Advice please
I am incorporated, my spouse is my employee. I have just discovered that my spouse has incurred huge debts (not joint). Money I thought was put to savings/pay down debt has disappeared. My work is contract, sometimes many months between contracts, I cannot realistically continue to employ my spouse at the same salary and cannot risk access to company funds. I really have no choice but to relieve of some present duties and reduce salary to my spouse who is making an effort in a small way by a second job, though it does not pay much, there is no way the entire debt can be repaid. If a Division 1 proposal or bankruptcy is filed, will this be a problem? Also, due to cash flow, delayed in submitting payroll remittance for 2006 for spouse, now wonder what should be done? Thank you
Before we begin, I want to be certain that you understand that there are 3 separate legal entities that have to be dealt with:
1) your corporation that owes debt
2) you – it is not clear from your notes how much debt you have
3)your spouse and their debts
Each has the right to file a proposal (or bankruptcy) independent of what the others do.
I suggest you summarize the debts that each of the 3 have and then go and see a trustee to discuss the options to resolve the situation.