Doug: Bankruptcy and CRA Debt

Table of Contents

Doug: Case History – CRA Bankruptcy

Over the years, Doug (not his real name) had worked hard to build his business, and had established himself as a leading tradesman in the Greater Toronto Area.

All four of his children went on to university and became successful professionals. While this was a great source of pride for Doug, it also meant that none of his children came into the business with him.

At 58, Doug had his first heart attack. He was able to be back at work within 7 weeks, but he was not able to keep up his old pace. Forced to use subcontractors who were not up to his standards, Doug’s clients began to complain. For the first time, Doug found that his business was not making money. The cost of subcontractors, disputes for payment with his customers, and his own inability to stay on top of everything – was driving him out of business.

For the next four years, Doug struggled to keep the business going – using up his savings, maxing out his credit cards, and taking out personal loans – till his heart gave out and he had his second major heart attack.

This time, it was several months before he was able to return to work. During which, his business slipped further into chaos, and when Doug returned to work – he found a situation that was unimaginable. Not only was he heavily in debt – his income tax and GST payments had not been made for years, and the Canada Revenue Agency (CRA) had levied high penalties and interest charges on him (his business was a sole proprietorship). Doug tried to deal with the CRA, get his receipts in order, and keep his business going – but he was not up to the physical demands. Finally, the CRA put a freeze “Lien” on his business bank accounts. Doug was now forced to file for a Proposal or for Bankruptcy to get the lien lifted.

~~~ ~~~

Marva Brooks, CIRP – Trustee is a senior member of David Sklar and Associates who frequently handles complex Corporate and Consumer insolvencies. Despite the complexity of the cases she handles, Marva is always able to see the human element and Doug’s situation was no exception.

When Doug first met with Marva, the stress of the situation was clearly taking a toll on his already fragile health.

As Marva and Doug reviewed his situation, several factors became clear – Doug had amassed over $900,000 of unsecured debt in credit cards, personal unsecured loans, unpaid GST, fines, and income taxes.

He had some bankruptcy-exempt assets – life insurance, tools of trade, and a leased vehicle with minimal equity.

The only non-exempt asset he had was his modest home which was valued at $250,000, and which was jointly owned by his wife.

Marva explained that due to the size of his debt, he would most likely not be successful in a Division I Proposal to his creditors. If he decided to go into Bankruptcy, the value of his share in the home, $125,000 (50% of $250,000) would have to be paid into his Bankruptcy estate for disbursal to his creditors.

If Doug did not want to sell his home, he would have to consider getting a $125,000 mortgage on the home – which would most likely require a co-signer. After discussing it with his family, Doug’s wife agreed to the mortgage and his oldest son agreed to co-sign the loan.

Marva then obtained prior approval from the Canada Revenue Agency for this course of action. The CRA agreed, as there were no other assets.

It was very difficult for Doug to obtain the mortgage due to his bankruptcy, however we was finally able to secure financing which was placed into his Bankruptcy estate for disbursal.

Since there was no surplus income, his Bankruptcy was completed in nine months and he was discharged from his unsecured debts.

Although he was not able to have the retirement he had planned on, Doug was out from under the pressure of his unpaid debts to creditors and the CRA.

To protect our client’s privacy, aspects of this case study have been altered.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

Share This!

Christine Sylver was very helpful to my situation. No question asked, she went above and beyond just to give me the options that I need to solve my problems. She explained and made me understand my options. Thank you Christine! Everything was done in a week. Regards, to Richard Sklar for explaining everything further to me. 😊
Kris
1685201109
I was blown away by how kind and empathetic Christine and David were. I came into the process expecting to feel embarrassed, but they were so helpful and unquestionably supportive, they made the whole experience a positive thing. On top of that, Christine found a solution for me that was better than I ever could have imagined. I highly recommend Christine, David, and colleagues to anyone.
Mary M
1684189795
Christine Sylver has been very efficient in working with me in all aspects toward developing a very favourable consumer proposal which meets my financial budgeting very nicely. She also exhibited a very positive pro client attitude and was every pleasant to communicate with. Richard Sklar also demonstrated a very positive pro client attitude in explaining in detail all aspects. All great!!
Rob Hultgren
1683919919
Dealing with Christine was a real pleasure.She was very understanding professional and knowledgeable she answered all my questions.I left feeling relieved a big burden was lifted from my shoulders
John Horan
1683830383
Very happy I got in touch with Jackie! She has been a great help and a pleasure to work with! I highly recommend Jackie if you need help getting out of financial debt.
Hailey Cascagnette
1683647325
I had the pleasure of working with Jackie and she made the experience very easy and was very honest which I appreciated as I was extremely nervous to go through with the process. Any questions or concerns I've had after our meetings were answered no problems and although it's been a few weeks I can honestly say I've never felt so stress-free. Very thankful for Jackie.
Cassandra Arevalo
1683644364
Very considerate of how people can sometimes make mistakes and need help to get things back on track. Great team of people. Thanks to Jacqueline for all her help.
Kevin Chase
1683498014
My mother told me about this firm because they helped resolve her situation nearly 25 years ago. I had the pleasure of working with Christine Sylver. I should’ve done this years ago but I am where I am and it is what it is. Extremely courteous, professional and understanding. I hope to never need their services again but they would be my first call! A+
Patrick Martel
1683324165
Jerry was extremely thorough and ensured that as a client, I understood all of my options and their repercussions. He offered his professional advice best suited for my situation and he is amazing at his work. Thank you Jerry! :)
Stephanie Belanger
1683317517
Great experience with Jerry and staff. Thank you.
Harold Hutchings
1682737038
js_loader
DS david skalr icon

Book your free consultation.

Call 1-844-962-9200 or fill out the form below. We’ll do the rest.

Contact Us