What are my options to avoid bankruptcy?
Once a business’ bank accounts are frozen, it is essentially unable to operate and it’s time to really sit down and determine options to avoid bankruptcy.
Here are the options for available to small business owners in Alberta who have unmanageable CRA debt:
- Raise money from investors (family and friends) and pay down the debts, or at least a significant portion of them. Treat any money you borrow as a debt you need to repay as soon as you're able. Note that banks won’t lend to repay CRA debt.
- Call a trustee about bankruptcy. Take the time to talk to a few and choose one that you like and that meets your budget. Trustee fees can vary significantly.
- While a consumer proposal might be a good option, it has upfront costs. Expect to pay somewhere between $2,000 to $5,000 upfront.
- Another good option might be orderly payment of debts. Read our blog on this Government of Alberta-backed program.
- Challenge the CRA. If you believe your tax debt is unfair, you can challenge. It will cost you in lawyer and accountant fees, but it can buy you time, and sometimes even lower your tax debt.