Licensed Insolvency Trustee
In Canada, one of the most common, if not the most common, debt relief program is a Consumer Proposal.
Other debt relief programs, commonly referred to as Debt Management Programs, (“DMP”) or Debt Consolidation Programs, typically do not reduce debt.
To help understand the difference between the two, Boale Wood has posted detailed information on the differences. See this page for more.
When you owe the government money, it can be overwhelmingly stressful. It doesn’t matter if it is for taxes, student loans or even Medical Service premiums. Most consumers assume that the government has an endless means available to them to collect the debt.
The Government of Canada, through its various departments of the Canada Revenue Agency (CRA), are responsible for the issuance of income tax refunds, pension and old age security, GST/HST and provincial credits and other government issued income sources. When you owe the CRA money, there is concern that any collection action will result in loss of income and will leave an individual without sufficient resources to meet their basic living expenses let alone any other debt payments.
What Can They Do to Me?
CRA has the right to proceed with collection action without a Court Order. It can be as simple as issuing a Requirement to Pay to your employer (garnishee) or a Set Off Notice to the department that issues CPP benefits. In essence the government can:
Why would this occur?
These actions will usually be taken by CRA when the following occurs:
To avoid collection by CRA, you need to file any outstanding tax documents and continue to file your income tax returns on time each year. CRA is big on tax compliance. It’s not illegal to owe them money but it is illegal not to file your returns.
This will help you improve your situation by complying with the tax laws. It also helps you determine how much debt you owe them.
Once the amount is determined, you can figure out how you’re going to pay them and also know how much you should be sending them each month for next year’s tax debt so you do not continue to have debt owing year after year. Sending them the money monthly avoids the temptation to spend it and will help stop the cycle of owing taxes every year.
After your returns have been filed, start making some meaningful payments towards the debt. The CRA may ask you to provide various documents to help them determine a suitable monthly payment. This may include an income and expense statement that outlines your other financial obligations.
Expect to sacrifice some of the niceties of life, such as recreation or vacations, to get this debt under control. This applies not to just CRA debt but also to other debt.
And finally, make sure you stick to the payment plan that was agreed. CRA wants to see a concentrated effort and compliance with the income tax obligations. Whatever you do, don’t enter into a payment arrangement that you can’t keep. You will miss payments and CRA will start collections once again.
They Want More Than I Can Reasonably Afford
Despite your best intentions to pay the debt, sometimes it is not enough when you owe a lot of money to CRA. It may be the amount of the debt is just too high or perhaps the budget does not allow for a monthly payment. If that is the case, it is recommended you speak to a Licensed Insolvency Trustee (“LIT”) to discuss your options.
LITs are debt professionals and can assess your financial situation to determine if a bankruptcy or proposal is the best choice to allow you to make a fresh start. In most cases, debt owing to CRA can be included in a bankruptcy and proposal. With a few exceptions, CRA is treated like any other creditor in insolvency proceedings and must stop their collection activity once a bankruptcy or a proposal is filed.
An LIT can also provide continued support to make sure that you are not at risk for incurring future tax debt through the two mandatory counselling sessions.
Beware of Scams
Scammers posing as Canada Revenue Agency (CRA) employees continue to contact Canadians, misleading them into paying false debt. These persistent scammers have created fear among people who now automatically assume that any communication from someone representing the CRA is not genuine. To be sure that it is not a scam, review this website as to what CRA will and won’t do.
Contact one of the Licensed Insolvency Trustees at Boale, Wood & Company Ltd. for a free consultation. We will be able to advise you on what solutions are available to help you address the problem.
Call us. It’s not too late. (604) 605-3335.
Consumer insolvencies in BC increased in November 2018 overall by 1.0 percent from November 2017. Consumer proposals increased 6.7 percent while bankruptcies decreased 7.7 percent.
Consumer insolvencies in all of Canada increased 5.1 percent over the same period last year. BC accounted for 7.92 percent of all insolvencies in Canada in November 2018.
The proportion of proposals in consumer insolvencies in BC accounted for 63.73 percent during November 2018 while they accounted for 58.93 percent for all insolvencies across Canada for the same period.
The proportion of proposals in consumer insolvencies in BC was 59.68 percent during the 12-month period ending November, 2018, up from 57.99 percent during the 12-month period ending November 2017. It indicates the popularity of consumer proposals as a way for consumers to deal with their debt and with dealing with a Licensed Insolvency Trustee over other unregulated service providers.
While insolvencies across Canada are down overall by 5.1 percent, bankruptcies are down 3.6 percent, but proposals are up by 12.1 percent. Proposals also make up 55.67 of all insolvencies in Canada in 2018 up from 52.4 percent in the previous twelve months.
The insolvency statistics indicate the increasing benefits of the protections provided to consumers under the Bankruptcy and Insolvency Act over other non-legislated options, whether that is a consumer proposal or a bankruptcy. It also indicates that consumers are seeing the benefits of seeking the professional advice of a Licensed Insolvency Trustee rather than those of other non regulated service providers.
If you would like to know exact details of how a consumer proposal or a bankruptcy would benefit you in dealing with debt, call us at (604) 605-3335 to schedule a free consultation.
Call us. It’s not too late.
For more on the the all Canada statistics, see this page.
The latest numbers from the office of the Superintendent of Bankruptcy Canada shows a 2.5% percent decrease in the total number of insolvencies in Canada in November 2018 compared to the previous month.
Bankruptcies decreased by 8.2% percent and proposals increased by 2.1% percent.
Compared to a year earlier, insolvencies increased by 2.0%
Other stats: For the 12 month period ending November 30, 2018, the total number of insolvencies increased 2.0 percent compared with the 12-month period ending November 30, 2017.
You can read the summary and full report here.
What are my Options?
Do any of these situations seem familiar?
You’re not alone.
There are several solutions available to solve the problem.
At Boale, Wood & Company you will meet with a Licensed Insolvency Trustee (“LIT”) who will assist you in dealing with any of these situations, with a free, confidential meeting.
At Boale, Wood & Company Ltd., we will find a solution that will work for your personal circumstances and your family circumstances.
We will discuss all your financial options to be debt free and assist you in the development of a plan recommend the best the best option for you.
Ok, So What Are My Options?
At our initial meeting/assessment we will discuss all financial options to resolve your indebtedness. Your options could be any of the following:
As you will note, your last choice, as set out above is always bankruptcy. However, depending on your circumstances, bankruptcy may be the best option.
We will discuss and set up a plan and financial options that will deal all of your debts including government debt owing to CRA, Student Loans.
We will discuss the protection/exemption of various assets and the interrelationship of exempt assets in B.C. (such as car with a value up to $5,000, Pensions, RRSP except contributions in the last 12 months).
We will discuss the impact of net your current net income, and how this may affect you in a proposal or a bankruptcy scenario and how surplus income is calculated.
To get more information on the options that would work best for you, call the friendly and knowledgeable staff at Boale, Wood & Company Ltd. today.
We have offices in Vancouver and Surrey and also serve the Yukon. We can set up a meeting face to face, speak to you over the telephone or via email.
Call us, it’s not too late.
604-605-3335