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Tag: stop a wage garnishment

  • 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.

  • 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.

  • The Only Ways to Stop a Wage Garnishment without Going to Court

    debtcare1A wage garnishment put in place to repay a creditor can be a terrible thing to deal with. The knowledge that a significant portion of your income is being taken from you before you even see it, money that would usually go towards paying for things you need, can be hard to swallow, and it can be tough to know where to turn for help.

    This blog deals with wage garnishments – those put in place to deal with civil debts such as credit cards, or loans, as well as tax debts. It does not apply to Family Responsibility debts and some unique types of debt. If you want to know more about how to get rid of a wage garnishment put in place to deal with the former, here is where you need to be.

    The easiest way to stop a wage garnishment, obviously, is to pay the debt. Sure, this may seem like a very simple solution, but if you can’t pay the debt, in full, it is a simple solution that really doesn’t help you. Don’t worry, all is not lost.

    Two additional ways that you can immediately stop a wage garnishment include a consumer proposal and bankruptcy.

    In a consumer proposal, you propose an amount that you are prepared to repay your creditor with a repayment term of usually 5 years. The moment the proposal is filed by a trustee, the garnishment stops. Once your creditors accept your proposal you begin repaying. A consumer proposal can be paid in full at any time. A consumer proposal also stops interest and can even reduce the amount of debt you owe.

    In a bankruptcy, a trustee, based on an income calculation, will determine if you have to pay into bankruptcy for 9 or 21 months. During this time you will make a monthly payment to the trustee for the term of the bankruptcy and that payment is based on your income. Generally higher income earners opt for consumer proposals because bankruptcy payments end up being higher. Once you complete your obligation to the trustee you become discharged from bankruptcy. The moment a bankruptcy is filed the wage garnishment stops, interest stops and your overall debt can even be reduced.

    It is important to note that, in either scenario, you will need the services of a licensed trustee in bankruptcy; but you do not want to go to the trustee directly because they represent your creditors and you may not get the best deal. A debt counsellor can help you prepare your information and structure relevant information so that the trustee makes an arrangement that is fair for both you and the creditors.

    Want to stop a wage garnishment or learn more about how a consumer proposal or bankruptcy can help you clear those debts?

    Call DebtCare Canada today at 1-888-890-0888.

     

  • Garnishment of Wages Blog Series Part 2 of 3 – How to Stop a Wage Garnishment

    In our last blog in this series we answered the question “what is a wage garnishment”.  If you have been threatened with a garnishment of wages then you need to know that your employer is about to be notified about your defaulted debt. If your wages are already being garnished then your employer has already been made aware of your defaulted debt and you are likely feeling the financial hardship that accompanies wage garnishments. In this blog we will discuss how to stop a wage garnishment even if it is already in place.

    The three most common wage garnishments are: court ordered wage garnishments that arise because of a defaulted debt to a creditor; a garnishment of wages from the government which does not require a court order for the government to impose; and finally, wage garnishments issued as a result of family responsibility. In this blog we will discuss wage garnishments that arise because of a debt to a creditor and government imposed wage garnishments, and how you can stop them.

    When a garnishment of wages has been imposed, there are 3 common ways to stop it:

    You get your creditor to agree to voluntarily remove the wage garnishment. This rarely works if you try to negotiate this on your own. If a creditor has pursued a garnishment of wages it is generally because they feel that they have been unsuccessful at negotiating a voluntary repayment arrangement with you. Once a garnishment is in place and they start to receive payments, there is very little you can say to them to convince them to lift it.

    1. You can pay off the debt. Likely this is not a possibility because if you could pay the debt in full, you would have done that already and wouldn’t be putting yourself through the stress of having your wages garnished.
    2. You can work with a financial professional who has access to programs and resources to push your creditor to accept a repayment arrangement that is acceptable to them and that you can live with.

    Court ordered wage garnishments can be removed or reduced by going to the court and convincing a judge to give you relief. Pursuing this option can be expensive and time consuming and there are no guarantees. This is not an option in the case of a debt to the government because the government can garnish your wages without a court order.

    When there is a debt owed to the government you have far fewer options. Going to the court for relief is not an option, as previously stated. Negotiating with the government once a wage garnishment is in place is often fruitless for the same reason that negotiating with a creditor is. Once the garnishment is in place and the government starts receiving their money, there is no incentive to them to remove the garnishment.

