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Category: Wage Garnishment

  • Requirement to Pay – If You Received One, Act Before Life Gets Uncomfortable

    A requirement to pay is one of the most uncomfortable forms of debt collection you can receive.

    A requirement to pay can be:

    • Sent directly to your employer (as a wage garnishment) so your employer will have to send a portion of your paycheque directly to the CRA. This can be embarrassing as now your employer will know you owe a tax debt.
    • Sent directly to your clients if you are self-employed or a sole proprietor. This is embarrassing and can also be damaging to your business if your clients switch to a competitor because they are worried about your financial situation.
    • Sent directly to the bank so the funds will be taken out of your bank account. You will be in for a shock when you go to access your account and find less in there than you expected, which could put you into financial trouble in other areas of your life.

    In any of these situations, a requirement to pay can make your life extremely uncomfortable at best, and at worst can result in long-lasting consequences that affect your reputation, finances, and livelihood.

    The solution? Take action — fast.

    Like any CRA collection action, a requirement to pay can be stopped by:

    • Paying the tax debt in full — however, this may not be an option if you don’t have the money available.
    • Filing for a consumer proposal or bankruptcy.
    • Working with a tax debt counsellor, like DebtCare Canada.

    The worst thing you can do is try to negotiate with the CRA yourself. At best, you will still have to pay the text debt in full and in a timely fashion, and at worst you may reveal information that allows the CRA to issue more requirements to pay.

    The better option is to work with a debt counsellor. For instance, at DebtCare Canada we offer one of the only programs that resolves CRA back taxes, including stopping collection action in its tracks.

    If you’ve received a requirement to pay from another creditor, we can help, too. We will work with you to stop the collection action as quickly as possible so you can avoid costly consequences — both financial and reputation-wise.

    If you’ve received a requirement to pay, don’t wait. Act now.

    Contact us for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • A Consumer Proposal is One Way to Stop a Wage Garnishment Dead in its Tracks!

    How do you stop a wage garnishment?

    If your paycheque is being targeted by creditors, it’s a critical question to ask – and we have the answer.

    Stopping a wage garnishment immediately is vital to your financial health:

    • A wage garnishment removes a percentage of your paycheque automatically.
    • It can be embarrassing – your employer (or clients if you’re self-employed) will find out that you are being garnished.
    • And it can put you in even more debt if you can’t afford your other expenses because of the garnishment.

    Luckily there are ways to stop a wage garnishment in its tracks. One of these methods is by filing for a consumer proposal.

    In a consumer proposal you make an offer to your creditors to settle your debt for a lower amount than you owe. The majority of your creditors must accept your proposal and they must think that it is more beneficial to them than if you were to file for bankruptcy instead.

    To qualify for a consumer proposal, you must:

    • Have less than $250,000 in unsecured, non-mortgage debt.
    • Be able to demonstrate your ability to repay at least a portion of your debt.

    Benefits of filing a consumer proposal:

    • It stops collection actions by creditors – including wage garnishments.
    • As long as the majority of your creditors accept the proposal it is binding on all creditors whether they voted against the proposal or not.
    • In most cases you can keep your home, car, and investments.
    • It allows for one low, interest-free monthly payment.
    • It can be paid in full at any time, at no additional cost.

    A consumer proposal stays on your credit rating for three years from the date it is paid in full as opposed to a bankruptcy that will remain on your credit for six years from the date that it is discharged.

    How to file for a consumer proposal:

    A consumer proposal is filed by a Licensed Insolvency Trustee (LIT) – formerly known as a Bankruptcy Trustee. But it’s important to note that LITs represent both you and your creditors and they are paid on a percentage of the consumer proposal they negotiate. The larger the settlement, the more money they make.

    We recommend working with an independent financial advisor who is strictly on your side to advocate for you throughout the consumer proposal process. At DebtCare Canada, we do just that. We perform an independent review of your financial situation and make practical recommendations that will work for you.

    If a consumer proposal is your best choice, we will work with you and structure the terms of your proposal before you meet with an LIT. With our assistance we will schedule a meeting with a Trustee and negotiate on your behalf as well as supervise the entire process.

