U.S. resident,

I received a question from a Canadian with massive debt
in Canada.  the Canadian is now living and working in
the USA and the question was "could they go bankrupt in
Canada while living in the US?"
I did not know the answer so sent it along to Murray
Morrison, the Surrey Bankruptcy Lawyer who helped me
out in my own $4,850,000 bankruptcy in 2002.  I have
included my own story again after his answer.  Let me
tell you that I wish I had declared bankruptcy 20 years
earlier. Holding on did me no good, did the only
creditor no good and had a very adverse affect on my
marriage and family.  If you are in a bankrupt
condition or have a friend or relative or enemy or
creditor in a bankrupt condition, read this and pass it
on.  USUALLY, in my opinion, going bankrupt clears the
air and lets everyone get on with their lives.
The following is Murray's answer to "Ms Smith"
Dear Ms. Smith:
A U.S. resident cannot declare bankruptcy in Canada as
you must be a resident
of Canada, and the bulk of your assets must be in
Canada.  This question
crops up from time to time, and is difficult to
resolve, as even if you
wished to declare in the States, the Canadian Courts
(and creditors) would
not recognize your US discharge.  If you plan to remain
in the States and
not return to Canada, we recommend that you declare
Murray K. Morrison
The following is an article I wrote for Western
Investor Magazine last February.  This version is
longer and contains more information than the Western
Investor article which was edited down a bit to fit a
space.  I want to take this moment to thank editor
Frank O'Brien who asked me to write it and then
published it.  I received over 200 phone calls from
individuals who I was able to help with some
encouragement and moral support.  By help, I mean I was
able to help them make the decision to "pull the plug".
Lately they have been calling to tell me how good it
feels.  they do not need to tell me.  I feel it myself.
The following is an expanded version of the Western
Investor Article.
BANKRUPTCY - or How I Found Freedom in an Unfree World
I have just received my discharge from bankruptcy.  It
isn't completely over.  I have to pay $800 a month for
36 months starting on Feb 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 trustee's office 15 years ago and would have
been able to get on with my life.  Instead I got
stubborn and decided I would go to my grave owing the
CCRA as much as the tax bill increased to before I
So the house was in my wife's name, the cars were in my
wife's name, the motorhome was in my wife's name and
the business was in my wife's name.  I owned nothing
and was quite enjoying the position.  After all, what
else could anybody do?  Well, there was one thing
someone could do.  In the middle of the bankruptcy my
wife left (with all the assets) but that is another
Thankfully, the CCRA finally gave up on collecting it
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.  No trustee I
have talked to had ever handled a receivership where
the CCRA had put an individual into bankruptcy.  Oh
sure, there were thousands where a taxpayer had
declared bankruptcy because of a tax bill.  But no one
knows of an individual out into bankruptcy by the CCRA.
Now you have to know that I have sent a couple of
hundred people to go bankrupt over the years.  Their
situation was hopeless and bankruptcy was the only
solution. And I had even had an appointment to see a
bankruptcy trustee on July 22, 1999 but luckily, broke
my arm and leg in a motorcycle accident the week before
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 and I could have done something with
those three years.  You see, 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 counsellor such
as Margaret Johnson at SOLUTIONS CREDIT, 200-10351
150th Street in Surrey - 1-877-588-9491 or locally
(604) 588-9491.   www.creditsolutions.ca
www.solutionscredit.com mnjohnson at creditsolutions.com
 As her pamphlet suggests;
"Budgeting involves more than just arithmetic.  It
takes determination.  People experiencing financial
difficulties need objective, unbiased neutral
That statement applies to your finances when you have
an income and bad spending habits.  It does not cover
the financial disasters that I seem to see 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 crisis
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 help that
does NOT start with a bankruptcy trustee, a night
school course, a credit counsellor or an accountant.
Now, you need a lawyer and not "just" any lawyer.  You
need a Murray Morrison, 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.
BUT, 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.  When you sign that paper, the trustee that you
searched out, the trustee that you found in the yellow
pages, the trustee your banker, hairdresser, mechanic,
best friend or worst enemy recommended is not working
for "you".
The trustee is working for the creditors.  Their 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.
To access all these limits click on the best site I
know of: http://www.bankruptcycanada.com
British Columbia for instance is:
Equity in a home in Greater Vancouver and Victoria = $
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
Alberta shows its agrarian roots with much larger
exemptions as follows:
Food required by the debtor and his/her dependants
during  the next 12 months;
Necessary clothing of the debtor and his/her dependants
up  to a value of $4,000;
Household furniture and appliances up to a value of
One motor vehicle not exceeding a value of $5000.00;
Medical and dental aids required by the debtor and
his/her 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 $40,000.00;
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.
Saskatchewan Exemptions and agrarian routes are even
more generous:
For Non-Farmers:
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:
Furniture, furnishings and appliances to a value of
The cash equivalent of produce sufficient to provide
food and fuel for heating until the next harvest;
All livestock, farm machinery and equipment, including
one car or truck, necessary for the next twelve months
One motor vehicle, if required for business or
profession, but not in addition to the one above;
Tools and equipment to a value of $4,500 used by a
farmer in his trade or profession;
Equity in personal residence to a value of $32,000
($64,000 if jointly owned);
Seed grain equal to two bushels per acre of land under
RRSPs, RRIFs and DPSPs are exempt from seizure
(effective March 4, 2003);
Cash equivalent of crop equal to:
unpaid harvesting costs;
living expenses to next harvest;
necessary costs of farming until next harvest.
