Licensed Insolvency Trustees spend a lot of time dispelling myths about bankruptcy in general. There is a lot of misinformation on the internet, especially, which people often take as gospel: if it’s in writing, it must be true! Let’s take a minute to review some of the most common ones we hear.
Other than “What if I win the lottery?” and “Will this affect my spouse?”, this is the most frequently-asked question we get from our clients.
“You can’t fight City Hall.”
That’s what they say, isn’t it? And that counts double for the federal government for a lot of people. Canada Revenue Agency (CRA) has long been viewed by Canadians as the ‘godfather’, that enormous, all-powerful entity embodying for many all that is bad in government.
Absolutely you can. About 58,000 people did just that in 2015 in Canada. Income tax arrears are eligible to settle with Canada Revenue Agency (CRA) as a consolidation solution (along with all other unsecured debts such as credit cards and lines of credit) in the form of a proposal. CRA are not only just a likely to reduce the principle (and ALL of the interest) as other creditors, but in most cases they are even MORE likely to participate, since this acts as a form of collection for them in their overworked portfolio.
Every year, a certain number of unsuspecting Canadian taxpayers fall victim to the rather predatory practices of those who push charitable “donation” schemes which are presented as legitimate tax shelters.
Few things come as such a shock as a garnishee on one’s wages. Not just the feeling of violation at not having access to your full, hard-earned paycheque, but the embarrassment as your employer is now aware of your financial situation. It can come as a real blow.
For those unfortunate Canadians who owe significant personal debt, there is often a background story or some triggering event that helped lead to that situation. Say a job loss or a sickness in the family. But all too often, being in debt is caused by marital breakup.
So you’ve got a lot of credit card and line of credit debt. You own a house with equity and want to keep it. You want to finally pay off that unsecured debt but you don’t want to dip into a home equity line of credit or do a second mortgage.
There is a disturbing trend in Canadian personal finance: the indebted senior. Unfortunately seniors represent the fastest-growing demographic in Canada for debt accumulation.
So why is this happening? I thought seniors had money.