The Wealthy Barber Podcast - #51 — Doug Hoyes: Bankruptcy, Consumer Proposals and the State of the Canadian Consumer

Episode Date: April 7, 2026

Our guest this episode is Doug Hoyes — Co-Founder of Hoyes Michalos, Licensed Insolvency Trustee and one of Canada’s leading experts on debt and personal insolvency. Doug has spent decades helping Canadians navigate financial hardship and is a passionate advocate for ensuring people understand their options and find the right path forward. In this episode, Dave and Doug dive into the world of debt, bankruptcy and consumer proposals — what they are, how they work and when each option might make sense. They break down how Licensed Insolvency Trustees operate, how consumer proposals are negotiated and what actually happens if you file for bankruptcy (what you keep, what you lose and who typically ends up choosing each path). Doug also shares insights into why so many Canadians are struggling with debt today, from inflation and the “K-shaped” economy to mortgage renewals, rising vehicle costs and the financial impact of divorce. The conversation also explores some of the lesser-discussed drivers of debt including gambling, travel spending and lifestyle creep, along with practical advice on when to seek help and why early action can make a significant difference. Doug brings decades of real-world experience to highlight common mistakes and what people can do to avoid them. If you want a clear, practical understanding of debt and insight into the Canadian economy from someone with boots on the ground, this episode is packed with insights you won’t want to miss.   Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Doug Hoyes (01:51) Why Debt Education is So Important (03:11) Inflation and the K-Shaped Economy (07:29) Consumer Proposal vs. Bankruptcy Explained (09:18) How the Trustee Negotiates Consumer Proposals (10:37) Who Ends Up Filing Bankruptcy vs. Consumer Proposal? (12:34) Who Should Talk to a Licensed Insolvency Trustee and When? (17:03) If You Claim Bankruptcy, What Do You Lose vs. Keep? (19:48) How Do People Get Into Trouble with Debt? (24:02) Gambling's Role in Insolvency (25:38) Historical Homeownership Rates Among Insolvency Clients (27:02) Mortgage Resets and the Condo Crash (29:56) Vehicles Can Be a Major Financial Trap (32:54) Divorce and the Financial Cost of Separation (34:53) Travel and Debt (36:38) No One Cares About Your Money More Than You Do (38:20) Rapid Fire Questions (40:43) Conclusion

Hey, it's Dave Chilton, the wealthy barber and former Dragon on Dragonstant. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making the subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever, will be here to help you. You do it. Before we jump in, a quick but important note, nothing we discuss here should be taken

as investment advice. We don't know you and your personal financial situation. So we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hope entertain. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chilton, the wealthy barber with the wealthy barber podcast. I'm excited about today's episode. We have Doug Hoy's on from Hoyce Mickelis, one of the big insolvency firms in Canada, one of the very biggest, one of the most well-known. Doug is a very sharp guy.

He's also quite funny. He's outspoken. He's a CA by background. And I think a real compliment to him. And I sincerely, we've had many telling us to get him on the show. Now, I've known Doug for years, it was always our intention to get him on the show. But I think he'll love this. And a lot of you're thinking, I'm not in the kind of financial position where I may have to hire.

someone like him or do a consumer proposal, that's not what this is about. He has got his ear to the ground. He understands what's happening out there in the economy, what people are running up against. There's a lot of good knowledge, a lot of good lessons to come. So Doug, after that high pressure intro, can you handle it? Let's see. We're going to find out. Thank you very much. I appreciate it. Now, a little different route to start. You guys are ahead of the curve or we're ahead of the curve. You got involved in content marketing, you know, debt free and 30 of the podcast and a lot of the other things you've done with videos over a decade ago before anybody was doing something like that. What led you down that path? I believe that a lot of our problems are caused by people not knowing

stuff. Right. So if you want to learn about nutrition, I guess you got to study nutrition. You go to YouTube. You watch videos, whatever. Our business is something that people don't like to talk about. I don't, I'm not going to go and talk to my barber about debt probably. Maybe I will. I don't know. So where do you go? You go to the internet. And so in the privacy of my own home, I can watch a video, I can read a blog, I can listen to a podcast. And so that's why we started it. I'm sure there was ego involved too. We called the firm Hoys Michaelis, like you said, so there's probably some ego there.

People have questions and they want answers. So we've got tons of stuff out there, and it's an educational thing, first and foremost. That's how I came in touch with you. I listened to your podcast. And I always thought it was very well done. And I liked, again, the boots on the ground. You're sitting there with the people who are going through the challenging situations, figuring how they got there, et cetera.

But again, I give you nothing but credit. You've got a very high brand profile, although I hesitate to use the word giving you credit with you. That may not be wise. What are you seeing out there right now? Let's start there. Is it tough out there? Yes.

