January 10th, 2011 by Questions
I am currently self employed and have been for 10 years… I owe revenue canada just over $25,000, this included taxes and gst. My industry has slowed right down and have been unable to find any other kind of work..I own a home and have a first mortgage of $82,000 and second of $50,000, no car payments and just other utilities bills. My wife has a job and had her wages garnished but that will be done at end of January 2011. Not sure what to do as we dont want to loose our home. I am very lost at this point
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January 11, 2011 at 9:39 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
There are a number of available options, but from the information provided it is difficult to determine what option is best and I would recommend you contact a local trustee and have your situation evaluated.
However, the things that catch my eye are as follows:
1. The house. The important issues with the house and the ones that will determine whether or not you will be able to retail the property are the value of the house and the amount of the provincial exemption that exists in your area. Each province determines whether you are able to protect any equity and if so what amount of equity is allowed per residence. There is significant variation in this (i.e. Alberta exemption is $40,000.00, Ontario doesn’t allow any equity to be protected). So this will be an important factor to discuss.
2. CRA has some unique collection powers that other creditors don’t. The biggest one to worry about is their statutory lien rights. Essentially what they can do is register against your property and once they do they are like a second mortgage. You then have no way out of owing that amount, even in a bankruptcy that tax debt would now have to be paid. So the important thing is that whatever direction you choose you need to act before CRA registers against title.
This is not to say that bankruptcy is the best route, again there isn’t sufficient information to determine this, but I do think it is important you contact a local trustee for an evaluation right away… at this point you want to act before CRA does.