Can I keep one credit card for emergencies if I file for bankruptcy?
No, you cannot keep one credit card for emergencies. All credit cards must be tuned over to your trustee when you file an assignment in bankruptcy or a proposal. You can, of course, apply for new credit and new credit cards once you have filed a proposal or a bankruptcy. Your trustee can advise you on how to do this as well as the limitations on how much credit you can get and what disclosures you must make.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. Thank you. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
Will CRA allow liabilities to be included in my consumer proposal?
CRA will only allow liabilities up until the end of the calendar year, before the proposal, with one exception:
If the debtor files a provisional tax return at the time of filing the proposal the amount is shown as a liability. In other words, if there are clauses about the return in the proposal document, the CRA will allow the pre-proposal liability to be included in the proposal. It is important to note that this is usually done for high-income professionals or self-employed individuals that are no longer operating a business.
Who prepares the consumer debtor’s income tax returns?
A bankrupt’s tax year is divided into two parts. If a consumer debtor files an assignment, for example, on May 1, then the tax year is divided into the period between January 1 and April 30 and the second part is the period between May 1 and December 31.
In most cases, the trustee in bankruptcy prepares the income tax returns for both periods of time; that is pre-bankruptcy and post-bankruptcy until the end of the calendar year.
With the pre-bankruptcy return, it is possible in many cases of consumer debtors that there will be a tax refund available. As the consumer debtor has a duty to deliver up all property to the trustee, the tax refund belongs to the estate. The tax refund is technically property of the bankruptcy and the trustee will receive it on the consumer debtor’s behalf and pay it into the estate. Therefore, the consumer debtor may be asked to sign a direction to Canada Customs and Revenue Agency permitting the Agency to pay the trustee although technically the trustee is entitled to the refund as of right.
With the post-bankruptcy return, the trustee may, but need not, prepare the consumer debtor’s bankruptcy return. Once again, if there is a refund, the trustee is entitled to intercept that refund and pay it into the estate for the general distribution to creditors.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
Yes, Canada Revenue Agency can garnish CPP and OAS as well as all types of pensions. You may hear that creditors may not do this or may only be able to take a percentage. However, Canada Revenue is not a typical creditor. It is important to stress that CRA has more power than a credit card company or other creditor.
In other words, standard garnishment rules do not apply to the CRA. If you owe taxes to CRA and you receive CPP or OAS, CRA can withhold some or all of your monthly pension payments.
But you do have options:
1. Contact Canada Revenue Agency and discuss the possibility of a re-payment plan before they Garnish either pension CPP or OAS
2. Consider a Consumer Proposal
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