And what makes it even tougher, I think, is we all live in our own little bubble, right? So if you're some old guy who bought a house 20 years ago, invested in the stock market 20 years ago, you got a good job, nice pension, you're fine. Everything's cool. It's all good. You've benefited from the increase in assets over the last couple of decades. But if you are someone perhaps not quite as old, maybe you graduated from school in the last 10 years and you've still got a student loan, you haven't got onto the asset ladder, haven't been able to buy a house, invest, anything like that, then things are really tough out there. We can all read the inflation numbers. And whether you believe them or not, there's no doubt when you go to the grocery store and you and I both have our favorite grocery store. We're not giving them free advertising here today. But you see what the price is. are. Even the official government numbers, say food inflation is running like 6% or something like that. So when your wages are not going up as fast as your expenses are, you got a problem. And again, if you're a rich guy, you're spending 1% of your income on food, it doesn't matter. But if you're

someone who's making three or four grand a month, you might be spending 10 or 20% of your income on food. That increase is a huge thing. So I think for your listeners, you're right. If you're not in financial trouble, you might go, well, you just work harder and everything will be fine. No, there are structural issues, and that is what's causing a lot of the financial difficulties today. It's not just people spending way too much and having a good time. It's really tough out there. You and I are in 100% agreement, 100%. I looked at all of the spending summaries that people were sending in before doing the fully updated version of the book. And sir, there's some reckless spending, but for the most part, this is just basic arithmetic. People are not making enough to keep up with

the high prices. You and I talked once before about people think about the inflation rate, but even when it levels out at, let's say, 2%-ish, the problem is the high prices still remain. It's not like it's going backwards. It's not deflation, and people are very much pinted. I think the K-shaped economy, that analogy is actually quite accurate. That as you say, that upper income, they got on the ladder of assets and the assets have done very well. But if you couldn't afford to invest and save, you just are getting a wider and wider gap. Do you think that analogy holds as well? Absolutely. And whether it's a K-shape or whether there's multiple levels to it or not, I don't know, but you're absolutely right. And so if you are one of the people in that upper echelon,

whether it's the top 1%, 10%, 20%, whatever you want to call it, you don't fully grasp what it's like to be in the bottom 80%. And again, we're old guys. We went to university in the 1980s. I don't want to say it out loud, but it was a long time ago, right? And in those days, tuition was a thousand bucks a year. You could get a summer job, make enough to pay for it. Your parents helped you out a little bit. You drove your old car. Everything was cool. Now an education is far more expensive than that. There's no way you can get a summer job at minimum wage and pay for that. So unless your parents are foot in the bill, you're starting your working life in debt, which is not something that our generation had to do. And then you get out there on the ladder and it's like, well, there are no, there are not as many fantastic jobs where you're going to be with the same company for your whole career. You've got to be bouncing around constantly upgrading and whatnot. And not and if there is any little hiccup like I don't know if you're a history buff day but there's a bunch of stuff that happened in 2020 and made I heard that yeah yeah I can't remember what it was but it was you know it really messed things up and we're still dealing with that can you imagine if you were in high school or university or just starting your career at that time if you were just trying to get on the

property ladder or whatever so that those are all structural things and so yes I totally agree so my advice to everyone is don't just think about your own experience and the bubble you're in, if you're an old guy and your kids are having trouble, maybe it's not because they're not working hard. Maybe it's because times are tough out there. So I think we've got to be a little more conscious of what's going on with people other than ourselves. Yeah, again, I completely agree with you. And you said something earlier that's fairly straightforward, but I don't think people really think it through. We've had a lot of costs in society rising at a much faster clip than wages. I mean, it's that simple. That's how we got to be where we are.

And how do we address it? We have to have increased productivity through policy changes, all those types of things. But at the end of the day, that's the situation we're in. It's really affecting the bottom 50 to 60% in income. And of course, therefore, you're busier than ever. Before we start talking about what you're up against, how you're helping people, walk my listeners through the difference between a consumer proposal and an insolvency. So insolvency is the overall term.

Insolvency means either my debts are bigger than my assets or I've got negative cash flow. That's insolvent. In Canada, so you can do. insolvent and not be bankrupt or in a proposal or anything. I'm in that state and I haven't done anything formal. There are two formal solutions, legal solutions in Canada, bankruptcy and proposal, and there's different flavors of them, but to keep it simple. In a bankruptcy, conceptually, you lose your stuff. I think everyone understands what that means. You lose your stuff, but you also get rid of your debts. Whereas in a consumer proposal, we go to your creditors and say,

look, I don't want to go bankrupt. I know I can pay you back something. I just can't pay you back everything. So let's make a deal where I pay you back something. So maybe the proposal is I'm going to pay 500 bucks a month for the next five years. That's $30,000. Maybe my debts are 60 or 80 or 100. But the creditors are like, we don't want you to go bankrupt because we'll get less. We'll accept that deal. So a consumer proposal, I mean, 85% of the formal insolvencies in Canada right now are consumer proposals. Only 15% are bankruptcies. That's interesting. Okay. So, and this is unsecured debt obviously in the vast majority of instances otherwise you wouldn't be going through this. Yes, that's correct. If you've got a million dollar mortgage on your house, it doesn't mean you're

insolvent if your house is worth a million five. You sell your house. You pay off your debts. You're good. But yes, the insolvency deals with your unsecured debts. Now, we're seeing a lot of people whose houses are underwater or cars are underwater. Okay, you surrender the asset to the secured creditor. They sell it. That turns it into an unsecured debt for whatever the shortfall is. And then that's what gets included in the consumer proposal or the bankruptcy. Okay, so let's go back to the consumer proposals. Is your job or part of your job to be as aggressive as possible in terms of trying to strike the best deal for the customer, the client you're representing? Sure, but I liken my view more to the referee in the hockey game.