    Stop a wage garnishment today. Contact us to get started. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Don’t Let the CRA Spook You – How to Stop a CRA Wage Garnishment

    With Halloween around the corner, we’re thinking about all of the scary financial situations that Canadians might face. And one of those that tends to spook people the most is a Canada Revenue Agency (CRA) wage garnishment.

    The CRA has broad garnishment powers. They can issue garnishments on your employment income, your bank account, and even other forms of income, like pensions. If you are self-employed, they can send requirements to pay to your clients. And unlike other creditors, the CRA doesn’t need a court order to garnish you.

    There are four ways you can stop a CRA wage garnishment:

    1. Pay the debt in full. If you can take out a loan or have home equity to access, this might be the time to use it.
    2. Get the CRA to agree to remove the garnishment. This is very difficult to do once collection action is in place. If you do attempt to negotiate with the CRA, you shouldn’t do it alone.
    3. File for a consumer proposal.
    4. File for bankruptcy.

    If you don’t have a sizable sum to offer or the ability to pay the CRA through a loan or home equity, then filing for a consumer proposal or bankruptcy will immediately stop a wage garnishment.

    So, what is the difference between a consumer proposal and a bankruptcy?

    Consumer proposals:

    • Are for non-mortgage debts up to $250,000.
    • Make a settlement offer to your creditors. The majority of creditors must accept this proposal for it to go through.
    • Typically, will not require you to give up any assets.

    Bankruptcies:

    • Are for any amount of unsecured debt. There is no limit.
    • May mean that you have to give up your assets.
    • Leave you with the worst credit rating possible — an R9.

    These options may seem extreme, but if you are faced with a CRA wage garnishment, they can be the better choice. The CRA will be aggressive with their garnishments and will not stop until they have recouped the full amount — plus any interest or penalties you have accumulated. This could mean thousands of dollars (or more) in garnishments by the time all is said and done.

    In turn, that could leave you struggling financially for months, or even years, on end. You need your employment income to pay your other day-to-day expenses, so having up to 20% to 50% of it (or more) go to the CRA could mean going even deeper into debt to other creditors.

    At DebtCare Canada, we can help you explore your options for stopping a CRA wage garnishment in its tracks. We will look at your credit rating, financial standing, and debt management choices to make the best plan of action.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • 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.

  • Avoiding a Wage Garnishment or Other Enforcement Action: Protecting Your Information

    If you find yourself drowning in debt, unable to meet your monthly financial obligations, you may soon find yourself facing a wage garnishment or other enforcement action if you don’t take the appropriate steps to deal with the problem. Being in debt isn’t a great feeling, but it doesn’t mean the situation is hopeless. To help avoid having a creditor garnish wages, it pays to be diligent in keeping your personal and financial information safe.

    A wage garnishment, frozen bank account or property lien on your home can happen easily if you are not careful about how you guard your personal and financial information. With very basic information about you and your assets, including any property you own, your creditors can easily take action to collect.

    Creditors often investigate public documents regarding property ownership and income to find out if you have the means to pay. If they have reason to believe you have sufficient income or assets, they will come after you. Some innocent sounding questions from your creditor when discussing repayment plans can lead to serious enforcement action down the road. Working with a creditor, you may be asked where you bank. Now they know which account to freeze. Maybe they ask where you live, and now they know where to look to place a property lien. Questions about employment and clients can easily lead to wage garnishment, which can be a substantial cut.

    Simply by protecting your information you can buy yourself some time to get your debt straightened out.

    If you’re concerned about a potential wage garnishment, whether a creditor has contacted you for the above information or not, the best thing you can do is pay the outstanding debt in full. This will eliminate the need for your creditor to seek you out. However, if you’re worried that your current financial situation won’t allow for payment in full (as is likely the case, otherwise you wouldn’t be in the situation), you need to think about other ways to remedy the situation.

    One of the best things that you can do if you know that you owe a creditor, and want to avoid a wage garnishment because you don’t have the means to pay in full, is to consult a financial professional. Whatever you do, don’t panic. And DO NOT answer any financial/personal questions from creditors without first consulting a professional.

    At DebtCare, we can help you explore your options. Call us today at 1 (888) 890-0888.

