More Money Podcast - 240 Managing Your Debt During the Pandemic - Doug Hoyes, Licensed Insolvency Trustee & Author of Straight Talk on Your Money

Episode Date: May 13, 2020

It’s been way too long since I first had Doug Hoyes, licensed insolvency trustee and co-founder of Hoyes Michalos, on the show! I’m talking years! He was first on the show to talk about consumer proposals and bankruptcies back in May 2016 for episode 49, and he’s back to talk about things to consider if you’re dealing with mounting debt during this pandemic. Not only that, but he is now also an author with his book Straight Talk on Your Money, which we also discuss in this episode. What I enjoyed most about his book is his very unique perspective on some of the money myths or traditional financial advice we’ve all heard over the years. Since Doug has worked with a number of clients over the course of his career, he has seen almost every situation possible first-hand. If you haven’t read it yet, I’d highly recommend it. There are some great sections on day-to-day money management and dealing with debt that I found so different in their take. For instance, a common piece of financial advice is to pay off either your most expensive debt or your smallest debt first. But maybe the best route to take is to pay off your callable or secured debts first since those debts are linked to assets that can be taken away. For full episode show notes visit https://jessicamoorhouse.com/240 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome back to the Mo Money Podcast. This is episode 240, and I'm your host, Jessica Morehouse. Welcome back to the show. Last week, I had Preet. He was a repeat guest. He was one of my first guests ever on the podcast when I started it, oh my gosh, almost five years ago. We're getting close to that anniversary date, but I wanted to have another repeat guest because it's been a long time since I had Doug Hoyes on the show. He was actually last on the show. Let me check. Oh, episode 49, May 11th, 2016. Raise your hand or nod your head. I know you're alone, but you're listening to me and I will know because I have vibes. Let me know in your weird way of vibing with me that you did. You're a long-time listener and you know that episode. Okay. I've been alone way too much. I've been alone way too much. I need

to get out of the house because I'm going a bit crazy. Anyways, I certainly digressed. I have Doug Hoyes on the show. So back when he was on the show, episode 49, he was on the show to really dive deep and explain what's the difference between a consumer proposal and bankruptcy. What are some of your options if you're in a situation where you've got a lot of debt and can't pay it back? Well, I have him back on the show because a lot of things have changed since that first interview. First off, he has a book, an amazing book, very interesting, very different perspective. It's called A Stray Talk on Your Money. I read the book, reread it because it'd been so long since I first read it when I came out. I was supposed to, honestly, honestly, I was supposed to have him on the show in 2018. And then I had to cancel

because of a family emergency. And now, well, it's 2020. So I made a bunch of notes and we talk about basically his book is all about debunking all these kind of money myths or pieces of personal advice that we thought were true, but actually maybe they're not. Or maybe we should think twice about that because personal finance is personal and it's not so black and white. Anyways, if you're not familiar with Doug, he's amazing. He also has his own podcast called Debt Free in 30. Definitely check that out. But he is the co-founder and is a licensed insolvency trustee at Hoyes Miklos, which they are a debt relief expert. So he and his profession helps people that are looking for some help because they're dealing with debt and again, cannot pay back and they're looking for a solution for their issue. So he is also a chartered professional accountant

and he's been in the biz for a long time. He's seen a lot of things in his time. I'm not calling him old. I am not. He's just very experienced. And so we're going to get into all of this good stuff in this episode. But before I get to that, I just want to share a few important words about this episode's sponsor. This episode of the Mo Money Podcast is supported by Policy Me. Unsurprisingly, there has been a big spike in people getting life insurance policies recently. And although being in the middle of a pandemic isn't great, one silver lining is that a ton of Canadians are taking this as an opportunity to become more financially prepared for the future. So what about you? Do you have life insurance? If you're single with no dependents or have built up enough savings to provide a sizable

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latest info about getting life insurance during these uncertain times, visit PolicyMe.com slash MoMoney. Once again, visit them at policyme.com slash mo money. Well, welcome back to the show, Doug. It's been actually the last time you were on the show was for episode 49. So you were in my I believe that was my first ever season May 11 2016. I remember it well and nothing has changed since then. So I don't know what we're going to talk about. But hopefully we can find something. Nothing has changed, huh? Yeah, you're right. Everything's exactly the same as it was. Now, a lot has changed since then. I obviously have wanted to get you back on the show. I feel like I've talked to everybody we both

mutually know for the past several years. I'm like, I need to have Doug back on the show. And then I just never did just because I'm lazy. And then I'm like, you know what? I need to have Doug back in the show. And then I just never did just because I'm lazy. And then I'm like, you know what? I need to get Doug on the show because we have some things to talk about. And also, I mean, a while ago now you put out a book that I think is great called Straight Talk on Your Money, which I really liked because honestly, it's a very different take coming from someone with your background. I've read a ton of personal finance books and yours had a very different perspective. And I appreciated that. So well done. Well, thank you.