I'm not working for Team Blue. I'm not working for Team Red. My job is to get a deal done. And so at the end of it, nobody will be super thrilled because I'm saying to the creditors, hey, guys, you're not getting all your money. And I'm saying to the person who owes the money, we're going to get a. you deal, but you're still paying something. There's still going to be an impact on your credit report, but hopefully it becomes a deal that works for everybody. Because my firm has done many tens of thousands of these, I think we crossed the 75,000 insolvency number a few weeks ago,

we've got a pretty good idea what the big banks are looking for, how much it's going to take to get a deal done. We've got your budget. We can see what you can realistically afford. So we're trying to find that middle ground where it's enough for the creditors to say yes, but not so much that you can't afford it. So that's my goal is to come up with that middle number that's going to work for everybody. 75,000. That is incredible. Well, now, you are 84 years old.

I've been around for a while. So it's, uh, and you're right, though. You gain tremendous experience from that. You're almost like an AI. Yes, exactly. And that you've seen all of this data. You can kind of put together. Okay, walk us through.

You've got the 85% they're going consumer proposal. What differentiates the 15% that offer bankruptcy? How much worse off are? they. So in a bankruptcy, the amount of money you have to pay is based on your income. So there's a grid. So if you're a single person, you're allowed to earn this much. If you earn more than that, you've got to pay a penalty of half the amount you're over. And I won't go through the exact numbers because they change every year, but you can go to our website and look them up. So we do the math and I go, oh, okay, your income is $1,000 over the government limit. The penalty

you have to pay is $500. And because you're over the limit, your bankruptcy, it's the first bankruptcy for you. It would take 21 months. So we have a reasonable expectations. So we have a reasonable expectation that in a bankruptcy, you're going to pay $10,500. So we go to the creditors and we say, okay, how about I offer you $12, $15,000, $18,000, something like that. So maybe in that case, the proposal would be $300 a month for five years. That's $18,000. That's more than $10. So we would expect the creditors to say yes to it. However, the creditors also like to get a certain number of cents on the dollar. If you've got $200,000 worth of debts, they're not accepting $0.3 cents on the dollar, it's not worth it for them to be doing all that work for three cents. So if your

debts are really high, then maybe we just do a bankruptcy because it's not good enough for the creditors to accept. Or maybe your income is low and in a bankruptcy, you wouldn't have much in the way of surplus income. You don't have any assets that you need to protect. Okay, then the bankruptcy is a quicker and less expensive option. What we find, and the reason that 85% of the people are filing proposals is the government limit is pretty low. You can't live in a place like Toronto and live on that government number because, you know, it's for a single person, it's around $2,700 a month, take home pay. If your rent is $2,100 a month, you can't do it. So in the bigger cities, it's much more likely that you're going to be filing a consumer proposal so that you can get

them the money that's going to be needed, but over a period of time that allows you to meet your budget. Dude, people try to do this on their own ever orders. Almost everybody seek out people like you. Well, a lot of people don't know that people like me exist. So if you are in serious financial trouble, you've got a lot of debt. What does that mean? It means at some point in the past, you were in good shape. The only way you could possibly borrow $50,000 is things were better in the past. My income was higher. My credit was good. And now things are worse. So nobody is investigating how insolvency works when everything's going great. Something has changed in your life. You lost your job. You got sick. You got divorced. Or it's just the whole structural things we've talked about that your expenses have

just gotten so high that you just can't continue servicing the debt. You've never been in this situation before. So what do you do? You go on the internet and find all these scammy places that say they can settle your debt for 10 cents on a dollar and whatnot. But if you do enough research, you go, oh, okay, so in Canada, there is only one regulated professional that can do a consumer a proposal or a bankruptcy, that's a licensed insolvency trustee, regulated by the federal government. Maybe I'll reach out and talk to someone. And like you said, we've done a good job of filling up the internet with all of these different solutions. So once people do a bit of a deep dive, they realize, okay, it's probably worth talking to a licensed insolvency trustee.

And the law says, I can't charge you anything up front because that's the law. So once you start the procedure, you start paying, but you don't start any, you don't pay anything up front. So as a result, people go, okay, there's really no risk to talking to someone. You can talk to two or three different LITs if you want. So that's one of the reasons I like to get the word out there, that there are possible solutions. You've got to reach out to talk to someone who can explain them to you. Okay. Now, you know a lot more about this than I do. So if I'm wrong here, jump in, slap me, correct me. I think a lot of people are waiting too long to talk to people like you, especially in the last few years. And the reason I say that is we're seeing so often now with younger people in particular,

they're in trouble and they're layering debt on top of debt to try to serve the first one. And it's just getting worse instead of better. They're never going to be able to escape it with this approach. And then by the time they get to you, they're in a much worse position than when they started a year, two, and three years ago up against the eight ball. Am I wrong there? No, you're right, because compounding is great when you got money in the bank. And it goes, it's exactly the wrong thing when you don't. And so what I would encourage everyone to do is math.

