Getting your money back from an insolvent estate

… and the tax pitfalls you need to watch out for

SO, YOU’VE sent out the nasty letters, paid thousands in legal fees, and having reached the end of your tether, you have put your debtor into liquidation.

Finally, you will get what is owed to you, right? Well, it’s not quite so simple—there is a whole legal framework that determines who gets what—if anything.

And like all commercial transactions, you can guarantee that there will be some or other tax consequences involved. But let’s start with the process of trying to salvage some money from this sorry mess.

When an individual or business to which you are owed money goes insolvent, you are required to …