with those debts. I'm doing those. The American phrase for it is creditor protection. I need protection from my creditors.

I don't want my wages to be garnished. So I have to do this. So the typical person we deal with is, is working, but they aren't earning enough to service their debts. That's one of the problems that they've got. And why do you find typically most people get into a situation where they have to, is it a lot of just lifestyle inflation, making bad choices? Well, I guess ultimately you could make the argument that

everything that happens to us in life is due to our own choices. Yeah. Yeah. Now, of course, I could make the exact opposite argument too, that everything that happens to us in life is circumstance, luck. And I mean, your show isn't called the Karma Show. So I guess we can't get into a detailed discussion about that. That's a side podcast you could do later. But I think the truth is somewhere in the middle. Yeah. So, I mean, you moved to a new city and you, you know, got an apartment with your husband and you, you know, you went out and you bought a couch. Yep. Okay. Well, if you then lost your job, would it be your fault that you're not able to pay

the loan on the couch? Well, yeah, I guess in hindsight, what I should have done was bought a used couch. We can wrap ourselves up in all sorts of thinking as to what got into it. When I look at the people who come to me with problems, there have generally been what I call hiccups, life events that were unexpected, job loss being a huge one, medical issues being a huge one. And think about it. If you were to get sick tomorrow, you were in a car accident and broke your leg and couldn't get to work for the next two months. Would that impact your income? Well, sure it would. I couldn't get to work. And yeah, okay, I've got sick benefits at work, but they don't kick in for six weeks.

Okay, well, how are you going to pay the rent next month? Do you have 10,000 bucks sitting in your bank account right now to cover all those debts? Well, most people don't. And that's a broken leg I'm talking about. What if it's a more serious illness where you're off work for a year or two? Well, that's going to throw a lot of people behind. The other huge category we see is relationship breakup. So when you're together, both of you have an income, you're paying one rent, one hydro bill and so on. And then when you get separated, well, now all of a sudden the income gets cut in half, but I've got to pay my own rent, my own this, my own that. So how do I survive? Well,

I may have to use debt to do it. So it's usually the debt may have already been there, but it is some hiccup in life that then throws people over the edge. And that's often what we see. So what would you, in your kind of expert role, what would you suggest to people as ways to prevent getting into that kind of situation? Well, obviously, if you never, ever borrow money, you will never have to deal with me. True. But that's just not realistic, is it? Well, I mean, again, we could do a whole show on that. Is that realistic? Well, not if you want to buy a house, it isn't. Exactly. Because how long would it take you in Toronto to save up a million dollars, which is the average price of a house? I mean, it would be pretty much impossible, I guess. Even buying a car, okay, well, I could buy a relatively inexpensive car, I guess, but it might not get me actually to work, whereas I can lease a car or finance a car for a lot less.

But how do you prevent it? I guess the most important piece of advice I would give would be to look ahead, look into the future, stress test your financial situation. So before you put that purchase on a credit card, before you take out a bank loan or any kind of loan, ask yourself, what would happen if I lost my job, I got sick, I got separated, would I still be able to service this debt? And if the answer is, well, no, I would be totally pooched, then maybe you shouldn't be incurring that obligation. And that's the only ultimate protection for getting into debt problems. But I mean, like you just said, that's in many cases impossible. Well, if I borrow the money for that car, I'll be able to get a much better

job on the other side of town. My income is going to go up. I'm not saying you shouldn't do it. Yeah. I'm just saying stress test what possibly could happen. And I guess buy as inexpensive a car as you possibly can. So that if something does go wrong, well, the potential burden is that much less. And I think that's kind of a big issue with at least millennials, people my age, is we are very conscious of the present but not so much the future, not necessarily everybody. But I think a lot of us are very, you know, they could think maybe one or two years ahead, but they don't really, they'll, they kind of think, oh, well, they feel like they're, they are securing their job. And so they will put things on their credit card and be like, oh, it's fine. But it's until something

actually does happen that they get the reality check that, oh, maybe I should have had an emergency fund. Maybe I shouldn't have kind of overextended myself. And it's sadly, sometimes it has to be kind of a hard life lesson for some people to really realize the importance of not getting into too much debt. Yeah. And I think the biggest problem with being a young person is you're young. You know, you haven't lived through, you know, 30, 40, 50 years of life. So, I mean, the real estate market is a classic example of that. In certain places in the world, Ontario, for example, house prices have been increasing every year for years and years and years. Obviously, it's different now in places like