And you don't have to do it yourself. Go on the Internet. there's all sorts of places that do math for you. But if you've got a credit card and the interest rate is 22%, and your minimum payment is only covering the interest and maybe a tiny bit of print. It says right on your credit card statement. It's going to take you 47 years to pay this off. Okay, probably the sooner you address the situation, the better. It's exactly like a medical issue. If you've got a toothache, do you go see the dentist now or do you wait six months? Probably better to see them now. The sooner you get started on the solutions, the better. And part of it is fear. I don't know,

am I going to lose everything? Am I never going to be able to work again? What's going to happen? And part of it is just, I don't know where I'm supposed to go. So yes, I agree. The sooner you reach out, the better. And most of the people who contact us, more than half, we say, you know what, you don't actually need my solution. Maybe what you need to do is follow the wealthy barber and do a spending summary and see where your money's going and make some adjustments and pick up a second job and you'll be able to work your way out of that. Fantastic. Maybe it's sell your assets, sell your house, whatever. We will walk you through all those options. But if a first, formal insolvency is the option, then yeah, the sooner we get going on it, the better,

because the sooner you start, as sooner it's done. Well, I'm going to pay you a compliment here. I think one of the other things that holds people back is shame. That a lot of times, even though you're a stranger to them, they're very guarded about exposing the troubles they've got themselves into, whether it's their fault or whether it's bad luck, whatever. It's often bad luck, as you know. The people I've known who have spoken to you, personally even in some instances, have said

there's a sense of relief when you finally get it off your chest. and you show somebody the math and they walk you through the potential solutions. And in your case, you were saying sometimes you say, no, you can do this on your own. But I think for a lot of people, again, jumping in, talking to an expert early makes sense. Yeah. And again, it's exactly like with the medical situation. Okay, I don't want to go talk to the dentist. And I know what he's probably going to say is I got to get the drill out and do stuff.

But once it's done, and yeah, maybe there's a recovery period, but longer term, I will be much better off. So sometimes a little bit of short term discomfort. is exactly what's needed for a long-term permanent solution. Now, walk us through what, if you claim bankruptcy, what happens? I get asked that all the time. What are the ramifications of that and does it vary province by province? There are minor variations between provinces, but basically you lose your stuff. So there is a list of stuff that you don't lose.

It's called the exemption limit. It's all contained in the Executions Act of each province. So you're not going to lose a car that's only worth a few thousand bucks. You're not going to lose your household stuff, your couch, your chair, your clothing, that sort of thing. You don't lose your RRSP except for what you've contributed in the last year. Right. So the government doesn't want you dumping a million bucks into it and then go in bankrupt. So whatever you contributed in the last year is fair game for the creditors, but everything else you get to keep. If you have investments like TFSAs, RESPs, sorry, those are not exempt. You do lose them.

But most people by the time they get to see me, they've depleted their investments. So that's not a big issue. You lose equity in your house. But again, most people by the time they get to see me have probably sold the or never had one in the first place. If you have a car loan, you can keep paying the car loan and keep your car because it's not really your car. It's owned by the bank. So first thing we do is go through all your assets, see what you're going to lose.

You would lose your tax refund for the year of the bankruptcy in any prior years you haven't filed, but then once the bankruptcy is done, that's it. And then the second thing you lose, like we talked about earlier, is a portion of your income. So again, we help you project forward what your income's going to be, what's the math say, how much are you going to lose? So we go, okay, this is what you're going to lose

in terms of your assets. This is what you've got to pay in terms of your income. That's how much the bankruptcy is going to cost. And you can decide then if a proposal would be a better option. A first time bankruptcy in Canada, if you have no surplus income, meaning your income's low, you're eligible to be automatically discharged in nine months. If you have surplus income, an extra year gets added to that. If you've been bankrupt before, another year on top of that gets added to it.

But there is generally a defined end to it. Now, the creditors can object to the bankruptcy ending if they think you haven't been fully forthcoming or whatever. But in most cases, a bankruptcy is going to be done in nine or 21 months. So what about really high income orders that happen to get themselves in a lot of trouble? Are they very hesitant to claim bankruptcy? Because as you say, it ties into income as well? They are. But again, it's a math question. And I've got a couple of people who are going to be filing a bankruptcy with me over the next week or two who have pretty high income, but they've also got really high debts. Maybe they had to surrender their pre-construction condo because they're way

underwater or someone's like, well, or they're three, exactly. There might be, there might be more than one. And so it's, or they've got a huge tax debt from that business they operated five years ago. I got closed down during the events of 2020 and they've just never been able to catch up. So it's okay, I'm going to have to pay $50,000 because of my income in a bankruptcy, but my debts are $400,000. So you know what? It's still better off to clean it up and get a fresh start. Okay. Next question. I personally think we're seeing higher and higher debt levels now than we've ever seen among the people who are claiming bankruptcy, I'm often asked, and you'll know the answer to this, how are they gaining access to the credit this deep into the problematic situation?

