Bankruptcy Kitchener Blog

Today’s blog is to pass on an e-mail that we received from someone who has just completed a consumer proposal through our Kitchener office.

E-mail received:

“This is not a question but a thank you. The service and advice I received was way more than I expected, Any question was answered, and in a very timely manner. You handled every detail with utmost professionalism. From the moment we started to work together right up to now, my mind was at ease and I am so happy to have reached the end of one road and the start of another. I have recommended you to others I have encountered in my position and want to once again thank you for helping me get my life (and finances) back in shape.”

At Hoyes, Michalos & Associates Inc. we take pride in helping individuals obtain a fresh financial start. We understand that financial strain can have a significant impact on personal and family life. A consumer proposal or personal bankruptcy are some of the options that individuals have available to ease their stress and obtain a fresh start.

Our approach is to answer questions and provide facts so that individuals can make an informed decision for themselves. When they file a consumer proposal or personal bankruptcy with us, we attempt to provide assistance when they need it.

If you’re experiencing financial hardship and want to discuss your options in detail, e-mail us or call us at 310-PLAN. There is no cost in calling us or having a meeting to review the options and we are located at 607 King Street, Kitchener – between uptown Waterloo and downtown Kitchener.

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On Saturday Ted Michalos and I were guests on the 570 News Ask the Experts show, where we spent the hour discussing taxes and personal bankruptcy in Kitchener. The topic of taxes always draws a lot of attention as we are all affected by taxes and there are many rumors around how they work. There are several reasons that individuals owe taxes to Canada Revenue Agency (formally Revenue Canada), including but not limited to:

1. Self-employment,
2. Working more than one job,
3. Receiving pension income,
4. Reassessments of prior years returns, and
5. Cashing out RSP’s

The options in dealing with tax debts are:

1. Pay them – in a lump sum or over a CRA payment plan;
2. Apply to relief under the CRA fairness provisions;
3. File a consumer proposal,
4. File for personal bankruptcy in Kitchener, or
5. Let Canada Revenue Agency (CRA) garnishee pay cheques, freeze bank accounts, place liens on assets, etc.

It is true that the Canada Revenue Agency has more collection powers than any other creditor.  Some of the difficulties individuals face when they have a tax debt is

a) they have various other debts and do not have the funds available to pay the tax debt and

b) CRA tends not to be too aggressive with the collection calls compared to other creditors.

One of the common misconceptions with respect to tax debts, is that they never go away.   This is not true.  A tax debt is a dischargeable debt in a bankruptcy or consumer proposal pursuant to the Federal law called the Bankruptcy and Insolvency Act.  Therefore, if someone does file for bankruptcy and has a tax debt, then that will be included and discharged as part of the bankruptcy.

Further into the radio show we discussed consumer proposals. In a consumer proposal, a CRA liability is a debt that does go away. 

The main difference is that the creditors vote on a consumer proposal and therefore if taxes are the majority creditor a consumer proposal acceptance will depend on whether Canada Revenue Agency wants to accept it.

There are proposed new rules around bankruptcy that will impact tax debts.  Doug Hoyes and Ted Michalos (founders of Hoyes, Michalos & Associates) were in Ottawa last month and presented the Senators with their opinions on these new bankruptcy laws. 

If you are finding yourself with a tax debt that you are not able to handle and want to discuss your options, e-mail or call me in Kitchener at (519) 747-0660 or 310-PLAN (7526).  As a Chartered Accountant and a Trustee, I will understand your situation and will be able to explain to you how to make a plan to deal with your tax debts.

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