Calgary and Edmonton and so on. But if you have lived in Ontario for the last 10 years, 15 years, all you have ever seen is increasing house prices. So when someone says, well, you know, they might go the other way, well, you just don't believe it. You've never seen it. Now, I'm much older than you. And I remember in my day, I bought my first house. It was a townhouse just north of Toronto in 1989. So you weren't born then, but that was- I was born then. I was just very young. I was just very young. And the peak of the market happened around 1987, 1988. And so I thought, hey, look at me. I'm Doug Goys.

I'm pretty smart. I'm a financial genius. So I bought this place for a lot less than some other people in the complex had bought their places. When I sold that house seven years later, I lost $20,000. So I owned it for seven years and still lost $20,000. And I didn't buy at the peak of the market. Now, of course, if I still own that same place today, well, it's probably worth $10 million.

It's all in the timing. But if you've never lived through something like that, it's just not real to you. Oh, absolutely. And I constantly, whenever I do talk about house ending with people, especially people my age, or maybe 10 years older than me, they still have this idea that's like, well, if you don't buy now, you may not be able to afford it. I'm like, what goes up must come down. And people can't afford houses right now, they're taking on a lot more debt than they can afford. So I don't think you, you know, my kind of rule of thumb is, if someone's pressuring you to spend money on something,

you should probably think twice about it. Absolutely, because that's what gets you into debt problems. So if you feel queasy about taking on that kind of a massive mortgage or car loan or whatever, then don't do it. it. There is nothing wrong with renting. And I totally agree with you. What goes up must come down. Again, talk to your pals in Calgary from three years ago and talk to them today. Things have changed. Now, I have no idea what's going to happen in the future.

I don't have a crystal ball. House prices in Toronto and Vancouver might keep going up for 10 more years. I have no idea. But if you can't afford the payment now, then don't do it. Exactly. It's as simple as that. Absolutely. From the director of The Greatest Showman comes the most original musical ever.

I want to prove I can make it. Prove to who? Everyone. so the story starts better man now playing in select theaters um so we kind of uh talked about ways to kind of prevent yourself from getting um into debt or having to file for bankruptcy but i know some people you you know, it happens. But the thing that I think is very common with people who have gotten into debt is repeating the cycle. So would you want to kind of talk about that? Because I feel like a lot of people may not kind of learn their lesson after having kind of a bad financial situation and may, you know, kind of just keep going. And I know a lot of that could also happen because sometimes it's so cheap to get money. Like I'm just talking about like if you were to go to kind of a payday loan place and then that's kind of where it just kind of, you know, spirals out of control. Yeah. Once you go to a payday loan place, you're pretty much done. Yeah. It makes me so sad whenever I see a commercial firm like, no, I hope no one's listening. No, and they're very good at marketing.

And the governments in various provinces have been tightening the rules. And in Ontario, they're looking at some proposed changes that may or may not happen. But, I mean, with payday loans, do the math. In Ontario, the maximum they can charge is $21 on 100, which doesn't sound like very much. I mean, in other provinces and other parts of North America, it's slightly different. But if you borrow $100 every two weeks and have to pay back $121 and you do that for a year, that's the equivalent of a 546% annual interest. Wow. Yeah, it's mind-boggling, but we don't look at it that way.

So you have to step back and look at the big picture. We get into this trap of, oh, the loan payment is only $242 biweekly. I can afford that. Yeah, but did you multiply it by how many payments you have to make so that that $20,000 car you're buying is actually going to cost you $40? Did you think your way through that? And that kind of gets us into that trap. Now, I've forgotten the question that I'm answering because you got me all riled up about payday loans. No, I know.