One dollar at a time. So that's how it works. So, you know, you get a credit card with a few thousand dollar limit and you're paying that on time. So you qualify for another one. And then I get a car loan. Then I get a whatever other kind of loan it is. And it just grows and grows. And as you know, banks and lenders use the credit score as one of the determinants of whether you're going to lend to you. And as you know, that's kind of a scam because it's something that is there for the lenders, not the borrower. If you've got five different credit cards with a $10,000 authorized limit and you're carrying a balance of two or $3,000 on each one of them, the wealthy barber would say, you're nuts. You're paying a huge amount of interest. You should pay it off. But the credit scoring

system says, hey, you're making your minimum payments every month. You've got a relatively low utilization. You are the perfect guy. We're going to give you a high credit score, which means now you can call for another loan and another loan and another loan. And then if there's any hiccup at all, you're off work for a couple of weeks, you get sick, you get divorced, whatever, now you can't service it so you end up with a huge amount of money. Like we said earlier, the reason you have a lot of debt is because things are going pretty well at some point in the past. And every lender is not looking at every other lender all the time. They obviously have access to your credit report. So if it gets too high, they may start pulling back. But look, they all want to make money.

And if they think that you're the kind of person who can at the very least make their minimum payments, then they're happy. Like, does the credit card company really care if you ever pay off your credit card? Is it not true that the perfect customer is someone who makes their minimum payments for 20 years? Yeah. Because under that scenario, you've paid back the original debt three or four times over, but you still owe it. And they've got a beautiful cash flow annuity. So that's why lenders are happy to lend because they can make tons of money off it. Well, yeah, and again, for the audience, too, they don't.

they'll have a certain default rate. Some people will have to go down the insolvency road, but they've factored all that into the math. And of course, it's very much reflected in the high interest rates of 20, 21, 22%. Doug, when you look at the people who come to see you, how have they gotten there? There's always this feeling out there among the boomers, et cetera, that they've just spent aggressively and been irresponsible. I've seen enough of it to know bad luck has played a very big role in some instances, addiction in others. Just give me a general response to how do all these people get to your door. Yeah. And for some of them, it was truly, boy, you did a lot of silly stuff. You should not have done that. But for the vast majority of them, it was either a triggering event,

you know, lost my job, whatever. I mean, think about it. You've got your student loan and you had to perhaps get some other debt to survive because you got all these, you're not earning a huge amount of money yet. And then you lose your job. What do you suppose to do? Like, I assume I'll get a job in another month or two, so using debt to bridge that gap makes sense. Well, if I don't get employed as soon as I would like to, who knows. So that's part of it, but then it's all these structural issues that are also part of it. The unemployment rate is higher than it's been, and it's even higher amongst the younger generation. Obviously, expenses are higher. Food is a bigger percentage for poorer people than for richer people. So most of the issues we are seeing are structural as opposed to

just bad behavior. And once you get onto the debt treadmill, that interest keeps compounding and it's very hard to get off the treadmill. Yeah, I agree completely. Do you see more of the people coming in the door who are single than are in a couple? Yes, by a significant margin. And part of that is just math again, right? Like if I'm, if I'm a couple, then I'm only paying one rent instead of two, one phone bill instead of two. So it is definitely cheaper to live as two than as one. And, Yes, so that's definitely something we see. Now, of course, if you are a couple, you're more likely to be, you know, having a bigger place, buying a bigger house, having kids and all those things cause debt problems too.

So there's certainly lots of families who are also getting into financial trouble. I live as too with Jasper, my dog, and that is not less expensive. I assure you. I assure you. There you go. What about addiction? I mentioned it. I've seen that one jump up.

And I would argue gambling is the new addiction that is affecting so many younger males in particular. Are you seeing that come through? through the door a lot now? Yep, absolutely. And gambling has become so prevalent. I know you're a fan of a certain baseball team, so you probably watch the baseball on the TV. And what is every single ad on the broadcast for? Oh, it's crazy. Every single one. So it used to be car ads and beer. Now it's all these different gambling sites. So it is so prevalent that I'm like, well, you know what? Why not? It doesn't cost much. I can do it on my phone. It's really simple. And if I've got a bit of financial trouble, this might be the way to get out of it. Because if I make a couple of good bets,

then I'm good. Well, of course, if you don't, then it gets even worse. And that's just one form of gambling. Obviously, we've got casinos and online poker and all the rest of it. So I think gambling is not the problem. It's the symptom of the problem. I'm working from home all day long. I don't get to see as many people. And it's, it's there on the TV, on everything. It's just thrown at me everywhere and it's really convenient and easy. I don't have to drive to the casino in Vegas to gamble. I can do it right on my phone. So it's a combination of easy action. and maybe this is going to be the solution. And there's many different forms of gambling. I'm talking about sports betting specifically, but I would argue that investing in real estate could be gambling if you don't understand it. Certainly investing in the stock market could be gambling. Crypto can certainly be gambling if you don't understand it. And so we see all of those different forms. And yes, it does skew much more towards males. But we've certainly got lots of females who get into those issues as well. Over the years, we've had such a buoyant real estate market until relatively recently. I assume that the vast majority of people coming in are not homeowners. In the past years,

