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Category: CRA Garnishment

  • CRA Collections and You – How You Can Protect Yourself

    Canada Revenue Agency (CRA) collections can be financially and personally devastating. Whether you’re hit with a wage garnishment, frozen bank account, or lien against your property, the effects can be far-reaching. It might impact your ability to pay your regular bills, alert your employer or clients to your financial position, or put your assets in jeopardy.

    CRA collections can begin without warning and without a court order.

    Often, when a person is hit with a CRA collection action, they ask, “How did the CRA find out my personal information?”

    The answer, usually, is that you told them.

    If you’re talking to the CRA, you need to be careful about what you voluntarily disclose. They can’t begin collection action unless they know where to collect from. For example, your bank account can’t be frozen if the CRA doesn’t know where you bank.

    One of the ways the CRA gets your personal information is through financial disclosure forms. For instance, say you wanted to make a payment plan with the CRA to pay your tax debt. You might directly contact the CRA to do so. They may indicate that they are willing to accept a three-to-six-month payment plan based on $500 per month if you fill out a form providing financial disclosure.

    This form might ask for information about your income, income sources, expenses, assets, liabilities, where you bank, and more. And now they have all this information on file. Even if they accept your payment plan this year, they might not be so lenient if it happens again in a following year. And now they will know where to collect from.

    There’s another added danger of providing this information: once they have your data, the CRA could go back on their original payment plan offer and demand a much larger monthly payment based on what you’ve disclosed.

    They may accept the lesser monthly payment for three-to-six months, but if they demand more, or if you don’t meet the payment plan obligations, the CRA will have all of your personal financial information that you provided in the financial disclosure form and can proceed to take enforcement action against you.

    They can also get your banking information in other ways. For example, if you make a payment to the CRA using your main chequing account and you still owe money, expect your bank account to get frozen.

    You also might unknowingly provide personal information just by talking with a CRA agent on the phone. Remember, they are trained to seem friendly, so you feel comfortable talking with them and revealing personal details. But the friendship isn’t all it seems. Once they have what they need, expect the CRA to turn to collection action.

    All of these reasons are why many agencies advise people who have large tax debts not to deal with the CRA directly. The CRA may say they are willing to negotiate, but they are agents hired by the government to collect the tax debt from you. Their primary objective is to close your file, which can only happen if you pay the amount in full (or you end up filing for a consumer proposal or bankruptcy).

    If you know you owe the CRA and can’t pay in full, you need a plan before even initiating contact.

    • Don’t contact the CRA on your own.
    • Don’t attempt to negotiate with the CRA.
    • Don’t fill out any financial disclosure forms they provide or answer other personal questions when speaking with an agent over the phone.

    Instead, contact a financial consultant to explore your options so you can get your CRA tax debt cleared before collection action is started.

    DebtCare provides access to one of the only programs that can resolve a CRA back tax problem. We can help you before the CRA registers a lien against your home, issues one of your customers a requirement to payorder, or freezes your bank account.

    Contact us today for a free consultation at 1-888-890-0888.

  • How Does the CRA Garnish My Wages? CRA Garnishment

    How Does the CRA Garnish My Wages? CRA Garnishment

    CRA Garnish My WagesA Canada Revenue Agency, a CRA garnishment is one of the most dreaded forms of collection action – and for good reason. If you’ve found yourself asking, “How does the CRA garnish my wages?” you’ve come to the right place.

    In a CRA garnishment (called a requirement to pay) the CRA can garnish your employment income or client invoices if you are self-employed.

    They can also garnish from your other sources of income, including any federal agency or department that owes you money, such as the Canada Pension Plan or Employment Insurance.

    What’s worse is that the CRA does not have to warn you about this, nor do they need a court order to garnish. If they have decided to garnish your wages, they will either contact your employer or your clients (if you are self-employed) and request that the necessary amount is taken off your paycheque or invoice and sent straight to the CRA.

    This can have far-reaching consequences. If you are employed, your employer will now know that you are in financial trouble, which could be embarrassing depending on your situation. It can be even worse if you are self-employed, as your clients will now know that you are struggling, which might make them question whether they should continue to do business with you.

    If your employer, other income providers, or clients are contacted by the CRA, they are legally obligated to comply with the payment request.

    The best course of action is to avoid a CRA garnishment before it even starts. Once a wage garnishment is in place, the CRA becomes that much harder to negotiate with.

    If you have advance warning of a garnishment, or know that you owe the CRA, it is in your best interest to look for ways to pay the taxes owing. If you can’t afford it, talk to a professional debt counsellor who can help you find the right course of action to make sure the CRA gets their money and your professional reputation is kept intact.

    If you’re already under a CRA garnishment, there are only two things that can force the CRA to involuntarily stop collection (besides paying the debt in full): filing for a consumer proposal or filing for bankruptcy.