And it was written from the perspective of I've met with a whole bunch of people. Here's what I learned by meeting with those people. So it's not an academic journal. I probably wasn't using all the fancy words that I'm supposed to use, but hopefully it spoke to a few people with some practical advice. No, and I felt that too when I was reading. I'm like, it definitely feels like you're sharing your wisdom and your opinion, your perspective, because you've actually worked with a certain type of people for your job. And I feel like a lot of people that put out books have never actually worked with people. And that makes a big difference in terms of what kind of

advice you're going to give, doesn't it? Yeah, I think you can see that. And obviously, there's a lot of books that, you know, how to build your wealth and how to invest in the stock market and things like that. Well, that's not my area of expertise. It's certainly not what I wrote a book about. I'm dealing with people who have severe financial trouble. So I've seen all the bad things that can happen. So it's certainly a different perspective than a book that I guess Warren Buffett would write. That's for sure. And I really liked it too that you wrote it in a way that you're kind of debunking or sharing your perspective on different money myths or different pieces of advice that I feel like a lot of us have just like assumed, oh, this is true because I heard it from somewhere and it's just been ingrained in my mind

for years. And I really appreciated that. So I made a bunch of notes while I was going through your book once again, because it'd been a while since I first read it, that I thought we could talk about. But before we do that, because we are still in a pandemic, and part of the reason I wanted to talk to you is because you do have this background of helping people in severe financial need, people that are dealing with severe debt that are coming to you for help. I thought you could kind of shed some light on what is your perspective of what's going on right now. I know before I hit the recording button, you've been seeing like even your own business has kind of changed.

Can you kind of share a little bit about what are your thoughts on what's going on right now? Sure. So, I mean, our company name is Hoyes, Michaelis & Associates. We are licensed insolvency trustees. So we are the people you come to when there is no other option for repaying your debt. If you can pay your debt off on your own, absolutely, that's what you should do. What a lot of people now, of course, are doing during the pandemic is talking to their bank and saying, hey, can you give me a break? Can I defer my mortgage payment? That sort of thing. So if you can do that, absolutely, that's what you should do. But if you get to the point where, well, I've got $50,000 worth of debt and I'm only bringing in two or 3,000 bucks a month and there's

no way I'm ever going to be able to pay it back, then you come to us and we talk to you about various options, including a consumer proposal or a bankruptcy. So you would think, well, we're in the middle of a pandemic and people are not working. I mean, we've got the highest unemployment in Canada now that we've probably had in decades. And so if I don't have any money coming in, I guess I can't pay my debt. So therefore, I guess I need to go bankrupt. Well, no. In fact, the reason someone would consider a consumer proposal or bankruptcy is not just because they have a lot of debt, but it's also because I don't want to have the collection calls. I don't want to have my wages garnished. So I need protection from my creditors. Well, if you're not working, your wages aren't going to be garnished.

And as we're recording this, the courts are closed in Ontario and pretty much all over North America. So it's highly unlikely anyone's going to take you to court and sue you and garnish your wages because the courts are closed. So the collection agencies are still making some phone calls, but it's at a dramatically reduced rate. A lot of the collection agencies work out of big call centers where people are jammed in little tiny cubicles, you know, floor after floor. Well, guess what? With physical distancing, none of those places

are operating from where they used to. It's very difficult for them to deploy all of their collection agents to home. I mean, we're talking secure information here. You can't be, I mean, a collection agency, if they have more than 10 collectors, must record every phone call. Well, it's kind of hard to work from home and do that on your cell phone. You've got to have a phone system

you can patch through a VPN or a VoIP system or whatever. So all of the pressure that the immediate pressure that is on people with a lot of debt isn't there right now. They don't have the wages to garnish. The courts are closed. The collectors aren't calling as much. So as a result, there is less of an urgency to reach out to someone like me to file a consumer proposal or bankruptcy. So my guess is when all the numbers are in and it takes a few months for the government to release all the numbers. But my guess is that the number of personal insolvencies, consumer proposals and

bankruptcies filed in Canada in the months of April and May 2020 will probably be down 50% from what they were a year ago. And then I think they will gradually creep back up. And it's very possible that by the fall, if that's when the world is back in operation, the numbers will be quite a bit higher because of the pent up demand. So that's kind of the order of battle that we're seeing at the moment. Yeah, that's actually kind of, it's interesting because I would have thought, I'm like, oh, your business must be booming. But like you said, that makes actually a lot of sense. Have you ever seen or experienced, because you've been doing this a long time, anything like this in your career? Are you saying I'm old, Jessica?

No, I'm not. I'm just saying you're seasoned. You're experienced. I am old. And no, I haven't seen anything like this. The last big peak we had was the credit crisis that happened in 2008. And that was very, you know, it was bigger in the US than in Canada for various structural reasons. I mean, in many states in the United States, if you don't pay your mortgage while you just walk away, the bank sells the house, but that's it. They're called no recourse mortgages, whereas in Canada, if you walk away and there's a shortfall, well, they can come after you. So we are much less likely to walk away from our houses here. We refinance and live to fight another day. But it was still pretty bad back then. The busiest month for us was September of 2009. So the credit crisis really hit in 2008.