of course, they could have drawn from the ever-expanding equity and got themselves back out of trouble. Is that the case? Exactly right. So we've got the data historically going back many years because we've been around forever. So we publish it as the Hoyes-Michelous Homeowners Bankruptcy Index. You can see every month. And so it peaked in 2011, where about a third of our clients owned a home at the time they filed a consumer proposal or bankruptcy. And back then, it's, oh, my homes were $300,000. The mortgage is $2.80. If I sold it, I wouldn't get anything. So you're not going to lose it if you go bankrupt because there's no equity in it. But if you go forward to August of 2022, that was the first and only year in our 27 year history where the index was

zero. We did not have a single client that month who owned a home. Unreal. Because we were at the peak of the market. I was a few months after the peak. But even if you bought the worst house in the worst place, It went up $100,000 bucks yesterday so you could just refinance pay after credit cards. Everything was good. That trend has now started to reverse. Last year, it was about 8% of our clients who owned a home at the time of their insolvency. I suspect if you and I are having this chat again in a year or two, we'll be back up into the 20% range.

So the house as an ATM is no longer a thing. It has gone from being an asset to a liability. Yeah, you know, again, I agree with all of that. And I think you're right about the 20% figure because not only, can't you tap into the ever-expanding equity, it's going the other way. But of course, we're getting all the mortgage recess that are coming this year, making people even tighter. Are you seeing an impact of that yet? We are, but we're in the early innings. Early days. So if your mortgage was reset and now you're paying an extra thousand bucks a month, you're not going bankrupt today. It's okay,

probably I can Bob and Weave, I've got a bit of savings, maybe I can pick up some overtime. I can kick the can down the road a little bit longer, a little bit longer. I think this will become a bigger story with each passing month. I think certainly by 2027, it'll be an even bigger story because there'll be people realizing, you know what, I just can't do it. I've depleted everything. And it's not just the mortgage renewal. Everything's going up. Property taxes, hydro, repairs and maintenance, everything. And so a house, which used to be almost a guarantee of financial security, has become an anchor. It's like, oh, my goodness. And if you do the math, how much would it cost you to rent the same place you're living in as an owner? And the answer is, in most cases, rent is a thousand or

thousand dollars less a month and that's ignoring catastrophic repairs like a new roof and having to you know flooded basement and all the rest of it so there are more and more people are going yeah you know what maybe renting is the correct idea in the short term until the market kind of recovers and if you have to get out of a real estate situation where you're underwater yeah the answer might be an insolvency to do it i i love that answer and you and i are again on the same page i'm always saying that i cannot believe how much even experts underestimate the cost of owning a home. I'm pro home ownership. I own my own home. But when you look at it, as you mentioned, it's not just the mortgage, the property taxes, the utilities, obviously the insurance, the upkeep, they're all rising

at a greater than inflation rate pace. And it is really squeezing people. Rob Carrick had a good line. He was on the podcast recently and said, I used to think of a home as a forced savings program. Now I think of it's a forced spending program. And there's so much truth to that. Absolutely. And that was The worries of conventional wisdom. If you're forced to pay your mortgage every month, part of that is going towards principal, it is a forced savings program. But my admonition to everyone would be, well, do the math. Like, actually look at the numbers. Do a spending summary, figure out what it's actually costing you. And that's where you realize, hmm, maybe it's not so good an idea. Like all the people who, I'm again, over generalizing here, but people who bought a condo to rent out, it's like, well, this is a no-brainer.

The mortgage is $2,500 a month. I can rent it out for $3,000. I'm going to be making, money. Now, of course, what really happened is it was costing them $3,500 a month, but no problem. I'm putting $1,000 a month into it. But the condo is going up in value by $2,000 a month. I'm still going to be fine. Now, it's costing you $1,500 a month, and the condo's actually going down in value by $1,000 a month. The math is completely opposite. So do the math and make sure you understand where you're getting yourself into. Yeah, and of course, we're seeing thousands of cases like that. Okay, you and I are both quite supportive of the fact that it's difficult out there. And I think we would be two of the more sympathetic ears in terms of recognizing people are blowing their money in all cases to get themselves into trouble.

But I am quite judgmental on one front. And that is what a lot of younger people, more male than female, spend on cars. Do you see some things coming in where you go, how the heck did you buy this car in that position? Yes. And again, I'm highly biased because I drive a car that's 16 years old. So I am clearly not a car guy. I clearly don't care. so it's hard for me to be neutral on a subject like this. I do also understand that if you're a guy

and you work in construction and you got to be at the job site at 6 a.m. and you got to have a pickup because you got to haul your tools and everything, then you got to have a vehicle. I get it. You work, shift work, whatever. So yes, you have to have a vehicle. But do you need a brand new $100,000 pickup or whatever it is they cost today? I don't know, do you? Is that what you need? And again, I sort of understand how guys think because I, you know, I'm a guy. And it's like a car is an extension of my very being. And if I got something that says turbo on it, then maybe that makes me cool. Right.

So, okay, and that's all cool. And you get to spend your money on whatever you want. But again, do the math. It's not just the payment. Because, of course, the car place is going to say, oh, it's only $463 by week. That's not a very big number. Yeah, but it's an eight-year loan. do the math, you're going to pay twice as much for the vehicle as what you're actually paying for it.