I know. I should have brought it up. They riled me up too. I actually just saw a commercial while I was waiting at the subway that was basically saying, oh, you can consolidate all of your loans. Then you have one of chip away at than one scary big loan. Like, would you want to talk about, because I don't know too much about consolidation of loans, but it seems like it's kind of a popular topic. Well, let's do the math. So you've got three credit cards and you owe $10,000 each on them. So your total debt is how much? $30,000.

$30,000. Okay, there you go. You nailed that one. I'm like, oh my gosh, I hope I got that right. You got it right. Okay, so now you go and you get a consolidation loan where you take all of that debt and they put it into one $30,000 loan. So how much is your debt now? Still $30,000. Still $30,000. So what have you changed? Well, I went from $30,000 to $30,000. Okay, so all you potentially have done is secured a lower interest rate. Right. That's the only possible advantage of consolidating your debt. And I have seen people who have taken their three credit cards where they had interest rates of 18.9 percent.

They've gone to a finance company and now they've only got one payment, but they're paying 30 percent. Oh, really? So sometimes when people consolidate, they may not know that they're actually paying a higher – Yeah, and read the paper. Yeah. But again, they focus actually paying a higher. Yeah. And, you know, read the paper. So, but again, they focus on the monthly payment. So it's only going to be $300 a month and I was paying 400. So I'm better off. No, because now you're going to be paying for 10 years. Exactly. So consolidation makes perfect sense if number one, you can get a better deal, so a lower interest rate, for example.

And number two, and here's the key point, you don't do any more borrowing. Exactly. So great. We just paid off Jessica's three credit cards, and she's now got this $30,000 debt consolidation loan, and then she goes and racks up her three credit cards. So now she's got $60,000 worth of debt. Okay, well, that was the totally wrong thing to do. So if you are consolidating to get rid of debt, cut those credit cards up, cancel them so that you don't then multiply it.

I deal with all sorts of people who they say to me, yep, no, I was able to consolidate a couple of years ago, But unfortunately, I kept spending more than I was bringing in. And that's what debt is. Debt is spending more than you bring in. And as a result, now my debt is even higher. There's no possible way that I can service it. So I don't object to consolidation loans, but make sure you understand the terms that you're getting into. Make sure it's actually better for you, not worse. And it's not necessarily a solution to the problem because the problem is that you're spending more money than you have. And I think lots of people think that, oh, no, it's OK.

Now it's smaller, so I don't have to worry about that. But they continue to have those bad habits and spend more than they should. Yeah. Why am I in this situation? That's really the question you've got to ask yourself. And if the answer is, well, I was, you know, off sick for six months with a serious illness, but I'm better now. Okay. Then I'm less concerned about you taking on debt to, you know, consolidate your past debt because the actual problem has corrected itself. Maybe it was because you were unemployed. Now you found a much better job. But if as you say, well, I bring in $2,000 a month and I spend $2,500, then consolidation, bankruptcy, consumer proposals, none of those things are going to solve the underlying problem. Now, I want to kind of get into what actually happens when someone files for bankruptcy.

What happens to kind of their credit and everything? So let's kind of take it step by step. So bankruptcy in simple terms means me, the licensed insolvency trustee, is appointed to administer your estate. So my job is to take assets from you. And I also take your debt from you. So that's a good thing. And whatever assets I take from you get distributed to your creditors. Now, most of the bankruptcies we do, there aren't any assets because rich people typically aren't going bankrupt.

But in Canada, for example, one of the assets you would lose when you go bankrupt is your tax refund for the year of the bankruptcy. Right. So if you're a normal working person with maybe a single person, no dependents, well, I don't get much of a tax refund. It's not a big deal. But if you're a single mother who has a couple of dependents, you might be getting a $2,000 or $3,000 tax refund. That's a big loss, a big cost in a bankruptcy. The minimum bankruptcy period in Canada is nine months. So during that period, you are reporting to me your income. And if your income goes above a certain level, you pay more.

