Behind in Income Tax
December 14th, 2010 by Questions
I was thinking about doing a consumer proposal (I owe 26000 not including income tax) and I owe 2600 in income tax. Apparently my second careers counted as income and put me in the higher tax bracket when I was in school for two years. Would I be able to include the full 2600 in my consumer proposal? I also owe on propery tax but as i understand cant be included on the consumer proposal. Also, when i use the debt calculator, it only gives me 5 years. Can I do shorter?
thanks 🙂
Posted from: Ontario
One Response to “Behind in Income Tax”
Please post a follow up comment below:
(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)
You must be logged in to post a comment.
December 15, 2010 at 11:38 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
There is no problem with including the income tax in the consumer proposal, as a matter of fact you legally are required to list CRA and they will be an unsecured creditor just like everyone else.
As for a shorter time frame in the consumer proposal, technically it is possible, but it will depend on the type of offer you are making to your creditors and the individual creditors you have. The challenge is that there are a number of creditors who will routinely see a shorter period offered and immediately ask for the same payment but over the 60 month term. Their argument being if you can afford the consumer proposal payment for 36 months then you should be able to afford to make it for 60 months. The way this all plays out is that you will typically end up paying back is often much greater than if you simply started with a 60 month term and offered a slightly lower recovery.
But realistically this is something you should discuss directly with a local trustee, they will be able to look at your creditors and your budget and help you to craft the proposal in a manner that is most likely to be successful.