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Is Bankruptcy a Good Solution for Your Debt Problems?

bankrupcty for your debts

There are a lot of people that literally feel like they are being swallowed up by their debt.   This may include money owed to the CRA, or maybe it doesn’t, but most commonly it does include credit card debt.

No matter who the debtor is if you are behind in payments, they want their money and it doesn’t matter how many times you tell them, you simply don’t have it, they still will pursue you on a constant basis.

Many times the first recourse an individual will take to try and handle debt that is out of control is to borrow more money. In a lot of cases this means either being subjected to extremely high interest rates because now you are considered a risk. Or, companies will offer to consolidate your bills. The promise here is now you have one lower monthly payment instead of many, and you have all the creditors off your back. The problem is many times this is a quick fix but a temporary one. The payments usually are still too high to meet and the only difference is now you are dealing with one creditor instead of many. However, the amount you owe to that one person is accumulated debt and is quite a large amount, for which they have good reason to take legal action against you. When you owe small amounts to many debtors the individuals amounts are often so low they hesitate to take legal action because it costs them more money to do this compared to the amount owed.

So you may be down to having to really think about bankruptcy. If you are contemplating this don’t do anything until you have a clear understanding as just what this type of action is going to do for you.

It could be that you are just so over whelmed that your financial situation looks worse than it really is. Start by gathering all of your bills and financial papers including your taxes and go to an accountant with these. Your tax obligations must take priority, as the CRA has a lot of power when it comes to collecting money owed to them. It doesn’t matter whether this is business or personal. You want to make sure if it business debt that it isn’t going to affect your personal tax situation. The wrong mistake made with your accounting could very well lead you into some serious personal tax implications spilling over from your business tax problems.

You will have a very clear picture of where you are at financially once your accountant has finished his work.   From there you can then go to a debt counsellor who can advise you as what is the best course of action for you to take. If bankruptcy seems to be the best choice then there are professionals who specialize in this that will guide you through the process.

What is important is that any financial decisions you are making regarding your debt situation should be informed ones.

 

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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