But for various reasons, there's always a time lag. The government also tweaked some of the rules. So September 2009 was the busiest month we ever had. And we did not hit that level of busyness again until last year. So we went a decade, almost a decade, where the number of personal insolvencies filed in Canada was actually dropping year after year after year as the economy improved and interest rates fell and we were more able to handle all the debt we had. So no, I've never seen anything like this. And in fact, this is different than then because if you look at a chart of the age of the population, in 2009, the bulge of the baby boomers

was about 44 years old. In other words, the most common age back then was 44. Well, guess what the most common age historically has always been to file a bankruptcy or a consumer proposal? Well, about 44, mid 40s, because you're old enough to have accumulated debt. You may still have kids that you're supporting. Your parents may still be around and you may be helping to support them. You maybe haven't received an inheritance yet, but you're not the president of the company yet. So you're not in your peak earning years. Those are kind of your peak debt years. And that also hit in 2009. So those 44-year-olds 10 years later, 12 years later, obviously you're a bit older. So I don't think it's going to be the same.

And unfortunately, we're seeing more millennials and younger people now who are getting into trouble for various reasons we can discuss. But it is different this time. This was certainly a much more sudden shock as well. So it's very difficult to predict how things are going to shake out. Okay. Since you mentioned millennials, what's going off millennials? They are more likely to get into debt than they were in the past. And I think, I mean, everybody who listens to the work you've done will have a very good understanding of why. I mean, as an old guy, when I went to university in the 1980s, and yes, we had universities back then, my tuition at the University of Toronto was a thousand bucks a year. And so I was able to get a summer job making minimum wage and earn enough to pay my tuition and to pay for my books. My parents helped out with living costs, bing, bang, boom, no need for a student loan. Well, my son is currently at the University

of Toronto. And I can tell you that tuition is a lot more than a thousand bucks a year. If you're in an advanced program, nursing, engineering, something like that, you're looking at more like $16,000, $17,000 a year for tuition. And then when you add in books and living costs and so on, it's a lot more than that. There is no way that you can get a summer job and earn enough to pay your way through university. It is not mathematically possible unless you're, I don't know, playing for the Toronto Raptors during the summer. And of course, they're not playing either at the moment. So it's not possible. So you graduate from university, unless your parents were able to pay for everything, you're graduating with a student loan. And it is very common for people to be graduating with a student loan of 10, 20, 30, 40, $50,000. So younger people today are starting out

behind the eight ball. They're starting out with debt. I didn't start out with debt. I started out even. Now, the first job I got working for a big accounting firm, I made 20,000 bucks a year, but I didn't have any debt. Living costs were a lot less. I didn't have to worry about it. Today, I graduate from university. I've got this massive amount of student loan debt. The job situation may not be such that I can immediately parachute into a fantastic job. I may end up having to be an intern. I may have to do the gig economy, piece together a few different jobs. So what do I do? Well, I end up having to resort to credit just to pay the bills, just to pay the rent. So it's not uncommon for millennials to also have payday loans, to also have credit card debt,

because they're trying to scrape together enough to service their student loan debt and survive. And as a result, debt becomes a serious problem. So as a result, we are now seeing more younger people, people in their late 20s, in their 30s, early 40s, getting into financial trouble as well, to an extent that we've never seen in the past. Yeah, that all rings true. And that sounds exactly like all the conversations I have with the millennials. And I guess the younger generation too, it's so much more expensive to live. And it's hard now too, I feel like having conversations with people, especially the situation we're in, where it's like, for me, I had very little student loan debt. So I was able to kind of crush that quickly. I was unemployed for a while, didn't earn a ton of money when I was employed,

but I was able to get a second job and have a side hustle. And I can't really say that to anyone listening right now. It's like, just get a side hustle. Don't be lazy. Earn money. It's like, you literally have to stay home right now. So it's like, it's just, I feel, I feel for everyone going through it right now and kind of probably shaking their head yes to everything that you said, because yeah, it's tough. It is not an easy time to be alive right now. Yeah, you're absolutely right. And what are the side hustles going to be later on in 2020? So the food delivery apps and places have done well during the pandemic, but now they're even realizing there's some margin pressures and you can't really have a whole lot of unlicensed workers without that potentially causing issues as well. So those side hustles perhaps become, you know, less viable. And if I can't afford to keep my car, then maybe I can't afford to keep driving for Uber. So that side hustle isn't there either. So it's going to be difficult, I think, as we readjust to the new normal. There's almost no doubt about that. Yeah, yeah. No, it'll be interesting to see what happens. I think it's definitely going to be a

different world when we get out of this. I don't know what that looks like. But having gone through one market crash and recession, I've never really felt like super stable. So I'm not too bothered. I'm like, well, it's always been kind of up and down since I graduated university. So what else is new? But for people that are just graduating university, this is not the best. This is kind of a crappy time. I feel you. I graduated 2009. It sucks.