     

  • The Difference Between a Wage Garnishment from the Government and a Creditor

    A wage garnishment is a very popular (or unpopular, depending on your experience) form of collection action. When money is owed to a creditor, obtaining a judgment for enforcement action and implementing a wage garnishment is a common method for retrieval of funds. The Canada Revenue Agency (CRA) is also well known for imposing wage garnishments when money is owed. The process, however, is different for each. So, what’s the difference between a wage garnishment from the government and one from a creditor? We’ll explain.

    Firstly, what is a wage garnishment? When you owe a creditor or the CRA, but have failed to make the necessary payments, that organization has the ability to pursue a garnishment of your wages. Once this happens, your employer will receive a notice of garnishment, which lists the debt amount and the name of the creditor. Your employer is then required by law to pay a portion of your wages. The amount can differ depending on a variety of factors, as well as the organization seeking the garnishment.

    When a creditor garnishes your wages, you will have some warning. Not only will you receive a letter informing you of their intention, the creditor is also required to obtain a judgment against you in court, meaning they must sue you in an action which you can defend. If you fail to defend or don’t receive the letter and judgment is obtained, a notice is sent, as mentioned, to your employer and your employer must then submit the specified portion of your wages to pay your outstanding debt.

    The major difference when the CRA garnishes your wages is that they are not required to obtain a court order. When you owe the CRA and they choose to garnish your wages, they simply send a notice to your employer directly. You may not receive any warning, only finding out about the garnishment on payday. As with a creditor, once this garnishment notice is received by your employer, they are required by law to submit a portion of your paycheque.

    What can you do if your wages are being garnished? Wage garnishments can be devastating financially, so it is important to address the issue as soon as you are made aware of it. Once it is in place, your options are few. To have a garnishment removed you can try negotiating with your creditor to settle the debt, pay the debt in full, or file a consumer proposal or bankruptcy. These options are the same whether you are being garnished by a creditor or the CRA.

    It is a very common practice for both creditors and the CRA to garnish wages. Wage garnishments are typically very effective as they allow the creditor to intercept money before it gets to you.

    At DebtCare, we deal with wage garnishments every day.

    If you’re struggling as a result of one, get in touch with us today to discuss your options for having it removed. 1 (888) 890-0888.

     

  • Don’t Help the Canada Revenue Agency Take Collection Action

    If you owe money to the Canada Revenue Agency (CRA), you can be sure that the next few months will find you dealing with various attempts to collect. The CRA is quite aggressive when it comes to collecting a tax debt, and waiting for you to pay up just isn’t the name of their game. Don’t make it any easier for them to begin collection action.

    If you receive a legitimate communication from the CRA asking for financial information, you may think that providing such would be harmless or may prove favourable when attempting to negotiate a payment plan. For example, if an agent calls and asks where you bank, or who your clients are (if you’re self-employed), you may feel like this is a reasonable request and provide the information.

    The same goes for forms they may ask you to fill out. While you might think that completing these forms will result in a fair payment arrangement – they may even allude to such – it typically won’t.

    Think those questions are risk-free or safe? Beware. This information will be used for collection action.

    What questions lead to enforcement action?

    • Where do you bank = frozen bank account
    • What is your address = property lien
    • Where do your work = wage garnishment
    • Who are your clients = garnishment to clients, up to 100%

    Aren’t these things the CRA already knows, or can find out on their own? Sometimes yes, sometimes no, but even in the case of things they can find out, why do the legwork for them, thereby making it easier for them to hurt you?

    When you can’t pay, but you’ve answered the questions and filled out the forms, the CRA now has all of the information they need to come after you. The CRA isn’t interested in long-term payment plans and they won’t reduce the amount that you owe! Any arrangement will disallow payments to other creditors (loans and credit cards), thereby decimating your credit, as well as other expenses. If money is owed, the CRA wants it, right now.

    If the CRA is asking questions and you know that you owe but can’t pay in full, it is time to get professional representation. We strongly recommend that you DO NOT complete these forms or answer any financial/personal questions without first speaking with a financial professional.

    At DebtCare, we can help you navigate the dangerous CRA waters.

    Get in touch today by calling 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.

     

  • Will a Creditor Actually Sue You When You Default on a Debt?

