THE QUESTION
I'm a 32-year-old actor and I recently went with my company on two tours of Europe. I came back way over my head in debt, which seems to keep piling up. I still have student loans to pay and, while it's a little embarrassing to admit, I haven't done my taxes for five years. I have never felt there was any way I could pay them! I know you're not a financial adviser but I need advice on how I can get a handle on this situation before my credit rating is completely trashed. My family is trying to get me to take an office job to pay the bills, but I've always wanted to make a go of it in theatre. A friend of mine declared personal bankruptcy and said it's the best thing he ever did. But I'm afraid of the long-term consequences. How can I manage my debt without giving up on my dreams?
THE ANSWER
First of all let me say: I've been in your boots.
All through my 20s, while trying to establish myself as a writer, I played a cat-and-mouse game with my student-loan creditors.
One student-loan officer was like Holmes to my Moriarty, Porfiry to my Raskolnikov. I screened his calls, but he would phone at odd hours, sometimes on Saturday mornings, trying to catch me when I was groggy and disoriented.
"Dave's not here right now. May I take a message?" I would say, chipperly, as soon as I recognized the adenoidal twang of his voice.
"Who's this?" he would ask suspiciously. "This is Carl, Dave's roommate," I would say. He hated it; he knew it was me, but what could he do?
Once he called my grandmother in Minnesota. She freaked out and got on the blower to my father, who came down on me like darkness.
"Well played, Holmes," I thought.
Slowly, painfully, I learned what I feel were two important life lessons: 1) evasiveness and failing to return phone calls and acknowledge letters are not, in the long run, effective debt-management strategies; 2) sometimes even the most talented among us have to bite the bullet and get what my father would always refer to as a j-o-b.
First, though, you need to stop running, turn around and go eyeball-to-eyeball with your financial problems.
I ran your situation past Jeremy Kroll, a Toronto-based CIRP (Chartered Insolvency and Restructuring Professional: seriously, that's his job title) and bankruptcy trustee at A. Farber & Partners Inc.
Highest priority, he says: your tax returns. Do them. Now. Filing does not mean you have to pay right away. But you must file prontissimo.
If not - well, the government has all sorts of awesome and far-reaching powers. It can seize things. It can make assumptions about your income, and tax you on those assumptions. It can garnishee your wages.
It can even, without so much as a court order or a by-your-leave, reach into your chequing account with its big, hairy-knuckled, bejewelled hand, grab a giant fistful of your cash, stuff it in a sack and carry it off to be poured out in front of Stephen Harper's feet.
Then you have to take a look at your other debts. Personal bankruptcy is an option. And I was surprised to hear from Mr. Kroll that if it's your first offence, and you attend mandatory credit-counselling sessions, you can get back online creditwise in nine months.
"The courts understand when you've had one 'oops,' " Mr. Kroll says, citing as an example a laid-off autoworker waiting for a plant to reopen who gets stretched too thin. "What's abhorrent to the [Bankruptcy and Insolvency] Act is people who use it as a financial planning tool."
