Will Bankruptcy Take Care of Judgments?
There are two types of judgments.
The first, is one that a creditor can obtain against you through the courts to enforce an outstanding debt. The judgment is typically registered against any property that you own and you cannot sell or remortgage your property until the judgment is paid in full. The creditor also has the option to apply to the Sheriff to have your property seized and sold to satisfy the judgment. Once you file for personal bankruptcy or once a consumer proposal is accepted, the judgment turns into an unsecured debt and will get discharged with your other debts once the terms of the bankruptcy or consumer proposal are completed.
The second type, which can also be registered against your property, is referred to as a memorial judgment. These are used by the Canada Revenue Agency (CRA) for outstanding income tax, HST or source deduction debts. Filing for personal bankruptcy or a consumer proposal will not automatically turn the memorial judgment into an unsecured debt. This will require your Trustee to negotiate with CRA so they can come to an acceptable solution.
If you have an unresolved income tax or business tax issues contact a licensed trustee to review your options.
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.