But I will say it does get better. It does get better as you get older and you do build wealth and start taking, you know, some good advice like you share in your book, which I found very helpful. And again, like a unique perspective. I really liked just some of the things that you mentioned it. So I kind of want to dive into that right now. So myth number two that you share, which I think is not talked about enough is the idea that it is your fault, whatever your financial situation is. And maybe that's because a lot of the books that I read early on in the personal finance world really had this tone of, and I get it, it's like take personal responsibility, absolutely. But also this

kind of, well, you did this to yourself and now you have to dig yourself out, which I guess that is like a form of tough love. That's a certain strategy. But for a lot of younger people, I know that strategy does not work. And I like that you talk about it's not necessarily your fault because sometimes things are beyond your control. Like number one, this pandemic, it's not your fault if you lost your job because of the pandemic. It's a pandemic. Yeah, absolutely. And it's easy for someone who's 50 or 60 years old to say, well, you know, when I was a boy, when I was a girl, you know, I didn't need a student loan. You know, why can't you pull yourself up by your bootstraps? Well,

because it is different now. And you're absolutely right. I think the pandemic, if there is a silver lining to this horrible event, is that it has opened a lot of people's eyes to the fact that stuff does happen. And how many people have a really big emergency fund? Well, the savings rate in Canada is essentially zero. And I don't think it's because we are lazy or bad people. I think it's because the average person is bringing in $2,500 a month and it costs $2,500 a month to live. And so there is no ability to be saving money. And as a result, we don't have savings. And frankly, why would you save money when interest rates are close

to zero? We have all been conditioned to believe that savings is a line of credit, which is ridiculous. That's absolutely ridiculous. Debt is not savings. But why would I save money and put it in a bank account and earn half of 1% when I've got a line of credit sitting there where the interest rate's only 3% or 4%? That's my emergency fund if I need it. Now, of course, we are now realizing that banks can stop the emergency fund. They can cancel lines of credit, so it isn't an emergency fund. But yeah, there are circumstances that are often beyond our control. So I think that we as human beings should do what we can to take care of ourselves. I think we should work hard. I think we should learn. I think we should study. I think we

should do all those things. I think we should help our friends and family. But I also think stuff happens. And so the trick is to understand what can I control? What can I not control? Change the things I can control and don't get all hot and bothered about things that you can't control. You can't control the weather. So whining about the fact that it's raining isn't going to do you any good. Absolutely. And even for the people, I've been having lots of conversations with others and even some other money experts I'm friends with in the States. And in the past, they used to say, oh, I used to tell people, have at least $1,000 as your base emergency fund. And now they're like, I can't believe I said that because that's not enough. Because look at us now, $1,000 isn't going to get you far.

And even if you do have the typical, have three months saved up for your emergency fund, but what if we're going to be all unemployed or out of work for longer than three months? These are things that we couldn't have foreseen because this is a, again, a situation that we didn't, you know, foresee and it's not our fault. And so it's difficult. But I like what you said. It's like we can take responsibility for what we can control. But also remember, it's not your fault for the things you can't. Yep. It's in, I guess we will see how our attitudes change going forward. And, um,

you know, I don't know what the lessons will be cause it's too early to tell, but, uh, I suspect by the fall, when we look back, then yeah, there will be, there will be a lot of changes to the conventional wisdom. Absolutely. Absolutely. Um, Yeah. It'll be interesting to see what happens in the future. Lots of questions I've been getting. And it's interesting too, because there's people that are, there's so many different situations going on right now. There's the people that are still working and earning an income. They're still worried because most likely they're, you know, maybe healthcare workers or grocery store workers, like they're on the front lines and they are at risk. And so they're kind of freaked out for like, what if there is a point where I can't work? I'm not ready for that. And then there's the people that are currently out of work and they're like, I've never really

taken a look at my finances. What do I do? So there's a lot of different situations to think about. But one question I've been getting a lot is for people that are currently still working and they're like, oh no, I'm pretty stable in terms of my work, but they have some debt. They don't really know what should I, should I take some traditional advice of, you know, paying my smallest debt first or my most expensive debt first? Or is there other things that I should take a look at? I know in your book, you talked a lot about, and I thought this was interesting, thinking about it in a different way, thinking about what are your different types of debts? What are your secured debts, your callable debts, and maybe thinking about those should maybe be your kind of priority debts first, not just always ultimately paying off your smallest debt first.

You want to kind of explain what you meant in that part? Yeah. So I think the way to think about it is if I don't pay that debt, what will happen? Okay. So if I don't pay my car loan, what will happen? Well, eventually they'll come and take my car. If I don't what will happen well eventually they'll come and take my car if i don't pay my mortgage eventually they'll come and take my house so that is a secured debt but i guess you know not quite a callable debt in the in the way that we're

discussing it i mean a callable debt is the bank can change their mind at any time so if you have a five-year mortgage and make all your payments, the bank isn't going to change anything over five years. If you have a line of credit, as a lot of people are discovering in 2020, I've got a $10,000 line of credit at the bank and the interest rate is 4%. Well, there's no reason the bank can't just immediately change the interest rate to 9%. And I've seen it happen because the bank, most banks will do a soft hit on your credit report on a regular basis. So I know one of the big banks, a VP told me that, yeah, we do a soft hit on all of our clients, all of our customers' credit reports every three months, once a quarter. And if their situation has changed considerably, they've got a lot more debt. Well, we may turn down the tap.

