PROTECTING YOUR ASSETS FROM CREDITORS – Part 1

Rule 1: ​​To trust is good – not to trust is better!

Some insolvency trustees advertise that they can “solve” your debt problems. That may or may not be the case but be careful because they have a built in conflict of interest. This is confirmed in Bennett, the recognized “bible” dealing with proposals and bankruptcies which states:

“A licenced insolvency trustee is a representative of both the debtor and the creditor. The trustee’s role is to gather in the insolvent person’s assets and then to distribute them to the creditors according to the priorities under the Act.” (Bennett on Bankruptcy 12thEdition, page 68)

Therefore, if a debtor is seeking impartial advice from an insolvency trustee, there is a clear and acknowledged conflict of interest. Even worse, the more the trustee collects for your creditors, the bigger his/her fee.

Rule 2​: ​Engage your own advisor before consulting a trustee

You need someone who is 100% on your side. Therefore, it is wise to engage your own counsel to assist in planning for a proposal or bankruptcy. Only after an acceptable plan is worked out, will it be time to hire an insolvency trustee. A knowledgeable lawyer, who only acts for you, will make sure your interests are protected.

Rule 3​​: Protect your assets from creditors

In both a proposal and a bankruptcy, the objective of the Canada Revenue Agency (CRA) is to achieve maximum recovery of your outstanding taxes, interest and penalties. You want to pay less than the full amount due and achieve maximum flexibility as to repayment. If you are in business, another important object is to ensure future operation of your business. The planning may involve a reduction of debt, interest and penalties, deferral of payments, liquidation of assets, restructuring and whatever else seems to make commercial sense to the debtor, the CRA and other creditors.

Rule 4​​: Restructuring using a proposal

If your tax bill has grown so large that you have no ability to pay, it is wise to explore the options of obtaining debt relief through the use of a proposal or, only as a last resort, a bankruptcy.

MAKING A DEAL

A Consumer Proposal allows you to offer a deal to repay your unsecured creditors who are owed up to a total amount of $250,000, including the tax collector, an agreed upon amount by way of monthly payments for up to 60 months. This is usually slightly more than the total sum your creditors would expect to receive if you declaredbankruptcy. To succeed, you must be able to demonstrate that the monthly payment will be made without fail. If your creditors do not accept the proposal, you may then opt to file for bankruptcy – or, depending on the amount, just walk away and deal with it another day.

If you owe more than $250,000 and if your creditors reject the proposal, you are deemed to have filed for bankruptcy. If you owe less than $250,000, there is no automatic bankruptcy.

Rule 5​​: Get representation to protect your interests

As noted an insolvency trustee is obliged to represent both sides, meaning you and your creditors. The trustee is not permitted to cut you a good deal. They must recover as much from you as is possible to present as payment to your creditors. An insolvency trustee is definitely not on your side.

Your tax lawyer acts only for you. During planning sessions before a proposal is made and in subsequent negotiations, your lawyer is solely in your corner to make sure you get the best possible terms.

As soon as your Notice of Intent for a Proposal is filed,creditors are stayed from collection actions against you. This means the tax collector must immediately stand down on any bank or wage garnishments that they have levied against you for your tax arrears. They also cannot file a lien against your home during the period of the proposal.

© The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Tax Law

​If you are one of thousands of Canadians who have failed to file taxes for several years the answer maybe to seek amnesty. Be aware that failure to file for more than one year if you owe taxes is a criminal offence and you may be criminally prosecuted.

The CRA Voluntary Disclosure Program allows taxpayers to come forward and obtain immunity from prosecution and most civil penalties, provided certain conditions are met.

We specialize in lawyer-negotiated tax debt settlements and tax amnesties with federal and provincial tax authorities, offering taxpayers a much-needed resource for the resolution of situations that all too often put personal and financial lives at risk. We stand as your protector, defender, and advocate to ensure that you the taxpayer, receive the best treatment possible. 

We offer solutions for tax problems such as:

  • Unreported income
  • Unfiled tax returns
  • Payment arrangements
  • Unpayable tax debt
  • Tax dispute litigation
  • Criminal tax defense

Wills, Estates & Trusts

​We offer the following will, estate and trust services for individuals and business-owners:

  • Wills
  • Preparation of trust agreements
  • Powers of attorney
  • Estate administration
  • Probate
  • Representation in estate driven litigation
  • We currently offer a special time limited package for one will and two powers of attorney (property and personal care) for $295 plus HST

Real Estate

We can assist you with all your real estate needs including:

  • Drafting agreements
  • Purchases and Sales
  • Title transfers
  • Leases

Tax Debt Relief

With the coronavirus pandemic leaving many in a precarious and dire financial situation, it is essential that you protect yourself financially. If you have a large, unpayable tax bill, we can help. We act in the best interest of the tax debtor. Unlike us, insolvency trustees represent not only you but your creditors (ie- the tax collector). The more tax you pay, the more trustees earn. Our goal through leveraged negotiations, is to reduce your tax debt.

Please consult our blog post Protecting Your Assets from Creditors for more information.

Business & Tax Planning

If you do not already have a certified financial planner, we can provide one or more highly qualified people who can work closely with us to assist you with such matters as:

  • Resident and non-resident corporate restructuring
  • Optimum use of holding corporations
  • Continuity and succession planning
  • Tax-free transfers
  • Losses and ABIL planning
  • Making interest tax deductible
  • Small business planning

Corporate & Commercial Law

We have represented business clients for the last 50 plus years and have supported their legal requirements on an on-going basis by offering the following services:

  • Incorporations and corporate governance
  • Corporate reorganizations and transactions for the directors and shareholders
  • Negotiation and drafting of agreements, professional corporations, minute book maintenance

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Joyce Bruno

EXECUTIVE LEGAL ASSISTANT

Joyce Bruno has worked as executive legal assistant to Paul Dioguardi for 35 years and continues to offer her expertise and experience to the Dioguardi Law firm. Joyce’s role has evolved over the years and has acquired and developed many skills. She is an invaluable asset in case management and ensures the smooth running of our office.

Paul DioGuardi

B.A., LL.B, Queen’s Counsel

Paul obtained his Law Degree from Queen’s University in 1964.  He is a member of the Bars of Ontario, British Columbia and the Turks and Caicos Islands, a British tax free territory in the West Indies. He has over 50 years of experience and was trained at the Ottawa head offices of Revenue Canada and the Tax Litigation Section at the Department of Justice. Paul has had and continues with an extensive career in various areas of law such as:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy