CRA lien on house
I owe CRA $237,000 and Line of Credit and Credit Cards a total of $35,000. I still have a mortgage of $188,000. My house is valued at $299,900. My question is Will a consumer proposal be possible? If yes or how will bankruptcy or a consumer proposal help me solve my secured tax debt?
Posted from: British Columbia
I have assumed that CRA has put a lien on your house for the $237K owed. If so, this now acts much like a second mortgage and CRA will not remove it until they are paid or the house is sold and they receive the available proceeds after payment of your 1st mortgage.
As such, your unsecured tax debt would still be fairly substantial at over $100K (although you would no longer be a “high tax debtor” owing more than $200K).
Filing for bankruptcy or a proposal really only allows you to deal with your unsecured debts. Assuming the secured portion of the tax debt was paid, filing a proposal for the remaining amount plus the $35K in other debts would still be difficult since CRA is often reluctant to accept proposals that do not pay a substantial percentage of the debt.
Your ability to make a viable proposal would largely depend on your ability to earn “surplus income” and offer a payment of roughly that amount for a period of likely between 3 to 5 years.