Bankruptcy & Taxes Owing
The goal of the Canada Revenue Agency is to determine and go about collecting the proper amount of taxes from people and companies in the country.
However, based on circumstance or the size of your tax bill, it can happen that you are unable to pay for your tax debt.
- In situations such as these, it is always best to act as soon as possible.
- Generally, when you act more quickly, there are a larger number of options available for you to address your financial concerns.
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As you probably know, bankruptcy is a measure of absolute last resort.
If you opt for bankruptcy as a method of addressing your tax debt, it has the ability to dissolve your amounts owing – with conditions, of course.
So long as the CRA has not placed a lien against the amount owing to secure the debt, you will be able to discharge them through bankruptcy.
A lien is when they convert one of your assets, or part of it, such as a mortgaged home, into collateral or the debt.
Given the fact that secured debts are not addressed by bankruptcy proceedings, you could not have the matter resolved with a bankruptcy.
About Tax Debts
There are many different types of debts accrued as a result of taxes.
While the most common among them is income tax, there are also other sources of tax including payroll deductions, provincial sales tax, and harmonized sales tax.
In order to be in the black, all of these accounts must be up to date.
Another thing to consider is the fact that amounts owing collect a steady amount of interest – meaning the amount you owe only increases with time.
Handling it Properly
The CRA themselves have heavy abilities as far as creditors go.
They can freeze your accounts and garnish funds from your wages with a small amount of effort.
Construed against the average creditor, it is far easier for the CRA to take actual action pursuing you or an amount owing.
The agency can even go so far as to directly contact your customers to have them render payment directly to the CRA – instead of you.
They don’t require a court order to complete this step.
Considering the lengths, they can reach to reclaim owed funds, it is wisest to act sooner rather than later.
Reach out to a Licensed Insolvency Trustee in your jurisdiction.
As skilled and experienced financial professionals, they have the ability to give you objective and actionable advice that is specific to your situation.
Trained in helping those with financial challenges get back on their feet, a Licensed Insolvency Trustee offers their initial consultations at no charge and ensures that everything is fully confidential.
You deserve the benefit of information specific to your situation, so reach out for assistance today and take the first step in getting your finances back on track.
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What is Bankruptcy?
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What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?