Does bankruptcy clear CRA debt?

_{CRA debt, bankruptcy clearning CRA debt, Alberta}

Filing for bankruptcy can erase most CRA debts like income tax and GST/HST, while halting collection actions. However, debts from fraud or tax evasion will still stand. A Licensed Insolvency Trustee takes charge of dealing with the CRA, so not all trustees can be trusted. This process offers a breather from CRA stress. Reach out via phone, text, or live chat if you have any questions.

Show Table of Contents

_{Bankruptcy can clear CRA debt and halt collections.}

Cra Debt Question

Does bankruptcy clear CRA debt? If I owe money to the CRA, will bankruptcy eliminate that debt?

From: Anonymous Question
Location: Edmonton, Alberta (AB)
Category: personal bankruptcy

Cra Debt Answer

Yes, filing for bankruptcy can wipe out most unsecured debts with the Canada Revenue Agency (CRA), including personal income tax debt, GST/HST, and certain penalties and interest. However, keep in mind that debts due to fraud, misrepresentation, or tax evasion remain untouched by bankruptcy. Once you declare bankruptcy, a Licensed Insolvency Trustee will handle all communications with the CRA and put a stop to any collection activities, like garnishments or lawsuits. It’s like hitting the pause button on CRA headaches, giving you some breathing room.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

Bankruptcy does not clear all debts owed to the Canada Revenue Agency (CRA). Specifically, debts related to unremitted source deductions, such as taxes withheld from employee salaries, and other certain tax obligations incurred during the year before bankruptcy are not discharged and remain collectible by the CRA post-bankruptcy.

According to the Bankruptcy and Insolvency Act, section 178(1)(a) and (f), these types of debt are explicitly excluded from the discharge process, meaning that they will not be eliminated through bankruptcy proceedings.

From: OSB Helper

Related Questions to Bankruptcy Clearning Cra Debt

Here are the top 5 most frequently asked questions related to the topic “Does bankruptcy clear CRA debt?” in Canada:

1. Does bankruptcy erase all my CRA debts?

• Generally, yes, but there are exceptions, such as debts related to fraudulent activities.

2. What types of CRA debt are not dischargeable through bankruptcy?

• Debts related to fraud, misrepresentation, tax evasion, payroll remittances, and GST/HST considered as trust funds.

3. What happens to CRA debt collections during bankruptcy?

• The CRA cannot pursue debt collections against you, and any garnishments or lawsuits will be halted.

4. How long does bankruptcy impact my credit score for CRA debt?

• The impact typically lasts for several years but is not permanent.

5. Can the CRA pursue me after my bankruptcy is discharged?

• No, once your debts are discharged, you’re free from those specific obligations, and the CRA will not continue to pursue you for them[2][4][5].

If you have a question about debt see our debt questions or ask your own debt related question.

References

_{Table of article references}