When your tax debt becomes so large you know you will never be able to pay it, there’s a great temptation to rush to an insolvency trustee.
The trustees are doing a great job advertising consumer proposals and bankruptcy as a way to cut a deal on your taxes, or even walk away paying little or nothing.
Reality, however, is quite different from this rosy picture.
Any filing under the Bankruptcy and Insolvency Act, whether it’s a consumer proposal or an assignment in bankruptcy, is subject to the guidelines of the Act. All your income and assets must be disclosed and, depending on their value, the trustee may be required to take possession of these assets to pay off your creditors. This can include your home, your cottage, your motorcycle… Anything of value that you own.
So if you’re relying on an insolvency trustee to cut you a good deal on your debt, think again.
The trustee may be the friendliest, most understanding person in the world. But at the end of the day, he or she is a licensed professional and an officer of the court. As such, the trustee is required by the Bankruptcy and Insolvency Act to realize as much money as possible from your estate to pay out to your creditors. (The trustee also gets paid out of your estate, so the more he or she can get from you, the better it is for him/her.)
Bottom line: The Trustee doesn’t work for you.
The trustee works for your creditors. And when your biggest creditor is the Taxman, which is most often the case in tax-driven insolvencies, the trustee is obliged by law to work for the Taxman.
DioGuardi, on the other hand, always works for you. So if you need a deal to cut your tax debt down to something manageable, talk to DioGuardi first.