0040 - Debt Related Queston: Bankruptcy Question # 0040

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QUESTION #0040:

I canít pay my tax debt to Revenue Canada. What can I do?



ANSWER:

This is a complex issue, but generally you cannot reduce your tax debt through negotiations with CRA. You can apply for a reduction of interest and penalties under the fairness provisions (check CRA on line for details), however this usually proves unsuccessful. It is important to deal with this debt as soon as possible, as ignoring CRA may result in your bank accounts or wages being garnished by CRA. If the debt is too much for you to pay in a reasonable amount of time, a consultation with a licensed Trustee is the best intermediary for you. Under a proposal agreement, once your creditors accept it, you would only be obligated to pay a portion of your tax debts; while in a bankruptcy; the full amount of debt is generally discharged.