We may increase the interest rate on their line of credit or their credit card. We may reduce their authorized borrowing limit. That $10,000 line of credit might become $5,000. So a lot of things can change. So the question to ask yourself is, if I don't pay it, what could happen? So obviously, if you don't pay your credit card, the interest rate is very high. So all else being equal, if I have money to pay down debt, I would probably be starting with my highest interest rate debt because I'm going to have the greatest savings. But I understand the psychological impact. Well, I only owe $100 on that credit card. Why don't I just pay it off even if it's a low-interest credit card because it's one less thing that I have to pay. So you got to understand how your own brain works too. It

doesn't matter what I would do. What would you do? I think we should consider all the options and then make a decision that works for you. So you may decide, you know what, that car is critically important to me. I couldn't afford to lose it. I need it for my job. So I'm going to make sure I get that paid off as quick as possible. Other people might say, hey, look, it's a low interest rate loan. I'm not going to pay that off as quickly. Well, okay. What makes the most sense for you? And that's how you ultimately make the decision. Yeah. No, I think that's really great advice because honestly, nothing is one size fits all. And you really do have to take a look at what makes the most sense for you and then just do it. And I know there's another section

in your book that I thought was interesting too is myth number nine, cash in your RSP to pay off debt. You explain why that is not a good idea. And I completely agree. But I think, again, there's a lot of this traditional advice or things that we've read in books or articles about how you need to pay off debt whatever means possible, even if it means taking your cash, taking your investments to pay off debt because debt is bad. Do you want to kind of talk about what you mean by don't cash in your RRSP to pay off debt? Well, and yes, compared to not having debt, debt is bad. I agree. And I'm not saying you should never cash in an RRSP to not having debt, debt is bad. I agree. But if you, and I'm not saying you should never cash in an RRSP to pay off debt. I'm saying you should consider what the situation is. So I'll

have people come in to see me. And the typical person who ends up filing with us might have $40,000, $50,000 worth of unsecured debt, credit cards, bank loans, income taxes, payday loans, that sort of thing. So people will come in and they'll say to me, yeah, I tried to stay ahead of it. Last year, I cashed in my RRSP for $10,000. And yet here you are. Well, yeah, because when I cashed it in at the bank, I did it in small increments. So they only withheld 10% withholding. But when I filed my taxes, I had to include the entire 10,000 as income, which of course, I am now paying taxes at whatever my marginal tax rate is. So they withheld 10% when I took it out because I did it in small pieces, but now I end up owing 30% tax. So I owe an extra couple of grand, three grand, whatever it is in

taxes. And I didn't solve the problem. I now I don't have theRSP, but I've still got a big chunk of debt. If you file bankruptcy in Canada, you only lose whatever you've put into your RRSP in the last year. So if you had an RRSP through work or you've been contributing for a long time, then it is exempt from seizure, whatever's been there for more than a year. So if you're filing bankruptcy anyways, or more likely you're filing a consumer proposal to make a negotiated settlement on your debt, why would you give up an asset that you get to keep and end up paying a whole lot of taxes on it? You may be better off coming up with a different option. So again, that's why I'm always telling people, come in and talk to us first before you start making, um, you know, rash decisions, because

there may be a better way to deal with, with it. I talked to a guy this morning who got a call from a collection agent yesterday and the collection agent convinced him to e-transfer 4,000 bucks to them. And I said, Ooh, uh, I wish you had called me yesterday because you still owe them $20,000. So you've now given them your last 4,000. What did you accomplish by doing that? And that's kind of the same concept. I cashed in some of my RSP. Now I don't have the RSP, but I still owe the debt. So I think if you talk to a professional and understand what the different options are, you may actually be able to keep your RSP and still deal with the debt. What do you say to people that maybe have never done this before, have never talked to a professional like yourself and are kind of concerned or worried about doing a consumer proposal or bankruptcy? Because again,

there's like some negativity around it being like, it's the easy way out or, oh, you know, you're a failure for having to do that. What do you say to people that may have some, some preconceived notions about those two things? Well, okay. So I've got a cavity. Am I a failure if I go talk to my dentist? No. Yeah. No. I got a flat tire. My oil needs changed. Am I a failure? I mean, stuff happens, right? So what I say to people is, what's the alternative? Okay. So if you don't come and talk to me, what's your plan? Well, let's see. My minimum payments are a thousand000 a month. And so every month I pay the thousand and I still owe the same amount.

