Howard Hayes Bankruptcy Cambridge Ontario Blog

Howard Hayes

Yes.  A tax debt to CRA is a debt you can include into either a Personal Bankruptcy or a Consumer Proposal.

(Unfortunately, you likely not going to be able to include a tax debt into a debt management plan with a credit counsllor or debt settlement company).

With CRA debts, it’s important that if you file either a Consumer Proposal or Personal Bankruptcy, then you’d want to make sure that your tax returns are up to date.  Either use the latest software, or use a tax accountant or tax return preparation company to get your returns filed. 

In a proposal, it could be a win win situation to have your taxes up to date.  If you file and you get a refund, you’d keep the refund.  If you file the taxes and owe, you can include the debt into your proposal. 

In a bankruptcy, CRA will check to see if your returns are up to date.  If you have missing tax returns, then it could be likely that they’d consider opposing your discharge from the bankruptcy.  They may want to force the issue to have to go to court, so that you can explain why a return has not been filed. 

If you owe CRA more than $200,000 or if your tax debt represents more than 75% of your debt load, then you’ll likely have to attend court at the end of the bankruptcy to explain why before you can be discharged from the bankruptcy.

If you have tax debts and are considering your options, talk to a trustee.  A good trustee will be able to tell you exactly what you may need to do and what options are available to you. Call us at 516 622 3773 or email me your question.

Question: Do my traffic fines get included in a bankruptcy?

It’s not all bad news.

January is here once again, it’s a new year and a new start for many people. The holiday rush is over, the bills are rolling in, but the temptation to spend is still there.

I was recently walking through the mall and I was amazed at how many retailers are still pushing consumers to spend, spend spend even after the holidays. Take 50% off here, 40% off there, and an additional 20% off if you use your credit card. The savings appear to be too good to pass up.

Everyone loves to “score” a great deal, but when does it become a problem? Here are some warning signs that your spending may be out of control:

• Spending over your budget- You may not be able to afford the item, but purchase it anyway.
• Compulsive Buying- You go in for a t-shirt and come out with 10, in every colour.
• Hiding your purchases- To avoid being criticized by family or friends.
• Excessive use of credit -Unable to keep track of spending.
• Anxiety after making purchases- Feelings of guilt, or depression after making a purchase.

In any situation it is important to have a budget and a plan before you spend. Completing a budget will help you stay on track while spending. Revert back to the “old days” – you may want to consider using cash; it is often easier to keep track of cash rather than swiping your debit or credit card which can easily lead to over spending.

Identify your needs vs wants. Step back and ask yourself, “Is this an essential item?” Or is it a “splurge”? Asking yourself these questions is a simple yet effective way to control your spending.

If you feel spending has gotten out of control, your credit card bills are too much to handle, and you are facing serious financial hardship contact our office today at 519-622-3773 or send us an email, we talk to you about options such as a Consumer Proposal as a way to consolidate debts you have into one manageable montly payment as an alternative to having to file for Personal Bankruptcy.

Doug Hoyes and I are pleased to welcome Danielle Ratford to our Cambridge team. Danielle will be working out of our Cambridge office five days a week and can help you with advice of dealing with debts and options that you have available, such as a Consumer Proposal or a Personal Bankruptcy. As a trained insolvency administrator and counsellor, Danielle can also help you and guide you through a Consumer Proposal or Bankruptcy should you need to file with us.

When we talk about the average person who needs to file for bankruptcy, we often say that they are average, hard-working people just like you and me who have run into unfortunate circumstances that have caused serious debt and financial trouble.

Does this happen to you? You recieve those gifts at Christmas you don’t really want or need.

How can you survive the holidays and beyond during this economic crisis?

Here are three things to consider when walking around the malls with your Christmas list.

1. Use cash, not credit cards. Use cash for your holiday spending. Credit card interest rates average between 18% and 25%. These rates are astronomically high. This means that an unpaid balance of $2,000 can cost you $4,000 or more to repay. Make paying cash a habit and leave the credit cards home when you hit the malls.

2. Spend Less and think of alternatives. It was reported on CTV news yesterday, many people are in a similar situation this year. Rather than spending excessive amounts on gifts, is this the year to consider gifts you can make; like baby-sitting, offering to do the household chores for mom, fixing Dad’s car?
These are gifts that are appreciated but do not actually cost too much. Discuss the topic with your family and friends. Think of what your mom always told you, it’s the thought that counts.

1. Reduce your debt. If you have credit card debt you are paying interest, greatly increasing the cost of your purchases. Debt also means you’re not calling the shots. The credit card company is now telling you when to pay, and how much. If you have debt, you are not in control. You can take immediate steps to reduce your debt to regain control of your finances.

The best way to avoid financial problems is to prevent them. Email us or call us at 310-PLAN or 519 622 3773 for more information on bankruptcy, budgeting and credit counselling.

Is a consumer proposal still an option to deal with tax debt to CRA if CRA have a lien against your house (but there\’s no equity in the house)?

Yes, however CRA would be under no obligation to remove the lien. When a proposal is filed to your creditors, you receive legal protection that prevents creditors from taking any further legal action against you in an effort to recover the debts you have with them.

If the proposal is accepted by the majority of your creditors (every creditor has one vote for every dollar you owe them), then all creditors are bound by the terms of the proposal.

The lien will likley remain and CRA will be paid from the proceeds of the sale of the property when or if you eventually can sell the property for enough money to be able to pay out all the encumberances against the property.

If filing a consumer proposal or personal bankruptcy can often be the first step toward getting a fresh start with all your debts including CRA. Call me today at 519-622-3773 or sending me an e-mail. I look forward to meeting with you in Cambridge and helping you make your plan for a fresh start!