Should I File Bankruptcy for Tax Debts?
Tax Debts & Filing Bankruptcy
Most people understand the gist of filing for bankruptcy, but some of you probably wonder if all debts are wiped out.
More specifically, many individuals ask the question: should I file bankruptcy for tax debts?
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Do tax debts get discharged with bankruptcy?
Tax debt is any money that you owe to the Canada Revenue Agency (CRA).
Some people wonder if they go away when you become bankrupt, or if they stick around.
The worry is that this is a debt to the government, so you can’t get rid of it.
However, tax debts will not survive bankruptcy.
Very few debts actually continue to exist after you’ve filed for bankruptcy.
All types of tax debts will be gone once the whole bankruptcy process is over.
In effect, you will no longer have to pay them, and you have one less thing to worry about.
How do you file for bankruptcy?
If you have tax debts that are impossible to pay-off, then filing for bankruptcy can be your only way to gain a sense of financial freedom.
The best way to do this is through a debt relief service like the one we offer.
You will have a guide that can take you through the entire legal process and help with any issues along the way.
For tax debts, there are a few things to bear in mind before you file:
- Ensure you have all of your tax returns filed and ready, this confirms that you owe money to the CRA, and how significant your debts are.
- Do you have any liens on your assets? A lien is basically a legal right or claim against an asset. In effect, the CRA may claim your house or car as collateral to satisfy a debt. If these exist, then they are impossible to remove. So, bankruptcy can remove your tax debts, but you wouldn’t get to keep the asset that the lien is attached to.
You will discuss all of these things with a Licensed Insolvency Trustee (LIT), who will offer advice on debt relief and aid with your bankruptcy claim.
Never accept any advice from someone who isn’t an LIT.
LITs are federally regulated to ensure you get fair and professional advice.
Should you file bankruptcy for tax debts?
In some cases, this can be the quickest and cheapest way of getting rid of your tax debts.
It is generally considered to be a last-ditch scenario when all other options have been considered.
Becoming bankrupt will give you a fresh start, but it’s a very serious thing to go through.
While it may be ideal for some, it might not be the best approach for others.
This is where our debt relief services can come in hand.
Call us today, and we can discuss your tax debts in great detail.
By working with us, we’ll help you find the best solution possible.
If bankruptcy is the ideal option, then we will help you go through all the steps to finally be free from your debt.
How to File for Bankruptcy
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?