So the more you make, the more you've got to pay. That's how bankruptcy works. So if you've got a fantastic job, you're making lots of money, well, that's probably why we're going to do a consumer proposal and not a bankruptcy so that you don't have to incur those costs. Certain assets you don't lose in a bankruptcy. For example, you only lose money you've put into an RRSP in the last year. Okay. Because the government doesn't want you borrowing a whole bunch of money, dumping it into an RRSP and then, oh, I went bankrupt, I get to keep it. So anything you've put in the last year, you're going to lose. Everything else stays there. And the rules vary from province to province in terms of what assets you get to keep. So I won't go into a whole lot of detail on that. Now, the question you asked me was

what impact does that have on your credit report and your credit score and so on? Well, your credit score right now is already lousy. Yeah. That's why you have all this debt. So if it's already lousy, it's not going to make it any worse. You can't borrow now. Well, you're not going to be able to borrow the day after you go bankrupt either. But what bankruptcy does or a consumer proposal wipes out your debt, Equifax, which is – and TransUnion is very similar, will leave the note about your bankruptcy on your credit report for six years after the bankruptcy ends. So if it's a nine month bankruptcy, well, nine months plus six years, roughly seven

years. Yeah. That doesn't mean you can't borrow for seven years. It just means there's a note on your credit report. And so you're going to have to take steps to reestablish and rebuild your credit. You're going to have to prove that you are now a credit worthy person. You're going to have to start by getting a smaller credit card, a smaller loan and rebuilding from there. A consumer proposal stays on your credit report for three years after

the proposal is finished. So both of them have a detrimental effect on your credit report for three years after the proposal is finished. So both of them have a detrimental effect on your credit report, but your credit was already lousy by wiping out the debt and then dealing with the underlying issues and beginning to rebuild. Most people are able to come out in much better shape two or three years down the road. Yeah, exactly. Wow. So, you know, obviously you help people that, you know, they have kind of no other option and they need some guidance, but what kind of final tips would you give to, I'd say, especially young people who are kind of, you know, starting their personal finance journey with a bunch of student debt, what would you kind of tell them to do so they don't end up, you know, 40, 50 and filing for bankruptcy? The, well, in fact, I have two teenage sons and one of them starts university in the

fall. And my advice to young, really young people is, do you really want to go to university? Really? Really? It's very expensive. Well, and I say that somewhat jokingly, because obviously, I've got lots of initials after my name, including a university degree. But really, why are you going to school? That would be my first question. Okay, if it's just because I don't know what I want to do, well, that's probably not a good reason. If you're going for a specific purpose, then fine. If you want to be a doctor, you have to go to university. I don't think there's any other way to do that. I hope not. Yeah, exactly. We kind of want them to have some qualifications. So obviously, when you're in school, you want to keep your costs as low as possible, perhaps having a part-time job or whatever. Now, your question is, okay, so I got out of school and I've got all this debt.

Well, very simply, you want to live as frugally as possible for as long as you can so that you can be whacking as much money against that debt. Because here's the trick. You can't just go bankrupt in Canada and wipe out student debt. There are special rules that say student loans are only automatically discharged in a bankruptcy if you have been out of school for more than seven years when you go bankrupt. Wow, I didn't know that. And that's the only type of debt that has that special rule. So you can rack up your credit cards and go bankrupt.

The debts are going to go away. I mean, if you've committed fraud, then maybe you've got a bit of a problem. But with student loans, the government does not want you borrowing $100,000, becoming a doctor, and then the next day going bankrupt. So bankruptcy is not an option in general terms until you've been out of school for seven years. Not when you got the loan, which was at the start of your four-year degree, but seven years from when you ceased to be a student. So we do do bankruptcies and proposals for people with student loans that are less than that so that we can deal with all the other debt that they've got, the credit cards and so on. But it's a big challenge.

And it's something, in fact, in 2008, my partner and I testified before the Senate Banking Committee on this exact issue as they were looking at changes to the insolvency legislation. And my advice was, you know what, you shouldn't be penalizing students to this extent. Okay, maybe you make it a two-year rule or a five-year rule or something, but it seems pretty punitive. When I went to school, you know, back in the dark ages, I could get a summer job at minimum wage and earn enough to pay for my tuition and my books. We can't do that today. job at minimum wage and earn enough to pay for my tuition and my books. Yep.

