Sole Proprietorship, Source Arrears and personal bankruptcy

November 15th, 2006 by Questions

2 yrs ago assessed at $100 000.00 source arrears ($10 000.00 penalties incl.). Over approx. 1 year I paid it down to $65000.00. I also owe aboout $10000.00 GST. This was a sole proprietorship in my name. I have not operated this business for one year because it was losing money. The last year I have earned very little money and have avoided any pmts and contact. I also have a bank loan for $7500 (assets worth $5000) and a credit card (same bank) for $6700.00. I have stressed and tried my butt off this last year to come up with a way to pay this off and I can’t do it and have to give up. I need to get a job. I have no assets. How am I likely to be handled by CRA?


2 Responses to “Sole Proprietorship, Source Arrears and personal bankruptcy”

, Barton Goth, GCO Inc. Bankruptcy Trustees said:

Typically we find that CRA will insist on being paid in full. Failure to negotiate an acceptable arrangement with them will likely result in garnishee’s, or if you own any real property (i.e. a house) statutory liens (i.e. a charge on any real property you own that can not be removed unless the debt is paid in full, it operates much like a second mortgage but CRA doesn’t have to inform you that it is being done, it is simply registered). The best thing for you to do would be to contact a licensed trustee and look into the filing of either a consumer proposal or a bankruptcy. These really are the only options available when unable to pay CRA debts in full (and don’t delay, especially if you own real property, if you file either the bankruptcy or proposal prior to CRA registering against the property, the debt will cleared, if you don’t beat the registration the amount registered will survive the bankruptcy or proposal).

, tpa said:

Thanks for the response. What I am unsure of is this. CRA has registered against me. But to what have they registered against me. My only assets are a vehicle ($1500), some inventory ($1000), and some tools($2500). Anything else I auctioned off and endorsed the auctioneers cheque over to CRA. If I declare bankruptcy, what survives, the total debt, or the amount of the items I have registered? Basically, do I have to pay CRA $65000 before I can sell my van, or if I sell my van do I just pay CRA the proceeds and the register they have against me is gone? If regardless of bankruptcy I have to pay back $75000 then I may as well inform my wife so she can leave me and live in said van down by the river.

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.)