And if I keep doing this for 20 years, my debt will be exactly the same. Okay, well, now we've got a baseline then. Now, yes, you're right. If you come in and see me and we end up deciding to file a consumer proposal, there will be a note on your credit report that says you filed a consumer proposal. And it is quite likely if you've been keeping up with all your payments by borrowing from one to pay the other, that when you file the consumer proposal, your credit score will go down. But all of your debt is also going to go down. And now instead of paying $1,000 a month in minimum payments, maybe the consumer

proposal is, I don't know, two or 300 bucks a month. And maybe instead of paying for the next 20 years, you're paying for the next five years, or you get it paid off in two or three years, and then you have no debt. And now you can start to rebuild and reestablish. So don't compare a proposal or a bankruptcy to perfection, because that's not what you're comparing it to. Compare it to what your other alternatives are. And if the other alternatives are worse, then it's a pretty simple decision. When people come in to see us, there is no upfront fee, because the law says, I'm licensed by the federal government to do this. And the law says I am not allowed to charge anything until you have actually signed the

paperwork and started the process. It doesn't cost anything to talk to us. And you get a feel for whether our advice makes sense in your situation or not. And then you can decide whether you move forward. So there's no risk to talking to us. If your current situation is untenable, then you might as well find out what the other options are because it may end up being very much in your benefit to take action. And I hear also from people that they're either very concerned about the impact on their credit scores or they are concerned that kind of going with the, again, the idea that this is the easy way out, that they may not learn, or maybe not so much people that go through it, but other people that

have never gone through it and are a bit judgmental will think that going through a bankruptcy or consumer proposal, well, they're not going to learn anything from it. They're just going to go back to their old ways. I mean, you work with so many professionals, or not professionals, so many clients. What do you see after they've done a consumer proposal or bankruptcy? Has their habits changed after going through the process? Well, the vast majority of people are better off. You're right. There are some people who just get back into debt again, either willfully or through no fault of their own. The people who are most successful are the people who say, okay,

stuff happened and maybe it was my fault, maybe it wasn't. And one of the things we try to do is get to the bottom of what actually happened. Oh, there was a pandemic. Okay, well, that probably wasn't caused by you. So, and it's hopefully not going to reoccur in the same situation again, but if it does, what steps are you going to take? I'm going to have some emergency savings. I got to keep my debt low, whatever. Well, you're able then to rebuild and get back on track. So, I mean, as you know, there are two insolvency counseling sessions, what we used to call credit counseling sessions as part of the bankruptcy and consumer proposal process. So we actually are required by law to help you figure out what your financial goals are going forward. Let's actually think about it. And my goal is not just to stay alive for another month. My goal is I'd like to start saving for retirement

for my kids' education, to buy a house, whatever. And once people start thinking about the future, well, it's a lot easier then to make changes in the present because small changes today can have big impacts tomorrow. So if you take the process seriously, you are a lot better off. And again, I don't play the blame game. I mean, to say that it's the easy way out, well, I guess compared to making minimum payments of $1,000 a month for the next 20 years and never being able to buy a house, never being able to get married, never being able to have a kid. Yeah, I guess that's easier. But so what? Getting the dentist to fill my tooth and then I don't have

the pain of the cavity is also the easy way out. But nobody would say not to do that. So I think ultimately, you're the boss. You get to decide what is in your best interest. And in a lot of people, because you kind of mentioned, they can be aggressive. They can also say like, you need to pay us. What are some things that people should know in advance? How should they act if they are dealing with a collection agency? What should they do and not do? I believe in profanity, Jessica. I think that is absolutely the answer. Whatever swear words you know you should use. Well, no. I mean, a collection agent has a job to do and they are probably calling you because you actually owe the money. So step number one, when a collection agent calls you, make sure that it's legit. You actually do owe the money. Maybe you did pay it. Maybe it's

someone with a similar name, whatever. By law, certainly here in Ontario, but basically the same laws throughout North America, a collection agent, when they call you for the first time, has to give you evidence that they are who they say they are, and they are collecting for whomever they're collecting for. So they can do that by sending you a letter, by sending you an email, whatever. So let's establish that it's actually legit, you owe the money, and they're collecting for. So they can do that by sending you a letter, by sending you an email, whatever. So let's establish that it's actually legit. You owe the money and they're entitled to collect it. Then the next step is, okay, am I able to pay it? If it's an old cell phone bill from a year ago that you just forgot to pay and you've got the cash, then pay it. There's nothing really to talk about. But most people who are getting a call from a collection agent

are getting a call because they couldn't pay the debt. And it's very likely that they also have other debts that other collection agents are going to be contacting them about. So again, you got to look at the big picture here. I'm a big believer in getting a pencil and a piece of paper and writing down all the different places you owe money to. If you're like fancy pants and could do it on a spreadsheet, great. But a piece of paper works as well. And look at the size of the problem. If it's a manageable situation, then the next step with the collection agent is to work out some kind of payment arrangement. And certainly while we're in a pandemic, the first thing I'd be saying to the

collection agent is, hey, can you freeze the interest? Let's at least stop the bleeding here. And then the next thing I would be saying is, okay, depending on the age of the debt, the older the debt is, the easier it is to make a deal because the collection agent is much more willing to deal. So, okay, how about we make a deal where I pay back half of it or whatever the percentage is. But you can only make a deal that you can actually do. So you should never promise something that you can't do. So if the collection agent wants you to send them a good faith payment of 300 bucks and you've only got a hundred bucks well don't agree to to pay the 300. So what is realistic in the situation? Now it's also a good idea to understand how the law works so and again

the the rules are slightly different in in the different provinces and states but in Ontario we have something called the Limitations Act which says that if you're going to sue someone you have to do it within two years. So if I stopped paying my credit card bill four years ago and they haven't done anything, they're not allowed to sue me now. And so threatening to sue you now is probably an idle threat because if they did sue you, you would show up in court and you'd say to the judge, hey judge, it's been more than two years, the case would get thrown out. So you want to understand what your rights are. And again, here in Ontario, during the pandemic, that two-year period has been extended for as long as the pandemic lasts.