We can't do that today. Especially if you're living on campus and, you know, yeah, school is just incredibly expensive these days. Insane. Well, and what does just, you know, tuition for a year cost now? Forget about living expenses and everything. I mean, you know better than I am because you're close to the process. But, you know, what is it,, $15,000, something like that? Yeah, it might be closer to $10,000 now depending on what school you go to, yeah.

And where? Well, what summer job can you get where you can clear $10,000? You're working two jobs, I'm sure of it. Yeah, and at minimum wage, the math maybe doesn't even work. So I think what you have to do if you are in that position is keep your costs as low as you possibly can. Certainly don't be taking on any new debt. And, yeah, I realize it means you're probably not going to be buying the house you want tomorrow. You probably can't drive a fancy car. But the more you can throw at it, the better.

And do the math. Every dollar I pay on that debt, look at how much it's going to save me in the future. And I realize that student loan debt doesn't carry as high an interest rate as a credit card or a payday loan would. But every dollar you can whack against it, the better. But I have a lot of empathy for students and former students today because I can't get married as soon as I used to. I can't start a family as soon as I would have perhaps in the past. I can't be buying a house because of this mountain of debt. But unfortunately, that's the world we live in and you've just got to do what you can to chip away at it.

Absolutely. That's some great advice. It's not easy to hear. I'm sure to some students that are listening, but that's just kind of how it is at least right now. If you're taking out some student loans, you're going to just have to buck up, work your butt off, try to find a job after school, number one, try to work as much as you can, save as much as you can and live as frugally as you can until you've got that debt paid off. But then it's all good. Like that's the thing that I think lots of people have a hard time wrapping their head around, especially if they have been paying debt for years. It's hard to kind of imagine that life being debt-free. But I don't know.

I've been debt-free for years and it's the best feeling in the world. Oh, yeah. It's way better than the alternative. but you've got to get there. So I think you take a look at the situation you're in now and look at all the different alternatives. And obviously, you're going to look to family to help out if you can. You're going to look to getting a, like you say, maybe it's a part-time job to go with my full-time job. Maybe I'm going to be a bartender on the weekends to supplement the income I've got. It's not forever. Like you said, you had debt.

You've paid it off. Well, now you've got time to focus on other things. So the more you can throw at it in as short a period of time as possible, the more likely it is you'll be able to come out the other end. And if you do have a mountain of overwhelming debt, then seek professional help. I mean, if you've got a medical issue, you don't just read stuff on the internet, you actually go and talk to a professional about it. So it's what you've got to do to deal with the problem. Mm-hmm. Well, thank you so much, Doug, for joining me. I learned a lot about bankruptcy it's what you've got to do to deal with the problem. Well, thank you so much, Doug, for joining me.

I learned a lot about bankruptcy and debt today. Great to talk to you, Jessica. And that was episode 49 of the Mo Money Podcast. Make sure to check out Doug's blog and podcast. I've even made a couple appearances on his podcast. You can check out all that good stuff at Hoyes.com. That's H-O-Y-E-S.com. And then, of course, I will link to some of the stuff we talked about and some of his great podcast episodes on the show notes for this episode,

which is at JessicaMorehouse.com slash 49. And, of course, I've only got a few more episodes to wrap up this season. I'm very excited. Next week, I've got an episode with my grandma, my dad's mom. Very excited to share that. The week after that, I've got the fabulous Gail Vaz-Oxlade.

And then to kind of conclude season two of the Mo Money podcast and to celebrate my one-year anniversary, I will be doing a solo episode to kind of celebrate my one-year anniversary, me turning 30. So it's going to be a really fun solo episode and of course there will also be a contest i'm going to give away some awesome prizes to celebrate the occasion so make sure that if you haven't already subscribed to this show on itunes do so also just sign up to my mailing list, jessicawarehouse.com slash subscribe. You will never miss an episode or any important information.

And thank you for listening once again. I think you're awesome. And I'll see you here next Wednesday. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.