    In a consumer proposal, an offer is made to your creditors to repay a portion of what you owe in lieu of the whole payment. The downside is that it can critically affect your credit score, so it will likely be very difficult to qualify for any type of credit until years later.

    Filing for bankruptcy leaves you with only one monthly payment, stops interest and collection action, and reduces debt, but your assets may be taken, and it also affects your credit in a major way.

    Both a request for consumer proposal and a request for bankruptcy must be filed through a Licensed Insolvency Trustee (LIT, or formerly known as a bankruptcy trustee) who takes a portion of what you pay.

    If you’re on the line for a CRA garnishment, you need someone who will represent you — and only you.

    This can include going over your debt consolidation options, making a plan to pay the CRA, or being your advocate while filing for a consumer proposal or bankruptcy.

    At DebtCare Canada, we provide all these services and more. Learn about how we can help today.

    Contact us for a free consultation. Call 1-888-890-0888.

  • Question Corner: When Will CRA Garnishment Happen to Me if I Owe?

    The 2017 income tax deadline is looming on April 30, 2018 and with it the consequences of not paying a tax debt in full. One such consequence if you fail to pay a tax debt is Canada Revenue Agency (CRA) garnishment.

    A CRA garnishment is just one of several scary collections tactics that can happen if you fail to pay your taxes. CRA can garnish up to 50% of your employment income and 100% of your other income, such as contracts or pensions, simply by sending a letter to your employer, or your clients if you are self-employed. The person who receives this letter is legally obligated to send your money straight to CRA or they could face court action.

    Unlike other creditors, the CRA doesn’t need a court order to obtain a wage garnishment. And, scarier still, you may not even know when a CRA wage garnishment will start.

    A CRA garnishment can start any time after the 2017 income tax deadline once CRA has processed your income tax return and provided you with a notice of assessment. This is where you will see the exact amount that you owe.

    If you can’t pay the tax debt in full, that’s when wage garnishment and other collection tactics can begin. You may be able to make a payment arrangement with CRA, but this is nearly impossible for an individual to do on their own. And even if you are sending payments to CRA, they may still garnish.

    If you don’t pay your tax debt and CRA finds out where your income comes from, you are at risk for a wage garnishment.

    CRA can find out your income source in many different ways, such as:

    • You tell CRA or name your employer on a budget or disclosure forms given to CRA.
    • Tax filings by your employer(s).
    • Your client or supplier is audited.
    • And many more.

    There are options to stop a CRA wage garnishment depending on your income, assets, and debt. Some of these options will immediately stop a wage garnishment. Debt consulting companies, such as DebtCare Canada, can assess personal circumstances and arrange whatever solution is the right one.

    Don’t wait – call DebtCare today. We can walk you through the various options and help you avoid a CRA garnishment. 1-888-890-0888.

  • How to Stop a CRA Wage Garnishment

    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.

     

  • How to Stop a CRA Wage Garnishment

    How to Stop a CRA Wage Garnishment

    debt2You may be surprised to learn how many people have their wages garnished by creditors on a regular basis. This is such a common collection enforcement method, especially when it comes to the Canada Revenue Agency (CRA). We get calls on a regular basis asking about the ways to stop a CRA wage garnishment. This week we thought we’d tackle the topic and give you some tips to help.

    A wage garnishment is a method of collections which requires, in most cases, a court order. This order is then sent to your employer and they are required to remit a portion of your paycheque to your creditor. In the case of the CRA, a court order is not required. If your employer fails to comply, they may be liable for those funds.

    How does CRA find out where people work?

    • The most common method for finding out where you work is by asking. If, at any point, you’ve called the CRA to try and negotiate a payment plan, to try and discuss relief, etc., you’ve likely provided information regarding where you work.
    • Your T4s – your employer files a T4 with the CRA every year – this is part of their own tax obligations.
    • Someone you work for is audited by the CRA – meaning all employee documentation becomes part of that audit.

    When a wage garnishment is imposed by the CRA, the amount varies, but employment income up to 50% and self-employed income up to 100% is fair game.

    There are a few ways to stop a CRA wage garnishment.

    1. The first, and most obvious, is to pay it off. Once the debt is paid in full, that garnishment will be lifted.
    2. Going to tax court is another option, but this can be very expensive and there are no guarantees.
    3. Use an asset to finance the debt, such as your home, through a second mortgage.
    4. File a consumer proposal offering monthly payments to the CRA (this is often the only way to reduce a tax debt).
    5. File for bankruptcy.

    If you have no equity in assets and no ability to do anything more than make monthly payments, options 4 and 5 are viable options that will stop a garnishment immediately.

    When your wages are being garnished, this can take a significant toll on your ability to make payments with respect to other financial responsibilities, so it needs to be taken care of as soon as possible.

    Don’t wait – call DebtCare today. We can walk you through the various options and help you get that garnishment lifted. 1 (888) 890-0888.