The homestead;
Certain life insurance policies;
Certain pensions
MANITOBA Exemptions are a little light:
 Furniture, household furnishings and appliances not
exceeding total value of $4,500;
 Necessary and ordinary clothing of the debtor and
 Food and fuel necessary to family for period of six
months or cash equivalent;
If debtor is a farmer:
animals necessary for farming operation for 12 months;
farm machinery, dairy utensils and farm  equipment
necessary for ensuing 12 months;
one motor vehicle if required for purposes of
agricultural operations.
Home quarter.
Tools, implements, professional books and other
necessaries  not exceeding a total value of $7,500 used
in practice of  trade, occupation or profession;
One motor vehicle, if necessary for work or
transportation to and from work, not      exceeding
$3,000 in value;
Articles and furniture necessary to performance of
religious services;
Seed sufficient to seed all land of debtor under
Health aids, including wheelchair, air conditioner,
elevator, hearing aid, eye glasses, prosthetic or
orthopaedic equipment, necessary to debtor or family;
Chattel property of municipalities and schools;
 Actual residence of the bankrupt, equity of $1,500
each if in  joint tenancy, or $2,500 if not in joint
If you are in BC, Bankruptcy lawyer  Murray Morrison is
in the same office as Solutions Credit that is just
behind the Guilford Shopping Centre at:
Murray Morrison
200-10351 150th Street
Surrey, BC, CANADA, V3R 4B1
(604) 930-9013 Fax (604) 588-2005
email to morrocolaw at telus.net www.morrocolaw.ca
Talk to someone like Murray first.  Get your law
straight.  Learn what you get to keep and what the
limits are.  In BC 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.
Other assets you can keep (for a total of $32,000 if
they all exist are:
I advised one lady client to go bankrupt at this time
last year for a $140,000 tax bill (which was unjust,
unfair and illegal in my opinion) that we had fought
for two years.  (Canada decided to tax her
retroactively on her income for five years even though
she was an American living in the states.  They decided
she spent too much time in Canada and she had since
moved to Canada officially - Bankruptcy was the only
way to get rid of it and start over.)
I was blindsided by the Bank of Nova Scotia's new
policy of not allowing anyone to keep a car.  Luckily,
a friend paid out the bank and loaned her the money and
she kept her car.  It would have been far easier if we
had known that in advance.  Her Bankruptcy Trustee was
blind sided as well.  It was also the first one he had
After you have made a decision, you need a trustee.
Remember, they are all working for your creditors.
He was not my trustee but Gerry Foran at Sands and
Associates is a decent guy you can deal with. I
recommend him once a week at least.
Gerry Foran
E Sands & Associates Inc
1100 Melville Street
Vancouver, BC, Canada V6E 4A6
(604) 684-3030
Sands and Associates also have satellite offices in
Surrey, Burnaby and Langley.
Trustees might not like me saying this but you do not
even need money to go bankrupt.  The trustee can be
paid from your assets, tax refund or might not even get
paid until after the bankruptcy.  While I was actually
writing this, another client who I had sent to go
bankrupt came in to return some material I had loaned
him.  I said thank you and suggested that he must have
his discharge by now.  He did not have it.  He only had
a conditional discharge because he still owes the
trustee $1,500 which he expects to have very soon.
Another client is in the same position.  However, they
do not have a dozen creditors phoning looking for
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
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 to do anything else.
david ingram taxman at centa.com www.centa.com
Answers to this and other similar  questions can be
obtained free on Air every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred
Snyder of Dundee Wealth Management and I, David Ingram
will be hosting an INFOMERCIAL but LIVE talk show
Those outside of the Lower Mainland will be able to
listen on the internet at
Local calls are taken at (604) 280-0600 and Long
Distance calls are taken at 1( 866) 778-0600
I do not know how far the LD line reaches.
This from "ask an income tax and immigration expert"
from www.centa.com or www.jurock.com or
www.featureweb.com. David Ingram deals on a daily basis
with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate
problems  for the United States, Canada, Mexico, Great
Britain, the United Kingdom, Kuwait, Dubai, Saudi
Arabia, Thailand, Indonesia, Japan, China, New Zealand,
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Pakistan, Afghanistan, Mali, Bangkok, Greenland,
Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent,
Grenada,, Virgin Islands, US, UK, GB, and any of the 43
states with state tax returns, etc. Rockwall, Dallas,
San Antonio and Houston Texas
Denmark, Finland, Sweden Norway Bulgaria Croatia Income
Tax and Immigration Tips, Income Tax and
ImmigrationWizard Income Tax and Immigration Guru
Income Tax and Immigration Consultant Income Tax  and
Immigration Specialist Section 216(4) 216(1) NR6 NR-6
NR 6 Non-Resident Real Estate tax specialist expert
preparer consultant expatriate anti money laundering
money seasoning FINTRAC E677 E667 4789 4790 TDF-90
Reporting $10,000 cross border transactions
Alaska,  Alabama,  Arkansas,  Arizona,
California,  Colorado, Connecticut,
Delaware, District of Columbia,  Florida,
Garland, Georgia,  Hawaii,  Idaho,  Illinois,
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Massachusetts, Michigan, Minnesota,
Mississippi,  Missouri,  Montana,  Nebraska,
Nevada, New Hampshire,  New Jersey,
New Mexico,New York, North Carolina,
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and Dallas Houston Rockwall Garland
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wizard - consultant - expert - advisor -advisors
consultants - gurus - Paris Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo
New York, Boston, Sacramento, Minneapolis, Salem,
Wheeling, Philadelphia, Pittsburgh, Atlanta, Pensacola,
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St Louis, Centralia, Bradford, Stratford on Avon,
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Deer, Drumheller, Fortune, Red Bank, Marystown, Cape
Spears, Truro, Charlottetown, Summerside, Niagara
Falls, Albany
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 Fax (604) 980-0325
Email to taxman at centa.com
www.centa.com www.david-ingram.com
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