Q: I ran my very own flooring enterprise for 11 years. After again accidents and with tariff uncertainty pushing up the price of supplies, I shut down the enterprise this spring. I nonetheless owe about $38,000 on a enterprise line of credit score and a bank card in my identify , plus roughly $6,000 in GST/HST. I assumed the money owed would finish when the enterprise closed, however the financial institution retains calling. Am I personally on the hook for all of it? Are these now money owed I’ve to declare chapter on to cope with? — Dan
FP Solutions: Closing a enterprise after 11 years is tough sufficient with out the added stress of leftover debt. So, the quick reply is: Sure. As a sole proprietor you’re personally liable for these money owed, even when the accounts had been solely used for enterprise bills. That additionally means any missed funds seem in your private credit score report, not one for the enterprise. However the excellent news is that chapter is much out of your solely choice.
Earlier than deciding what to do, get a transparent image of what you owe and what you may afford to pay every month. Then contact the Canada Income Company and your financial institution to check reimbursement choices. Taking these steps so as will assist you make a sensible determination quite than reacting to assortment calls .
Make an entire record of your entire money owed, together with every lender, steadiness, rate of interest and minimal cost. Notice which accounts are secured, that are unsecured and that are behind. You probably have tools you now not want, promoting it and placing the proceeds towards your money owed, beginning with any mortgage the tools secures, will scale back the steadiness and curiosity prices.
Subsequent, shut your small business account with CRA and file your last GST/HST return. Closing the account is not going to erase what you owe, so ask CRA for a cost association you may realistically keep. Contacting CRA earlier than the account strikes additional into collections could offer you extra room to work out a manageable plan.
Then, contact your financial institution quite than ready for an additional name. Most traces of credit score are payable on demand, so the lender might ask for the total steadiness when a enterprise closes or funds fall behind. Clarify your scenario and ask whether or not the steadiness might be transformed to a fixed-term mortgage with set month-to-month funds. Check with a present finances and don’t comply with funds you can’t afford.
If mortgage funds don’t suit your finances, communicate with a non-profit credit score counsellor. Unsecured enterprise money owed in your identify, resembling a line of credit score or bank cards, could also be eligible for reimbursement via a Debt Administration Program (DMP). A DMP consolidates unsecured debt funds into one inexpensive month-to-month quantity, and taking part collectors usually scale back or cease ongoing curiosity. A counsellor can evaluate your scenario, assist refine your finances and reply any questions.
If full reimbursement isn’t real looking, chapter isn’t the one various. A client proposal is a authorized association, administered by a licensed insolvency trustee, to repay a part of what you owe over a most of 5 years. A proposal stops curiosity and assortment calls, and GST/HST debt from a sole proprietorship can typically be included.
Collectors representing nearly all of the debt should settle for the proposal. As a result of it impacts your credit score and turns into a public report, weigh the professionals and cons rigorously. A credit score counsellor can clarify put together to file a client proposal and assist you examine alternate options earlier than you determine.
What you are promoting could also be closed, however you continue to have choices. Appearing now provides you the most effective likelihood of discovering an answer that’s each manageable and sustainable.
Mary Castillo is a Saskatoon-based credit score counsellor at Credit score Counselling Society, a non-profit group that has helped Canadians handle debt since 1996.
Do you’ve got a debt query for FP Solutions? Electronic mail wealth@postmedia.com.