So it may end up being a two-year and three-month period, but collection agents will do what they can to collect. That's their job. Most of them are generally reasonable people. I mean, if they start swearing at you or saying you're going to go to jail, then just hang up the phone. You don't have to put up with any of that nonsense. But in most cases, they get some kind of commission or compensation for collecting from you. So they want to collect.

You can generally make a better deal if you're able to offer a lump sum. So if you owe 10,000 bucks on an older debt and you say, hey, look, my mother is willing to loan me 2,000 bucks. Will you take it? Well, they may actually be willing to take it. Now, of course, you want to get them to send you a letter or an email or something saying, yes, if you pay 2,000, that's full and final settlement and we're never coming after you again. But again, what are you able to do? Don't promise anything you can't do. If it's something that's manageable, then by all means, make an arrangement to pay them. If it's a massive amount of debt and there's four other collection agents who are going to be calling you next, then probably a more robust solution like a consumer proposal is a better option for you. That's, I think, so helpful for you to kind of share all that information.

Because honestly, I haven't read a lot of books that really go in depth with lots of those things because they don't really, I feel like, talk about them. And maybe they just don't have the kind of specialized experience that you do. So I appreciate you sharing all that, which is why I feel like everyone should grab a copy of your book because it has, honestly, it was very, like I've said it before, unique. It just had different perspective and you went in depth on things that I haven't found a lot of other personal finance books did. And I appreciated that. Excellent. Well, and again, that's why I wrote it. There are fewer books that talk a little bit more from the debt end than from

the how to invest in the stock market end. So if you have issues with debt or want to make sure you don't, or if you have, you know, friends, family members who do, it's not a book about debt, but obviously you're right. That's where my experience lies. So that's where a lot of the content came from. Yeah. And just like different ways to think, it really got me to think about different scenarios because I think lots of us kind of are very focused on like our situations, but you can't judge someone else for their situation. Like you had a part of your book where there's this girl who kind of did everything right,

but she got into debt because she got into a car accident and all these other kind of things happened that were again, kind of beyond her control. And it's, I think sometimes we forget that it's not everything's in our control. And I think that's, I mean, what we're going through right now is a very big reminder of that. So we need to be kinder to people and less judgmental, I'd say. Yeah, I totally agree. Stuff happens.

That's just the way life is. Absolutely. Well, thanks for taking the time to join me. I know, so obviously you have your book, Straight Talk on Your Money, but you also have an amazing podcast that you have on all the podcast platforms and YouTube. What's it called? Where can people find it? Debt Free in 30. And yes, I think if you punch it in, it shows up anywhere. So obviously we talk more about issues related to debt. We're

not doing a whole lot of stuff on investing or not, but I've got episodes on exactly what you and I just talked about, how to talk to a collection agent, for example. So you can scroll through the list and listen to what is appealing to what you want to hear. Amazing, amazing. And if anyone wants to follow you, because I know you're on social media, can people find you? Can people follow you? Yes, if you want to follow me on Twitter, it's my name, Doug Hoyes, D-O-U-G-H-O-Y-E-S. And that's, I don't understand how all the other things work. I'm not a Facebook guy or anything like that. So Twitter is generally the place to go. Fabulous.

Well, thanks so much, Doug, for taking the time to chat with me once again. It was too long. I won't wait, you know, that long again to have you back on the show. Another four years. Great. Thanks, Jessica. I look forward to it. And that was episode 240 with Doug Hoyes. Make sure to check him out. His website is hoyes.com, H-O-Y-E-S.com. Again, he's the co-founder of Hoyes Miklos and is a licensed

insolvency trustee. So if you have some questions or if you need some help, he's probably the person to ask. And as he mentioned in the show, it's free to talk to him to, you know, have that first kind of consultation. They don't charge any money. So there's no really downside, I guess, in asking some questions or just, you know, hitting him up. Also, he has this amazing podcast called Debt Free in 30.