Could you possibly survive with a three-year-old vehicle and save a ton of money and still accomplish what you need to do? Now, maybe you don't even need a vehicle. If you live in the city, you've got access to transit, rent a car every couple of weeks when you've got to go visit your mother in Peterborough or whatever. But if you can keep your car cost lower, that's definitely better. I've definitely had tons of clients who are spending half their income on their car. I see it all the time. It's probably my biggest frustration. It's probably my biggest frustration. and the stuff I'm sent is what a lot of younger people spend on cars. I don't get it. And cars have become so expensive. The up heat, the insurance, it's nuts. It's crazy. And again, the events of the

last five years drove used car prices up as well. So it's like, well, what am I supposed to do? And, you know, particularly, I mean, it affects females too. I got three kids. What am I supposed to do? I got to schlep them around. I can't be taking them to hockey practice on the back of my bicycle. Yeah, I get it. So you got to balance. The new car is great because you got warranties and you're not going to have the same kind of repairs and maintenance expense, but you are paying way more for insurance, way more for the financing. So is it possible to get something somewhere in the middle? I would encourage you, if at all possible, yeah, that's the way I would go to. Yeah, and I'm seeing lately a lot of people buying lower end new cars. Because even lower end cars are quite nice nowadays. I mean, cars are very well built relative to 30, 40 and 50 years

ago, but then they get the warranty, less stress, et cetera. They're not buying a hundred and ten thousand dollar truck. To your point, okay, another quick question. We were talking about a lot of single people come through the doors, make sense without the double income. Divorce is one of the big triggering events that pushes people into very challenging times, especially with housing costs running as hot as they have over the last 25 years. Thoughts there? Yeah, you're absolutely right. It's the reverse of the other. It's okay, we were living together. We had one set of expenses, two incomes. And now we've got, we've each got our own set of expenses because we're each paying rent, we're each got to maybe buy another car, whatever. And we've only got the one income coming in. And so when the separation happens,

what do you do? I got to go out and get stuff. I got to buy a couch and a bed and a microwave and whatever. So there is an immediate increase in expenses right away for capital costs, but then you're also now paying more each month. And if there's kids involved, maybe you're paying support, receiving support, whatever, you're back and forth between the two homes. So yes, it definitely increases the cost for all concerned. And look, I don't have any solution to any of this. But it's, again, if you can do it as amicably as possible. That would be my advice because you don't also want to be paying $100,000 to lawyers to sort it out because only the lawyers win. And again, my apologies to all the lawyers watching this. But if you can be as amicable as possible, while still protecting your rights,

obviously, then that's definitely a good idea. No, that's well said. You know, there are some rumors out there. And I haven't seen formal data on this that divorce rate is slightly trending down over the last fears because of the cost of real estate, because of the cost of living, people are getting out there and going, we can't handle it. And if we do go this well, we're going to have to live in not so desirable areas relative to our wants for our kids and schooling and so on and so forth. And I've actually seen a fair number of cases like that personally. Yeah, so have I. And I also see cases where it's like, okay, we need to be separate, but you know what? I'm going to live upstairs. You're going to live downstairs. And that way, we're still under the same roof. We can still

take care of the kids and do everything, but we could get a bit of peace as well. Okay. desperate times, you've got to do desperate measures, and that's certainly what I'm seeing as well. When you look at the people, again, you're helping, do you get some where it's just poor decisions around lifestyle, well, they travel too much in their 20s, buried themselves in debt, now can't get the kind of job that gets them out of it? Yeah, that certainly happens. I certainly wouldn't say that's the majority. Small number. But I guess in hindsight, if you were to wind your life back, you could go, there was a few poor decisions I made. Like, we've all done it. And the younger you are,

the less experience you've got, so the more poor decisions you make. But I also want to balance that against, do you really want to die with 10 million bucks in the bank? I agree. There's a really delicate balance there. And so, you know, I'm going to wait till I'm 80 years old and then I'm going to travel. Well, now you're too old. So you got to do some stuff too. Are you going to wait till you're 60 to start having kids? Is that your plan? I think there's probably issues with that. So it's very difficult. So I'm never one to say, you know what, you shouldn't have taken the family on that vacation because your kids are only young once. Are they going to, are you going to be taking them on vacation with you when they're 40? Probably not. I don't know. Right. So there's a

balancing act there. I think you just got to be, you got to think before you do something, pause for 10 seconds. Okay, this is going to be a great family vacation. Can we afford it? Would we be better off deferring it for six months, saving up a bunch of money so that we're not paying interest on the vacation as well? I think if you can do those. you can probably get to get a happy medium. You know, I love that answer. And for all the listeners, I know it sounds basic, but injecting time between the stimulus of wanting to buy and actually buying is one of the

most important things people do when they manage their money well. And Doug jokingly said 10 seconds, a lot of times people take 24 hours, especially for something big like that, it truly makes a gigantic difference. All right, when you've helped these people, they've filed a consumer proposal, they've gone down the bankruptcy, how do we help them not getting back in trouble again? Do you offer counseling on the financial planning front? How do we get them on the right path? We do.

