I want to say that bankruptcy is a way in which the law may deal with a person who is unable to pay your debts. And for more details you can check out this links below.

Tax debt is simply considered to be an unsecured debt and would be cleared by the filing of a bankruptcy. The only case where this can change is if CRA has registered against title of your house prior to you filing for a bankruptcy. If they have done so then the registered portion of the tax debt is like a 2nd mortgage on that property and will not be removed.

Good advice, but I'm simply amazed someone would make a voluntary disclosure, especially of an amount like that, BEFORE consulting with an appropriate trustee/ex-CRA consultant etc.

I would strongly urge you to seek out the services of a licenced Trustee in Bankruptcy immediately, especially a trustee who is attached to a large national accounting firm. He/she would have the knowledge, experience and resources to deal with your situatiuon. Do not decide to declare bankruptcy at this point but purchase one hour of consultion from the trustee and find out your options. Believe me, this will be money well spent and it will put your mind at ease knowinging what is in front of you.

In addition to the above, look up the website angelfire.com/tx5/taxbible. Allen Baggett who is a regular blogger on this site has written a book in CD format called "The Tax Collector's Bible". Allen spent several years as a senior tax collector at the CRA and this publication is the finest collection of information that has been assembled. There are literally dozens of contributors to this book who have been collectors at the CRA as their relate their experiences. I have purchased this CD and the information is mind-boggling. You can purchase it for $25 directly from Allen in Burlington, Ontario (his address is on this website) and download it onto your computer. He will allow you to print one copy of this CD for your own use. If you wish to print a copy of it, Staples will print it for 8 cents a page. Binding is extra. There are approximately 525 pages in the printed format.

After your visit and consultation with the Trustee in Bankruptcy, please revisit this site and tell us what advice the trustee gave you. We have some excellent bloggers here who have diverse business backgrounds and a wide range of experience and could offer you some suggestions as to how to proceed.

Good Luck and have a GREAT DAY

Hi, came across this forum while trying to better understand my options.

I live in Ontario.

I am likely facing a huge CRA tax debt after voluntarily disclosing unreported income for the past 6 years (2004-2009). The tax debt may range from $250k-$500k.

I have no other creditors. My wife and I jointly own our house which has about $200k equity ($100k my part).

I have about $100k in the bank and another $100k in RRSP's. If my tax debt is assessed at $500k can I pay it down to under $200k (this will require that I liquidate everything but our house to raise the $300k, possibly even my RRSP's) can I then file for bankruptcy under normal (9 month discharge rules)?

Secondly, if I end up in bankruptcy before the end of this year what happens to the tax debt I will have amassed from this year that is due next year while I am bankrupt? I expect to owe about another $75K taxes from income earned this year.

Lastly, I have not talked to a trustee yet. I imagine CRA will put a lien on our house for my portion of the equity and to help secure the debt. I assume they will also seize the bank accounts. What should I do in preparation of this? Should I remove the money from the accounts and just keep it in cash until it is determined if the money is to be used in a proposal or forwarded to a trustee to prevent them from seizing it?

I should also mention that my income for the next 8 months is good but after that it cannot be guaranteed as I work on contracts and have nothing that far out.