You can find it on any podcast platform, also on YouTube. So make sure to check that out. And lastly, grab a copy of his book. It is great straight talk on your money. Go get a copy, read it. It's very fascinating. It was an interesting read for me as someone who has read a lot of personal finance books to get a very different perspective because he does have a different perspective because he works with certain clients and has seen a lot of things and has probably dealt with a lot of different

situations that maybe other people haven't. So grab a copy of that. I have a few important things I want to share with you. So stick around. I just have a few words I want to share about this episode's sponsor. This episode of the Mo Money Podcast is supported by Policy Me. We're experiencing some uncertain times. I hope you're doing okay during these uncertain times. I can't wait until these uncertain times are over. Any of these phrases sound familiar? Because I swear I hear uncertain times at least five times per day, which doesn't help trying to stay calm and not feel like everything is out of your control. Listen, I know we're in some uncertain times, there it is again, but the truth is there are some things we can control. And right now is actually the best time to take a good look at where you're at financially and do something about it. This includes making sure you and your family

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into buying anything. If you aren't sure whether or not life insurance is right for you, take their free five-minute life insurance checkup to find out how much coverage you need or don't need. To learn more and find out the latest info about getting life insurance during these uncertain times, visit PolicyMe.com slash MoMoney. Once again, check them out at Policyme.com slash mo money. if you aren't already in it, I've got a free Facebook group called the Money Life Balance group. I've had it for goodness. How long? Three, four years, five years. I don't even know. A long time. And there's a lot of us in there and it's a great place to ask questions, share important articles to help other people, get some other people's kind of point of view or advice. It's just a really good positive space, online space. So if you want to be part of a online community about personal finance and empowering yourself, and there's always good people in there,

hop on in there at facebook.com slash group slash money life balance is where you can find that. Also, to keep in the loop of everything I'm up to, and I'm up to a bunch of things, you can make sure to get onto my email. It's jessicamorehouse.com slash subscribe. I also have a free resource library available to anyone who does subscribe to my email list. It's jessicamorehouse.com slash resources to find more information about how to make an account and get in there. But I have a bunch of freebie guides and my budget spreadsheet, a couple of past webinars, a bunch of things. I'm probably going to have to update it or add some new fresh things in there, but that's on the list. There's a lot of things on the list, and that's one of the things on the list.

Other things I got going on, well, if you're interested in getting some one-on-one financial counseling help, I can help you with that. Still accepting clients. More information on my website or just go to jessicamorehouse.com slash discovery call to book a call with me. I also have my two financial online courses that I've been getting a lot more students for, which is great because I mean, this is pretty much a great time to really start thinking about your finances and fixing some stuff, making a plan so you feel more in control in these times where you feel out of control. And I feel you. I really, really, really do. So I have my Fix Your Finances Master Class. It goes through pretty much everything to help you create a solid financial foundation for

yourself. And if you want to learn more about investing, because maybe you're like, I think I want to use a robo-advisor. I've listened to a lot of Jessica's episodes, but I still have a lot of questions. Well, that's why I made a course episodes, but I still have a lot of questions. Well, that's why I made a course for it because there's a lot to know. This is called Investing Foundations for Canadians. It is specifically for Canadians. Americans have taken it, but it really just goes more in depth about RSPs and TFSAs and all that kind of stuff. So make sure to check that out, jessicamorehouse.com slash courses. And since I mentioned my budget spreadsheet, in case you don't know, I've recently did a big overhaul of my free budget spreadsheet, made a new video tutorial that is

visible on my YouTube channel. But if you go to jessicamorehouse.com slash budget, you can download my new budget spreadsheet that includes a spending tracker, includes a net worth tracker, and the video tutorial goes through all of it. It is so much nicer and cleaner and easier to follow. I think you'll really, really like it. But of course, I've had a lot of people download it, said they really, really liked it. So I guess it's doing its thing and it's free. So might as well. So again, if you want to get your money together, one great way is to start making a budget and start tracking your spending and tracking your net worth. And here's a personal story on why it is so important to track your spending because there's so many people like, oh, it's not that

important. Here's why it's important. Okay. I track my spending every single month. And recently, as I was looking at my April spending, I saw a payment. I'm like, what is that? That payment's been for March and February and I never really took much. I really didn't pay attention to it. I'm just like, well, I think that's this other program that I subscribe to. No, no, no. What happened was I signed up to this thing and it was a free trial and I thought I canceled it. Honestly, I honestly think I did because I've signed up for this program before or this company that has a bunch of programs and I've canceled and then they didn't cancel. Like it's a scam. I swear it's not like

they're not a scam. It's just like, I don't know. It's just weird that this happened several times. Anyways, long story short, signed up for a free trial and I paid three months and I didn't really notice until now. Then I'm like, wait, wait a minute. What is that? And then I actually investigated it and yeah, it never canceled. So that was annoying. But the story is, if I didn't track my spending, I would have never noticed that for like a good year and would have been paying $30 a month for this thing that I'm not even using. So story, moral of the story, tracking your spending, it does really, really help. So there you go.

Okay, that is it for me. I will be back soon. I'll definitely be back next Wednesday. We'll see if I have another money minute episode for Friday. It really depends on if there's anything I want to share. And if I want to, I've been very busy lately, so I just haven't, I just didn't have time last week. So we'll see. We'll see. I might be here Friday. I may not, I don't know. I don't know. Um, but if you want to keep in the loop with what I'm up to, you know, check me out on the gram. Do people say that anymore? Does that show my age? Probably. But you can find me at Jessica I. Morehouse or I made a recent new podcast Instagram

at Mo Money Podcast. Not a lot on there yet, but I'm going to be putting some stuff on there. But you can follow me on both or one of them or whatever. All right. Thanks for listening. I'll see you very soon. Have a good rest of your day. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.