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Income tax debt & bankruptcy

income tax debt and bankruptcy in Thunder Bay

If you live in Thunder Bay or NW Ontario and have outstanding income tax debt, there are options available to help you deal with this debt.

You can often make a deal with the Canada Revenue Agency (CRA) for taxes you owe. You can either negotiate payment terms or file a proposal under the Bankruptcy and Insolvency Act (BIA) to avoid filing for bankruptcy.

Negotiate payment terms

If you owe taxes and cannot pay the balance in full, you can explain your financial situation to CRA and try to negotiate a payment plan. For example, if you owe $1,000, you may offer to pay $100 per month for the next ten months. But, be aware that even if CRA accepts your offer, you will continue to be charged penalties and interest until your debt is paid in full.

If you are unable to successfully negotiate terms, CRA may take further action against you to collect the taxes owing. CRA can withhold tax refunds and HST credits, garnish your wages or accounts receivables, take funds from your bank account and place a lien on your home or other real property. CRA does not have to go through the normal Courts process so they can act very quickly.

Filing a proposal

Filing a proposal stops both collection action and interest and penalties. Normally a proposal is for less than 100% of the debt you owe. However, CRA has specific criteria regarding proposals.

Our Licensed Insolvency Trustees and Administrators are familiar with all aspects of proposals to CRA. We have assisted countless individuals with income tax debt to arrange successful proposals to CRA.

Bankruptcy and income tax debt

It is a common misconception that personal income tax debt is not discharged by bankruptcy. This is not true; personal income taxes are covered by bankruptcy.

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To speak to someone now in Thunder Bay or Northwest Ontario, call us at 310-8888 for a free, no obligation, confidential consultation.

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