Hello David, I am trying to find someone who can advise me on getting out of an oppressive $60,000 debt to CRA. It resulted from an audit and ½ of it is interest and penalties. Is there not some way to negotiate down to a lower amount to be paid on a lump sum basis?---------------------------------------------
I spoke to a lawyer or interne at DiGuardio & Assoc and they basically wanted money to review my records so they could then ‘possibly’ work a deal with CRA. It sounded like they were collection agents for CRA frankly.
From: F. O'Brien To: David Ingram at home - bus at email@example.com Sent: Wednesday, February 04, 2004 8:31 PM Subject: MARWI - bankruptcy/ingram
Dave: check over the edits (below and in attachment)
Send any changes to
firstname.lastname@example.org and cc to: email@example.com--
March 2004 Western Investor
Column: Bankruptcy David Ingram 12 blocks
Pullquote: "Pull the plug if you are fighting a losing battle"
HEAD = BANKRUPTCY
LEAD = Last year in B.C. 9,527 consumers and more than 1,100 businesses filed for bankruptcy.
Editor¹s note: In 2003 David Ingram lost a near $5 million tax battle with Canada Customs and Revenue Agency, one of the largest personal tax judgements in Canadian history. In this, the second of two parts, he offers a first-person account on dealing bankruptcy, what you are allowed to keep and what you have to lose.
I have just received my discharge from bankruptcy. It isn¹t completely over. I have to pay $800 a month for 36 months starting on February 7th, but that is a lot better than the $4,853,000 income tax bill that started it with no assets.
Well there were family assets. But over a period of 21 years I went from a positive paper net worth of $4,800,000 to a negative $4,800,000 because of an income tax bill that I fought in court and lost and then got stubborn.
If I had to do it again, I would have walked into a bankruptcy trustee¹s office 15 years ago and got on with my life. Instead I decided to fight.
So the house was put in my wife¹s name, the cars were in my wife¹s name, the motorhome was in my wife¹s name and the business was in my wife¹s name. How could I get hurt?
Then my wife left me and took all the assets with her.
Thankfully, the CCRA finally gave up on collecting and hired a trustee to put me into bankruptcy. I understand that I might be the first person that the CCRA put into receivership in Canada. Oh sure, there are thousands of instances where a taxpayer has declared bankruptcy because of a tax bill. But apparently no one knows of an individual put into bankruptcy by the CCRA.
Now you have to know that I have advised a couple of hundred people to go bankrupt over the years. Their situation was hopeless and bankruptcy was the only solution. I had had an appointment to see a bankruptcy trustee myself on July 22, 1999 but broke my arm and leg in a motorcycle accident and never made the appointment. But I should have rescheduled and got on with my life three years earlier because it took the CCRA three more years to put me into bankruptcy.
Subhead = Ask for help
This article is meant to encourage you to see a trustee and pull the plug if you are fighting a losing battle, particularly if the major creditor is the CCRA.
If you have money problems for any reason that could include divorce, separation, unexpected tax penalty, leaky condo, company downsizing, illness, an accident or any combination of the above, you will need help.
That help may be as simple as taking an adult education course in family finances at your local high school. Most adult education courses include such a course and even though I taught them for years, it did not keep me out of that $5,000,000 bankruptcy after three of the above events occurred.
If you need more immediate help and you happen to live in Greater Vancouver, contact a credit counselor. There are lots around. If you want a referral, send me a request to firstname.lastname@example.org.
I am now seeing financial disasters of others on a daily basis. I am talking about the $186,000 income tax reassessment for something that happened five years ago. I am talking about the leaky condominium where the debt is $100,000 and you would have to earn $190,000 and pay $90,000 income tax to have $100,000 left and that is not counting interest accruing while you are doing it.
In this case, you need to consult competent legal help, a lawyer who specializes in bankruptcy law and will work for you and give you and your family the advice it needs to preserve any assets possible and tell you what you can do and cannot do.
Why not save a couple of dollars and go directly to the trustee?
The simple fact is that the trustee does not work for you. The trustee is working for the creditors.
Subhead = What can you keep?
The trustees job is to get the most for the creditors following local federal, state or provincial guidelines that have different limits in each province and each state.
In British Columbia, the assets that a bankrupt can keep are:
Equity in a home in Greater Vancouver and Victoria = $ 12,000.
In the rest of the province = $ 9,000;
Equity in household items = $ 4,000;
Equity in a vehicle = $ 5,000; The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
Equity in work tools = $ 10,000;
Equity in essential clothing and medical aids is unlimited.
Alberta shows its agrarian roots with much larger exemptions as follows:
Food required by the debtor and dependants for next 12 months;
Necessary clothing of debtor and dependants to a value of $4,000;
Household furniture and appliances to a value of $4,000;
One motor vehicle not exceeding a value of $5000;
Medical and dental aids required by the debtor and dependants;
Where the debtor is a bona fide farmer and whose principal source of livelihood is farming, 160 acres, if the debtor's principal residence is located on that 160 acres and that the 160 acres is part of the debtor's farm;
The equity in the debtor's principal residence, including a mobile home, up to a value of $40,000;
If the debtor is a co-owner of the residence, the amount of the exemption is reduced to an amount that is proportionate to the debtor's ownership interest;
Personal property (i.e. tools, equipment, books) required by the debtor to earn income from the debtor's occupation up to a value of $10,000;
Where the debtor's primary income is from farming operations, personal property required by the debtor for the proper and efficient conduct of the debtor's farming operations for the next 12 months, plus some other specific exemptions.
Saskatchewan Exemptions and agrarian routes are even more generous:
Household furniture and personal effects to a value of $4,500 per person;
Tools of the trade to a value of $4,500;
A motor vehicle, if required for employment;
$32,000 equity in your home ($64,000 if jointly owned);
Certain life insurance policies;
RRSPs, RRIFs and DPSPs are exempt from seizure (effective March 4, 2003); Certain pensions.
For farmers, the exemptions are more generous and include equipment and machinery for one year of farming; living expenses to the next harvest, certain life insurance and pensions and other specific exemptions.
Manitoba Exemptions are different again and maybe a little light:
Furniture, household furnishings and appliances not exceeding total value of $4,500;
Necessary and ordinary clothing of the debtor and family;
Food and fuel necessary to the family for period of six months or cash equivalent;
Actual residence of the bankrupt, equity of $1,500 each if in joint tenancy, or $2,500 if not in joint tenancy.
If debtor is a farmer, exemptions include livestock, machinery and equipment necessary for farming operation for 12 months; enough seed all debtor land under cultivation, plus some other specific exemptions.
(For complete information on provincial farming exemptions see:
Subhead = First step
Talk to a bankruptcy lawyer first. If you want a reference, email me at email@example.com. Get your law straight. Learn what you get to keep and what the limits are. In B.C.for instance you can have $5,000 equity in a car. However, The Bank of Nova Scotia (for one) will insist on seizing your car even if you have never missed a payment if the car loan is with them. Arranging for someone else to take over the loan before you go bankrupt could make the transition easier.
Hope this helps. Remember - see the lawyer first - before you see the trustee. And only talk to a lawyer who deals regularly with bankruptcy and appears in court for bankrupts protecting their rights. That means perhaps one in 100 lawyers. There is little chance that a lawyer you are already dealing with would be the one you would use because a bankruptcy lawyer is likely too busy today to do anything else.
- David Ingram is the CEO of david ingram's CEN-TA of West Vancouver. Ingram can be reached at (604) 980-0321 or email at firstname.lastname@example.org.
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