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 title , 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 take care of? — Dan
FP Solutions: Closing a enterprise after 11 years is troublesome sufficient with out the added stress of leftover debt. So, the quick reply is: Sure. As a sole proprietor you might be 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 possibility.
Earlier than deciding what to do, get a transparent image of what you owe and what you possibly can 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 aid you make a sensible determination reasonably than reacting to assortment calls .
Make an entire record of your whole money owed, together with every lender, stability, rate of interest and minimal fee. Observe 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 cut back the stability and curiosity expenses.
Subsequent, shut your small business account with CRA and file your remaining GST/HST return. Closing the account is not going to erase what you owe, so ask CRA for a fee association you possibly can realistically preserve. Contacting CRA earlier than the account strikes additional into collections might provide you with extra room to work out a manageable plan.
Then, contact your financial institution reasonably than ready for one more name. Most traces of credit score are payable on demand, so the lender might ask for the total stability when a enterprise closes or funds fall behind. Clarify your state of affairs and ask whether or not the stability could be transformed to a fixed-term mortgage with set month-to-month funds. Consult with a present price range and don’t comply with funds you can’t afford.
If mortgage funds don’t suit your price range, converse with a non-profit credit score counsellor. Unsecured enterprise money owed in your title, akin to a line of credit score or bank cards, could also be eligible for reimbursement by way of a Debt Administration Program (DMP). A DMP consolidates unsecured debt funds into one reasonably priced month-to-month quantity, and collaborating collectors sometimes cut back or cease ongoing curiosity. A counsellor can assessment your state of affairs, assist refine your price range and reply any questions.
If full reimbursement will not be life like, chapter will not be the one different. A shopper 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 usually 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 file, weigh the professionals and cons fastidiously. A credit score counsellor can clarify easy methods to put together to file a shopper proposal and aid you examine options earlier than you determine.
Your corporation could also be closed, however you continue to have choices. Performing now provides you the perfect probability 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 gotten a debt query for FP Solutions? E mail wealth@postmedia.com.
