Can the CRA take tax refunds while you are awaiting to be discharged?

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Twp99

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Years after filing for bankruptcy I re-opened the filing for bankruptcy.  During that time the CRA started garnishing my wages and took refunds totaling over $25,000.  Are they allowed to do this?  Shouldn't I be protected by the bankruptcy trustee who had my file before the court?

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NotATrust-E

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Re: Can the CRA take tax refunds while you are awaiting to be discharged?
« Reply #1 on: November 04, 2014, 08:06:27 PM »
Let's say you went bankrupt in 2000. As soon as you go bankrupt, collection action against you stops, and a trustee has been appointed. If you did not get your discharge, the trustee is required to get his own discharge from the file. As soon as the trustee gets her discharge, there is no more stay of proceedings. That means that anyone, including the CRA, can collect again.

The bottom line is that if you don't get your discharge, creditors can come after you again, subject to provincial legislation. As of 2004, the CRA must take collection action within 10 year of the debt being established.

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Twp99

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Re: Can the CRA take tax refunds while you are awaiting to be discharged?
« Reply #2 on: November 04, 2014, 10:25:14 PM »
if the trustee reopens the file and has the file before the court would there be protection from creditors?

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NotATrust-E

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Re: Can the CRA take tax refunds while you are awaiting to be discharged?
« Reply #3 on: November 06, 2014, 08:58:27 AM »
It depends on the what you mean by 'reopens'. If the trustee went to court yesterday and the registrar signed an order reappointing the trustee, then you would likely be protected from your creditors as of that date. The protection would not be retroactive.

I just thought of something; While you are bankrupt, the CRA can take your tax returns to cover your debt, I think. The main concern here would be the garnishment.

 

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