With the tax season behind us, those sitting with tax debts may be concerned about payment plans and what actions the Canada Revenue Agency might take to obtain money owed. A CRA wage garnishment is a very common form of enforcement action. If you’re concerned about a possible garnishment, or are currently trying to have one removed, read on.

The CRA does not need a court order to obtain a wage garnishment. They do not even need to warn you when one is being initiated. They can garnish up to 50% of employment income and 100% of other income, such as contracts and pension income, simply by sending a letter to your employer or clients (if you are self-employed).

Once a CRA wage garnishment is in place, it becomes even harder to negotiate with the CRA. Often the only way they will agree to remove it is by receiving payment in full.

If this is not feasible, don’t worry, you have other options.

To get a garnishment lifted, you may want to consider bankruptcy or a consumer proposal. Once either is filed, the garnishment will be stopped immediately.

In the case of a consumer proposal, your creditors must accept it to move forward, so if the proposal is not accepted, the garnishment can be re-initiated. However, a strong, well-positioned proposal will most often be accepted.

In a bankruptcy, a wage garnishment will be stopped, period. There is no need for creditors to accept anything. Once the paperwork has been filed, all enforcement action must cease.

Knowing which option is best for you depends on your personal circumstances – your income, assets, family composition, debts and more. Discussing your situation with an experienced financial consultant is the most effective way to determine which option will serve you best, both in the short-term and over time.

Tax debts can’t be ignored – they won’t just disappear on their own, and the CRA can be incredibly aggressive when it comes to collecting. The most important thing that you can do when you have a tax debt is look for a solution as soon as possible. Waiting may just find you struggling to make ends meet. A wage garnishment can be embarrassing and can seriously impact your ability to continue meeting your monthly financial obligations.

If you are stressed about a current or probable CRA wage garnishment, DebtCare can help. We have years of experience helping Canadians with such problems.

Call us today for a free consultation: 1 (888) 890-0888.