05-16-2024, 03:21 PM
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#1
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First Line Centre
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Crowd (most likely accountant/lawyer though) sourcing: Trustee in Bankruptcy referral
I have a personal tax client who will be in need of a Trustee in Bankrupty. (It's not for me!)
Long-time non-tax filer finally got caught by CRA's garnishee machine, came to me for assistance, and I quickly determined they will be unable to (ever) pay the tax owing. My only Trustee dealings come from several decades back, so I don't know who's a good referral any more.
Would appreciate a good "taking care of people" type of Trustee for this person, if such still exists in YYC.
(And no, you don't need to be an accountant or lawyer to make a recommendation.)
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05-17-2024, 08:40 AM
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#3
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First Line Centre
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I had no idea you could claim bankruptcy for taxes...
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05-17-2024, 11:08 AM
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#4
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Franchise Player
Join Date: Mar 2007
Location: Income Tax Central
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Quote:
Originally Posted by Zary's-Mustache
I had no idea you could claim bankruptcy for taxes...
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I know taxbuster (great guy) but Tax Debt is just the worst. Its almost a literal implication of The Simpsons "No! Dig UP stupid!" joke.
Because you have to earn more to pay it but as you earn more you're digging another hole simultaneously that you're going to have to earn more to dig out of and rinse and repeat.
I've seen it happen multiple times and it is heartbreaking. Because generally, its just normal every-day people, often who just started a business, who got a little behind because starting a business is hard, and then the fees, interest, penalties and fines add up and its just becomes a Hamster-Wheel.
So as much I'd love to help you taxbuster, I think your friend/client is going to need a bankruptcy trustee and a good lawyer more than Tax guys like us.
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05-17-2024, 01:40 PM
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#5
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First Line Centre
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Quote:
Originally Posted by Locke
I know taxbuster (great guy) but Tax Debt is just the worst. Its almost a literal implication of The Simpsons "No! Dig UP stupid!" joke.
Because you have to earn more to pay it but as you earn more you're digging another hole simultaneously that you're going to have to earn more to dig out of and rinse and repeat.
I've seen it happen multiple times and it is heartbreaking. Because generally, its just normal every-day people, often who just started a business, who got a little behind because starting a business is hard, and then the fees, interest, penalties and fines add up and its just becomes a Hamster-Wheel.
So as much I'd love to help you taxbuster, I think your friend/client is going to need a bankruptcy trustee and a good lawyer more than Tax guys like us.
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Yep! I examined the file....did a few very rough calculations based on the info the individual gave me in a convo and said..."I'm sorry to be the bearer of bad news, but....".
Not my first rodeo with this kind of situation, although it's not a regular thing. Better that the person deal with all of it via a Trustee and have it in one package. One year, mostly likely, and they're done and out.
Interestingly, most post-bankrupts, when interviewed, say they waited too long.
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05-17-2024, 01:41 PM
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#6
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First Line Centre
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Quote:
Originally Posted by RichieRich
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Thanks - will pass the name along!
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05-17-2024, 02:44 PM
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#7
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First Line Centre
Join Date: Feb 2013
Location: Field near Field, AB
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Funny how taxes is almost on the same line as credit card debt / bank supply of said debt and interest rates. Once you dip beyond what you can pay, the spiral begins, but at least the banks provide statements.
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05-18-2024, 09:01 AM
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#8
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Franchise Player
Join Date: Aug 2005
Location: Memento Mori
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I am surprised he wasn't threatened with jail time.
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05-18-2024, 01:04 PM
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#9
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Franchise Player
Join Date: Oct 2014
Location: Springbank
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Thing about tax debt is that, if it's a high enough percentage of your overall debt, bankruptcy is more difficult.
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05-19-2024, 04:25 PM
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#10
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Franchise Player
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Quote:
Originally Posted by GioforPM
Thing about tax debt is that, if it's a high enough percentage of your overall debt, bankruptcy is more difficult.
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Really? So the OP's client needs to run up their credit cards first?
That seems...like one way to write the rules...
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05-28-2024, 11:04 AM
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#11
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First Line Centre
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My experience has generally been different...it doesn't matter that it's only tax debt, but they'll hold the bankrupt in the state of bankruptcy for somewhwat longer. Don't know if that's a regular thing or not, but the ones I've dealt with seem to be that way.
Thanks to all and to those who PMd.
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05-28-2024, 11:11 AM
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#12
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Franchise Player
Join Date: Oct 2014
Location: Springbank
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Quote:
Originally Posted by taxbuster
My experience has generally been different...it doesn't matter that it's only tax debt, but they'll hold the bankrupt in the state of bankruptcy for somewhwat longer. Don't know if that's a regular thing or not, but the ones I've dealt with seem to be that way.
Thanks to all and to those who PMd.
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Holding someone in bankruptcy longer is a huge difference. I'm just telling you (as a lawyer who deals in bankruptcy) that there is a special category of "high tax debt bankrupt".
The trustees I referred can explain, but here's the gist:
High-tax debtors — whose tax arrears exceed $200,000 (including principal, penalties and interest) and represent 75 percent or more of their proven debts — face a slightly more complicated process. These individuals will not qualify for an automatic discharge from their Bankruptcy and must attend a special hearing.
At this hearing, the courts have a wide range of powers, including the ability to:
Grant an absolute order of discharge
Impose a conditional order of discharge (e.g. repay a portion of the outstanding taxes, attend additional financial counselling sessions, etc.)
Suspend the discharge for specified timeframe
Suspend the discharge and attach concurrent or consecutive conditions
Adjourn the hearing to a future date
Refuse the discharge altogether
https://mnpdebt.ca/en/resources/mnp-...-your-tax-debt
Last edited by GioforPM; 05-28-2024 at 11:13 AM.
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05-28-2024, 11:34 AM
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#13
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First Line Centre
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Not being discharged would, I assume, be reserved for those who seem either to have manufactured the circumstances, quasi-criminal, or were highly negligent.
The person I referred, after discussion, was possibly the most ostrich-like person I have ever met...just buried their head in the sand and ignored everything. Beats me what they'll end up doing with that situation.
Good to know though!!
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05-28-2024, 03:11 PM
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#14
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Franchise Player
Join Date: Oct 2014
Location: Springbank
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Quote:
Originally Posted by taxbuster
Not being discharged would, I assume, be reserved for those who seem either to have manufactured the circumstances, quasi-criminal, or were highly negligent.
The person I referred, after discussion, was possibly the most ostrich-like person I have ever met...just buried their head in the sand and ignored everything. Beats me what they'll end up doing with that situation.
Good to know though!!
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Eventually everyone gets discharged. I had an actual fraudster discharged because the bankruptcy wasn't helping anyone anyway.
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