This past week of November 14^th to 18^th was Credit Education Week across Canada.  Credit Education Week is a national initiative designed to increase the knowledge of Canadians about how to use credit wisely and avoid taking on more debt than they can handle.  The theme of Credit Education Week this year was “The Sandwich Generation”.  The Sandwich Generation is defined as people who are caring for their aging parents at the same time as they are supporting their own children.  Being in this situation puts a great deal of pressure on family finances, and the goal of this year’s Credit Education Week was to offer suggestions to Canadians on how to handle this pressure, as well as providing more general credit-related information.

Our local Thunder Bay Counselling Centre, as it always does, put together a week-long series of information events and presentations to coincide with the national program.  The events included presentations entitled “Family Finances”, “Protecting My Identity”, and a fun shopping-themed game called “The Price is Right” at Intercity Mall.  These events and presentations were well attended by the community and the efforts of the Counselling Centre staff were much appreciated.  Their team includes two excellent counsellors in Bev Dunnill and Cyndi Sereda.  As credit counsellors, they can help you make a plan to pay off your debts in full and can help you work with your creditors to reduce the amount of interest they are charging you on your debts, sometimes even to zero.  The goal of the Thunder Bay Counselling Centre is to “Help you take control of your financial future”.  They offer a weekly drop-in centre where people can “Ask A Financial Coach” for some assistance.  The Thunder Bay Counselling Centre provides a great service to our community, and we often refer clients to the Centre that contact us but whose financial situation is not dire enough to require a bankruptcy or consumer proposal under the Bankruptcy and Insolvency Act.

Tax debts owing to Canada Revenue Agency (CRA) include personal income taxes, HST or payroll source deductions.  Often individuals running a business get themselves into trouble when not making the required tax installments or remittances for HST and source deductions.  Tax debts continue to grow until reaching a point when the debtor realizes he will have difficulty paying it back.  CRA will not willingly accept less than full payment of tax debts because they are afraid of setting a precedent that would force them to accept less from everyone else.  Consequently, a debtor must take tax debts owing to the CRA very seriously because if not dealt with in a prompt manner, the CRA has powerful tools to significantly disrupt your life.

The tools/powers that the CRA can use include withholding income tax refunds and HST credits, garnishing your wages or accounts receivable, taking funds from your bank account and/or placing a lien on your house until your tax debt is paid in full.  CRA can act very quickly as these “super” tools don’t require the permission of the courts in order to implement them.

You can only make a deal with the Canada Revenue Agency for tax debts owing by filing a proposal under the Bankruptcy and Insolvency Act (BIA) rather than filing for bankruptcy.  A proposal enables you to make a settlement offer to your creditors to pay them a percentage of what you owe.  A proposal allows a debtor to keep their assets and to get a fresh start.

If the debtor is unable to offer a proposal then the remaining option is to file for bankruptcy.  A bankruptcy will also be able to compromise the tax debts and release the debtor from the tax debt responsibility.

Overall, it is important to understand income tax debts and the options available to individuals to deal with them.  If you are in this situation you would definitely benefit from seeking professional advice from a licensed bankruptcy trustee who will review your options.  The initial consultation is FREE with no obligation.

Many people dream of purchasing and owning their own house.  However, they often don’t carefully consider the cash flow commitments required to keep the house running.  Often individuals become cash-strapped from home ownership and don’t even realize it.  Before filing for personal bankruptcy, a person must decide whether or not they can afford, from a cash flow perspective, to keep their house.  If they decide they can afford to keep it, then the issue of whether or not a person can keep their house in bankruptcy all depends on how much equity exists in the house when they go bankrupt.  Equity is calculated by subtracting the mortgage balance, outstanding property taxes, and any other liens from the value of the house.  The value of the house must be confirmed by an independent professional hired by the Trustee.

If the house has little or no equity then a bankrupt can usually make arrangements with his or her financial institution to continue making mortgage payments and retain the house after filing for bankruptcy.   Furthermore, a person could decide to not keep their house and return the keys to the secured creditor and have any shortfall in the mortgage released in their bankruptcy.

If the house has considerable equity then a Trustee must get that equity out of the house for the general benefit of creditors.  One option would be for the bankrupt to purchase back their portion of the house equity.  This option is often difficult to attain as a bankrupt usually does not have access to this amount of money.  Another option would be for the Trustee to sell the house.  The Trustee must ensure that there is equity after all selling costs have been accounted for.

The rules governing houses and bankruptcy are complicated, thus it is best to review all of your options regarding your specific situation by contacting a bankruptcy trustee.

This site provides free information about bankruptcy and bankruptcy alternatives to residents of Thunder Bay and the surrounding areas of Ontario.

Find answers to bankruptcy questions about bankruptcy in Thunder Bay and Thunder Bay bankruptcy trustees.

The sponsors of www.bankruptcy-thunderbay.com, Grant Thornton Limited, are licensed by the federal government of Canada to provide personal bankruptcy and consumer proposal services to residents in the Thunder Bay, Ontario area. Grant Thornton Limited bankruptcy trustee office in Thunder Bay, Ontario helps Thunder Bay and area residents review options to deal with their debts, including consumer proposals and personal bankruptcy.

We believe it is important for you to research your options regarding bankruptcy and bankruptcy alternatives. Please contact our Thunder Bay Canada bankruptcy trustee office today to arrange for a no-charge initial consultation or for answers to your questions about personal bankruptcy and dealing with financial problems that might lead to bankruptcy. We’re here to help!