    We often have clients call us, when debt becomes unmanageable, asking if a creditor will actually sue if you default on a debt. While it may seem unlikely, it is, unfortunately, very common.

    A creditor may sue you themselves, hire a paralegal to cover it, or assign your account to collections, whereby the collection agency may sue you. If a judgement is secured against you, they can then take enforcement action to obtain the funds owed.

    Enforcement action may include a wage garnishment, a property lien or a frozen bank account.

    All of these are embarrassing and could have other consequences.

    A wage garnishment not only reduces your income (as the money is taken from the source to pay the debt), it also lets your employer know that you have a financial problem. This is particularly problematic for those in jobs where you have to be financially responsible. If you’re self-employed, the notice of garnishment is sent to your clients and intercepts their payments to you, letting them know that you’re financially in trouble. This can damage your reputation.

    A lien on property will effectively mean that you can’t refinance the asset and could mean additional fees and financial consequences to get the lien discharged when it is paid. It will also make the creditor a secured creditor, thus reducing financial options should you decide to file a consumer proposal or a bankruptcy.

    Not only will a frozen bank account result in an inability to access funds, it can damage your relationship with your bank. This may result in them choosing to suspend other credit products, make changes to your account (i.e. removing an overdraft), or deciding not to extend credit to you in the future.

    If a creditor is threatening to sue you, you need to take action now. Waiting will often just result in one of the above.

    If you find yourself worrying about such things, the first question to ask is why you are in this situation to begin with. Do you have financial challenges making it hard to pay your debt? Perhaps you just need a fresh start.

    A consumer proposal is a great way to consolidate debt and:

    • Stop collection action – even a lawsuit or enforcement action from a judgement (as long as it’s not a lien)
    • Stop interest
    • Reduce debt in most cases
    • Consolidate everything into a single monthly payment

    If you owe and your creditor is threatening to take you to court, don’t assume that this is an empty threat. Once legal action is initiated, you may find yourself in much deeper financial waters.

    At DebtCare, we can help you deal with your debt before it gets to this point, or, if it has already reached this point, help you stop that enforcement action.

    Call us today 1 (888) 890-0888.

     

  • CRA Wage Garnishments – What You Need to Know

    cra wage garnishments dcA few weeks ago we dedicated a blog to Canada Revenue Agency tax problems and how to approach a tax debt before attempting to make a payment arrangement. This week we follow that up with a discussion of what to do once the CRA has levied enforcement action against you, specifically in reference to a wage garnishment. CRA wage garnishments are terrible to have to deal with, and unless you face the problem head-on, you might be in for a struggle financially.

    What kind of struggle are we talking about? The CRA can garnish a significant portion of your income depending on its source. Here are a few examples:

    • CRA wage garnishments to employment income = up to 50%
    • CRA garnishments to pension income = up to 100%
    • CRA garnishments to subcontractors = up to 100%
    • CRA garnishments to companies = up to 100% of gross income

    In addition to issuing no warning prior to garnishing your wages or income, the CRA doesn’t need a court order to issue a garnishment. They simply need to send a notice to your employer/clients and the funds will be taken directly from your income.

    Once a wage garnishment is in place, getting the CRA to remove it is incredibly difficult.

    So, what can you do?

    A consumer proposal is one option for getting rid of a CRA wage garnishment. Once a proposal is in place, the CRA has to remove the garnishment as soon as notification of the proposal is received. Furthermore, a consumer proposal may even reduce the size of your tax debt – a consumer proposal or bankruptcy is the only way to reduce a principal tax debt – and stop interest from accumulating. A consumer proposal will also get rid of your multiple monthly payments, merging all into one, for a far more manageable payment.

    Just remember, don’t go directly to a trustee to negotiate your proposal. While a trustee will represent you, they will also represent the CRA which won’t always mean the best deal for you. Instead, speak with a financial consultant first. A professional financial consultant can facilitate your proposal, negotiate it with the trustee and represent your interests – both protecting your information and getting you the best, most fair, deal.

    At DebtCare, we will stand beside you throughout the entire process. We have years of experience dealing with both CRA wage garnishments and negotiating consumer proposals.

    You can count on us. Call us today 1-888-890-0888.