Filing for insolvency has many repercussions that can often go unrealized without proper financial expertise and advice. Listed below are some essential facts every taxpayer should note before considering insolvency:
- The debtor is required to relinquish certain assets in order to pay their creditors
- The debtor is allotted a R9 credit rating, which is the lowest possible score
- An insolvency is listed on your credit report, and can detriment the debtor’s ability to acquire
- property and loans in the future
- Depending on the circumstances, an insolvency stays on your record for 7-14 years
- The monthly payment arrangement is not finite, but rather subject to fluctuate based upon changes in income. The amount the debtor retains is based upon dependents and normalized living expenses; anything in excess of these costs must be given over to the trustee.
You have options…
Many taxpayers with an outstanding debt think their only way out is through filing an insolvency agreement—this simply is not the case. Often, it is in the taxpayer’s best interest to enter into informal negotiations with their creditors prior to sacrificing their financial reputation via insolvency.
Best Canadian Tax works to give holistic financial solutions to our clients’ CRA problems, which is why we administer a complete financial assessment of our clients’ outstanding debts and available resources, prior to suggesting any course of action.
We attempt to retain our clients’ financial reputation by exploring all possible alternatives to an insolvency agreement. If the CRA is unamenable to our request for an informal payment arrangement, the financial evidence we have constructed will be presented and filed with a licensed provincial bankruptcy trustee, who will then file the appropriate insolvency paperwork with the courts.
Let our representatives outline your options and give you the trusted advice you need before making these important financial decisions.