     

  • You Can Stop a Wage Garnishment in Ontario – Here Are Your Options!

    wage garnishment in OntarioWage garnishments impact thousands of people every day – and can come as a most unpleasant surprise for those individuals.

    Beyond the financial implications, a wage garnishment in Ontario can have serious consequences in other areas of your life. For example, if you work for someone else, once that individual receives a Notice of Garnishment regarding the wage garnishment, they will be fully aware of your financial problem and thus may view you in a different light. Responsibility and reliability may be questioned, and any company that required a credit check upon hiring may take this new information into consideration.

    If you work for yourself, especially with a small company, your reputation is important, but if your clients are receiving letters telling them to submit payment directly to the court, this could tarnish that reputation. The hassle may cause those clients to look elsewhere in the future.

    Once a garnishment is in place, is paying it off the only option? Perhaps not.  A wage garnishment in Ontario can often be stopped but this largely depends on who issued it.

    Here are a few of the most common types of wage garnishments in Ontario:

    1. Issued through the court – someone sued you, got a judgement and is enforcing it. Generally this can mean a loss of up to 20% of your earnings, and can only be stopped by paying the debt or making an arrangement with a creditor, by court motion, or by arranging a bankruptcy or consumer proposal with a debt counsellor.
    2. Issued by the CRA – the CRA does not need a court order, and can garnish up to 50% of your wages. If you are self-employed or on a pension this could be up to 100%. A CRA wage garnishment can only be stopped by: CRA’s consent or an arrangement, by arranging a bankruptcy or consumer proposal with a debt counsellor, or by taking CRA to tax court (the most expensive route). A CRA wage garnishment is particularly nasty….
    3. Issued by Family Responsibility – the only way to deal with one of these is to pay it in full or go back to court – there is no other option.
    4. Issued because of EI overpayment or by government after receiving money under false pretense – this can be complicated and these are instances where it is difficult to get protection. Like the CRA, this does not require a court order and if fraud is involved it can get tricky.

    When you are facing a garnishment of your wages, no matter the source, your best bet is to speak with a debt counsellor. The solution to your financial problem will largely depend on your personal circumstances, but ignoring the garnishment should never be an option.

    Avoid the embarrassment and financial hardship of a wage garnishment in Ontario by calling DebtCare Canada today at 1-888-890-0888.

  • Self Employed? Is a CRA Garnishment Going to Your Clients?

    Self Employed? Is a CRA Garnishment Going to Your Clients?

    CRA GarnishmentAnyone who is self-employed knows the many challenges that come with owning a business – and one of the greatest is dealing with the many complexities that come with the intricate tax process in Canada. Because of these complexities, many self-employed individuals find themselves owing money to the Canada Revenue Agency (CRA), for numerous reasons, and if unable to pay, face strict enforcement actions as a result. One of the most common of these is a CRA garnishment of your receivables.

    Here are some numerical facts when it comes to a CRA garnishment:

    The CRA can garnish up to:

    • 100% of subcontracted income
    • 100% of other income like pension
    • 100% of self-employed income

    If you are self-employed, the CRA can send a notice to your clients to direct your receivables to the CRA. This can cause significant financial hardship and stress, as well as the negative impact it can have on your client relationships.

    So, can you stop a CRA garnishment? It is difficult, but you do have options.

    1.     You can try to get the CRA to agree to stop, but know that the chances of this happening are slim to none. As far as the CRA is concerned, you owe the money and their job is to retrieve it. Also important to remember, in the process of trying to cooperate, many who attempt to negotiate divulge information to the CRA that can cause even more problems; providing financial disclosure can prompt further enforcement action, a frozen bank account or a property lien for example. This option should be avoided at all costs!

    2.     Consumer proposal. By entering into a consumer proposal you can immediately stop a garnishment – with the added benefits of stopping interest and likely reducing the size of your overall debt. However, there are a few caveats:

    o   If you have other creditors they will be included in the proposal too.

    o   If the CRA is your majority creditor, they have to agree to the proposal (if they don’t respond within 45 days they are deemed to have agreed).

    o   If you own a home and the CRA has a lien on it, this greatly complicates things.

    3.     Bankruptcy. Like a consumer proposal, this would immediately stop a garnishment, and is likely to stop interest and perhaps reduce the size of your overall debt. Things to keep in mind:

    o   You have to report income and your financial circumstances to a trustee every month – if your financial situation improves you will have extra repayment added which has to be paid before you can get discharged.

    o   Your payment to the trustee depends on your income and can change if there is an increase in income.

    o   If you own a home and the CRA has a lien on it, this greatly complicates things.

    If you are suffering from a CRA garnishment of your receivables, there are options to have the garnishment lifted while keeping yourself protected from further enforcement action. DebtCare has the tools and experience to help. Contact us today by calling 1-888-890-0888.