Bankruptcy and Insolvency : Tax tips

 

Automatic discharge from bankruptcy

The Bankruptcy and Insolvency Act will be amended effective September 18, 2009 to provide that bankrupt individuals with more than $200 000 in personal income tax debts representing 75 percent or more of their total unsecured liabilities will not be eligible for an automatic discharge from bankruptcy. They will have to seek a Court order to be discharged and will have to convince the Court that the relief they are seeking is justified on the basis of their efforts to repay their debts, their financial situation when the debt was incurred and their future financial prospects. The Court will be able to fix conditions on the discharge.