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Valuable Advice For Surviving Insolvency This Spring

Spring is often a busy season for Licensed Insolvency Trustees who handle consumer proposals and bankruptcies. For the past several years, the second quarter of the year (April, May, and June) has seen higher numbers of consumer proposals in Ontario and bankruptcies in Ontario than other quarters. Though consumer proposals and bankruptcies can be filed at any time of the year, the spring often has a higher number of cases.

Alongside job loss, personal injury, and poor use of credit, tax bills can push many individuals into insolvency. Self-employed individuals and small business owners are particularly vulnerable to owing large tax bills. That’s why it’s important to have an accountant who can help you understand the CRA and its expectations. Just because you didn’t know you owed money doesn’t mean you’re off the hook for paying it. Miscalculating personal income tax, failing to collect HST, and tax debts revealed in an audit can all cause a major financial headache. In some cases, unexpected tax bills hit those who are already trying to get out of debt. For example, cashing in an RRSP before your retirement to settle debts will incur taxes that you may not have prepared for.

Fortunately, a consumer proposal can help you with tax debts owed to the CRA. In addition to credit card debt, payday loans, and lines of credit, unsecured debt also includes taxes. If you don’t have the means or the assets to pay back debt, a consumer proposal can reduce your debt and stop interest payments. At David Sklar & Associates, we help people with insolvency. That includes filing for bankruptcy in Ontario, filing for a consumer proposal in Ontario, or credit counselling.

A consumer proposal is a legally binding contract with your creditors to pay back a fixed amount of money that you can afford that is usually less than your unsecured debt. Interest stops accumulating and you’re only responsible for small monthly payments that are then distributed by a Licensed Insolvency Trustee.

As part of the consumer proposal process, your creditors must vote to accept it. Their votes are weighted by the amount of debt you owe. In our experience at David Sklar & Associates, while creditors are not obligated to accept, they typically do accept reasonable offers. A consumer proposal typically helps creditors recover more money than they would in a bankruptcy.

It’s important to note that both bankruptcy and the consumer proposal process are intended for honest debtors who owe too much money. You cannot reduce your tax bill with a consumer proposal unless you are insolvent, which means you do not have the income or assets to cover your debts. If you truly can’t pay your tax bills or meet other debt payments, visit any one of six David Sklar & Associates offices throughout the Greater Toronto Area. Debt relief is just one phone call away.


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If your debt problems seem insurmountable – we can help. At David Sklar & Associates, our Licensed Debt ProfessionalsTM have the experience and knowledge to help you get out of debt. During your consultation, we will help you understand what your current financial situation is, how best to fix it, and how to move on to a better life. With six offices in the Greater Toronto Area – we are here to help.

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