And there are two credit counseling sessions that are part of every bankruptcy and consumer proposal. And we've got a ton of resources that we also provide to them. Like in an hour, I can't sit down and tell you everything you need to know. But we do say to them, look, we've got a ton of resources, videos, and whatnot. Here's a list of books. There's a bunch of great books. The Wealthy Barber is a pretty good book.

Brown's book is pretty good, Welting like Rabbis. There's a whole bunch of them that are, that are. really good. I throw all my book do if they want to understand where my thought process is, but we encourage them to, you got to want to do it yourself, right? Yes, true. Like anything. Like anything. You want to get in better physical shape. I guess you need to understand what's the difference between cardio and strength training. You want to understand what's the difference on nutrition. So my partner, Ted, constantly says no one cares about your money more than you do. It's very true. And probably no one cares more about your health and everything else more than you do.

So you got to take a bit of time and learn how to do all that. And I have my own theories about how, you know, best to do that. But ultimately it comes down to you. As you know, I'm not a huge fan of budgeting because I don't think people can stick to it. I do agree with your philosophy that you at the very least got to make a spending summary and see where your money goes. Invest a bit of time into that. Take a look at the numbers. And if you do, quite often, you know, the answer becomes obvious.

Oh, I'm spending $470 on coffee. Hmm, is there a way I can cut some of that cost and accelerate my retirement? You got to take ownership for yourself. You're the boss. You've said all that very well. Okay, we're going to wrap up with a few quick ones. What is the name of your book? Straight Talk on Your Money.

Yeah, what is the name of the grocery store beside you? Central Fresh Market, formerly Central Meat Market. One of the great stores of all time. We share the entranceway. The street light that comes into our lot is the same as that comes into theirs. And give us your background. Where did you grow up and how did you get tied into this? industry. Did I grow up as the real questions? My father was a school teacher. I was born in Toronto.

We moved, we lived north of Toronto for a while. I knew very early on that I didn't want to be out there in the hot sun doing something that was hard. So gravitated towards accounting. I became a chartered accountant. I worked for the big firms, KPMG and PWC for 10 years and realized I was not that eager to be making sure the balance sheet, which reflects what happens a year ago, was accurate to the penny. So I got involved in the restructuring area. I'm a chartered business valuator, but also a licensed insolvency trustee. The first few years of my career was helping corporations restructure themselves. So I made lots of money for the banks. And then I realized, you know what? Maybe it'd be good to actually help real people. And so when Ted and I started Hoysmeichaelus

in 1999, our focus was entirely on individuals. And I like that because instead of doing one corporate restructuring that lasts for six months, I can talk to 10 people in a day and actually make a difference. And because we've been doing it so long, I think we've got pretty good at it. And yeah, it's very enjoyable. I mean, you know this yourself. You talk to someone, show them something that they hadn't thought of before, and they're in a really good mood after. You see people come in and they're down and when they leave, their shoulders are up.

And every day someone says to me, man, I'm glad I met you with you. Yes, I should have talked to you sooner. But that's what is the most fulfilling part of this gig. I can't believe that was 27 years ago. You and Ted started the company. I remember that. Holy smokes that's gone fast. Yep.

Oh, life, life moves. That's for sure. What university did you go to? Toronto. Couldn't get into Loria? No, I couldn't get into Waterloo. Like, that's a true story. Is it really?

I applied to Waterloo because they had a co-op accounting program. And the high school I went to was a pretty tough high school. So my marks were not as high as the other schools that had the grade inflation. This was before we had, I don't know, standardized testing or whatever. And so I couldn't get into it. I could have got into the regular program, but not the co-op and accounting. So I said, you know what, I'll just go to Toronto, bang it out. And that's exactly what I did.

Do you know that every single person who can't get into a certain university says, I went to a really tough high school? Yeah, I know. That's what we all say. We all say that. We all say that. Anyway, it's a real pleasure having you on. You're a true expert in your field.

I've enjoyed your material for years. And I should say, I'm giving Doug a lot of compliments, but he'll testify. We really didn't know each other until quite recently. When I came on your podcast, we had to cross past one for about two seconds. So this is unbiased up. I really enjoyed the content. that he and Ted have put out over the years. I think they've helped a lot of people on the education front. The reputation is Sterling and really enjoyed having you on the show. I appreciate it,

Dave. And what I appreciate about you is the fact that, okay, you're a guru and you're famous, but you've actually also done stuff. You've actually met with people, thousands and thousands of them over the years. So it's not just book learning and platitudes. It's like, this is what actually works. And I think that's where you and I are, you know, in sync. We've actually met with real people. This isn't just our opinions. This is what we've seen work. And that's why I'm happy to spread the word. Yeah, thanks.

And you know what's interesting you bringing it up because I mentioned earlier, we're both quite sympathetic, empathetic to what people are going through. And I think more people would be if they sat across the kitchen table with them and saw, as you mentioned earlier, how costly it is out there. It is expensive to live in Canada right now. Absolutely right. Couldn't agree more. Anyway, great having you on.

Thanks very much. Say how to Ted for me. We'll do. Thanks. I appreciate it.