Tax debt: which way to jump?

March 15, 2011 2:58 PM

Canada tax arrears: would bankruptcy help?

I live in the province of Quebec, so I know financial advice can only be general, but I would still like advice, and I know you are not my lawyer, accountant, etc.

This is the situation. I owe Quebec and Canada revenues a total of just over $22,000. This built up over a number of years working in bad jobs with no deductions and generally neglecting my situation. I know this was stupid. I don't need to be told this again.

I make less than $35K a year and have little prospect of making more. Aside from this I owe $4K on credit cards (been paying these taxes at $500 a month for both, which pretty much zaps any chance of cutting the card debt down faster, but they are not in default) and nothing else.

I have no savings or other property which I can liquidate. I have no family to ask for help.

I have been advised by Quebec to declare bankruptcy. They wanted me to present a letter saying my bank would not loan me the money. Today, to my surprise, my bank suggested a low-rate credit card (11.99%) and moving this loan to the card, which has a high limit I've never come close to touching. They will not give me a bank loan as such, other than that. (One of my cards is due to expire soon anyway and has to be replaced, so getting a low-rate card seemed a no-brainer. I am not obliged to use it for this purpose.)

Which would be preferable, bankruptcy (which does not necessarily wipe out tax debts in Canada) or moving the debt to a credit card? Or are there other options?

posted by anonymous to Work & Money (1 answer total)

Couldn't you approach them and organise a repayment schedule? This is an option in Australia and the UK. This is far cheaper than credit card debt, and - well bankruptcy is a terrible last resort. 22k isn't a lot of money to the tax man. I'm surprised they suggested bankruptcy.
posted by the noob at 3:12 PM on March 15, 2011