personal business failure
I am in the midst of the government (gst only for the moment) taking action against me for being a year and a 1/2 behind in my gst payments and reporting. I just filed 2006,2007 and owe 21,000 but I have yet to file 2008 tax return i made a lot more money in that year but truthfully have nothing to show, I assume I will end up owing approx 50 000 before whatever penalties they impose. I really dont know what to do next bankrupcy does seem to be the answer but what would my alternatives be
Posted from: Ontario
from: Ontario
The standard list of alternatives to bankruptcy is as follows:
1. Negotiate with your creditors. Explain why you have fallen behind in payments. Outline your financial situation and expectations for the future. Suggest a payment plan that is realistic and reasonable for both you and your creditors. As this is an informal process make sure that if you come to an agreement get written conformation. .
2. Apply for a consolidation loan. Take out a loan to pay off all of your debts. This can potentially lower your interest rate, total monthly and sometimes the total length of the contracts. With consolidation loans it is important that you examine your current spending habits and stop using your so you do not continue to fall further behind.
3. Make an application to credit counseling. This is a voluntary program where your debts are pooled together (they aren’t actually paid off) so that you are only required to make a single monthly payment to a non-profit counseling agency. As you make your payments the agency forwards funds to each of your creditors in proportion to your total debt. The advantage of this procedure is that usually the interest on your unsecured debts is reduced to prime or even eliminated. You are required to repay 100% of what you owe, but because of the reduced interest your monthly payment is much lower than all of your minimum payments would have been without the plan.
4. Make a proposal to your creditors under the Bankruptcy and Insolvency Act. This solution is used by people who cannot afford (or get approval for) a consolidation loan or a credit counseling plan, but don’t want to file bankruptcy. In a proposal you offer to repay a portion (perhaps 100%) of the debt that you owe. Proposals are an excellent alternative to bankruptcy, but they are not well known so I suggest you contact a local trustee and ask them about proposals if you are interested in this solution.
5. File for bankruptcy. If none of the other procedures listed is appropriate for you then bankruptcy may be correct solution. The concept behind bankruptcy is that you cannot afford to repay even a portion of your debts. To file bankruptcy you must meet with a licensed trustee.
Certain provinces have an additional option for their residents called an Orderly Payment of Debts. When you speak to a trustee they will advise you whether or not this solution is available where you live and makes sense for you.