0025 - Debt Related Queston: Bankruptcy Question # 0025

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QUESTION #0025:

I canít pay my tax debt to Canada Revenue Agency (CRA). What can I do?



ANSWER:

This is a complex issue, but generally you cannot reduce your debt through negotiations with CRA. You can apply for a reduction of interest and penalties under the fairness provisions (check online for details), however this usually proves to be unsuccessful. It is important to deal with this debt as soon as possible, as ignoring CRA can result in an attachment of the debt to any and all of your property. CRA may also garnish your bank account or wages. If the debt is too much for you to pay (in a reasonable length of time), a licensed Trustee is the best intermediary for you. Under a proposal you would only be obliged to pay a portion of the debt, while in a bankruptcy the full amount of the debt is generally discharged.