    A garnishment of wages is almost always a symptom of a financial problem. Without the existence of a financial problem you would be paying your bills and would not have defaulted on your debt(s). If you want to know how to stop a wage garnishment you must first look at the state of your finances and start the process of coming up with a plan to deal with your financial problems.

    There are programs available that can be deployed as effective negotiating tools that can stop a wage garnishment. These programs are available through financial professionals who know how to stop a wage garnishment. When you work with professionals who are skilled at stopping wage garnishments you are able to breathe a sigh of relief as they become your personal representatives, charged with a mandate to deal with your creditors on your behalf. They can also work with you on an overall financial plan to cure your financial problems and begin the process of rebuilding.

    If you are facing a garnishment of wages and need help from a company that knows how to stop a wage garnishment, please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Garnishment of Wages Blog Series Part 1 of 3 – What is a Wage Garnishment?

    Garnishment of Wages Blog Series Part 1 of 3 – What is a Wage Garnishment?

    A garnishment of wages is one of the most common and effective enforcement methods used to collect money through the Small Claims Court by the Canada Revenue Agency, O.S.A.P, and Family Responsibility.

    A garnishment of wages occurs when you have defaulted on a debt and the party you owe money to serves your employer with a legal notice to garnish your wages (i.e. pay some portion of them to that party). Only the government, like the Canada Revenue Agency, Ministry of Finance, Provincial and Federal Student Loans, etc… have the power to garnish your wages without a court order.

    For a private company to garnish your wages they must sue you in court, obtain a judgement against you and have an order from the court to garnish your wages. So, if a private company is trying to collect money from you, the garnishment must be sent to your employer in the form of an order from the court that issued the judgement.

    A garnishment of wages from Family Responsibility will not occur unless the court has ordered you to pay child support and you go into arrears and the Family Responsibility office enforces the court order through a wage garnishment.

    The amount of a garnishment of wages can vary depending on the type of debt you have and who is issuing the wage garnishment. Here are some Canadian examples:

    1. A wage garnishment issued through the Ontario Small Claims Court will require that your employer remit 20% of your net earnings to the Small Claims Court to then be distributed to your creditor.
    2. A wage garnishment from Family Responsibility could involve a garnishment of up to 50% of your earnings.
    3. A wage garnishment from the Canada Revenue Agency could involve a garnishment of up to 100% of your earnings depending on the type of income that you have.

    Most people find themselves wondering “what is a wage garnishment” once they have been threatened with one.

    Once a wage garnishment is sent to your employer it can be humiliating and leave you feeling powerless. Your employer must garnish your wages or they can find themselves in trouble. If you have a job that requires you to demonstrate financial responsibility this could pose challenges to your employability.

    If you have been threatened with a garnishment of wages the question should not be “what is a wage garnishment” but rather “what can you do to avoid a wage garnishment”. This will likely require professional counsel, and not that of a lawyer but of a financial professional who has experience working with people who have had wage garnishments and who is capable of helping you through your financial problem.

    Wage garnishments that are the result of unpaid child support will leave you little in the way of options, other than to return to court and request that a judge reduce the amount of the garnishment. If you are being threatened with a wage garnishment from the CRA or a creditor, you definitely have more options, even if your wages are already being garnished.

    Now that we have answered the question “what is a wage garnishment”, the next thing you will want to do is learn how you can stop one. This question is answered in our next blog “how to stop a wage garnishment”.

    If your wages are being garnished or you are being threatened with a wage garnishment, time is of the essence. Contact DebtCare Canada today by calling 416-907-2582 or visit www.debtcare.ca to find out your options.

  • Wage Garnishments in Canada – How to Stop a Garnishment on Your Wages

    Thousands of Canadians have their wages garnished each year. In the past few years there have been more instances of individuals having their wages garnished because of the turbulent economy. Wage garnishments in Canada occur when one party believes that another party owes him or her money and pursues enforcement action.

    Wage garnishments in Canada are generally issued in one of three ways.

    The first most common reason a wage garnishment is issued is when a debt is owed to the government and the individual is unable to make a satisfactory, voluntary repayment arrangement. Some examples of this are: tax debt owed to The Canada Revenue Agency or The Minister of Finance or a debt owed to the Province and/or Federal Government for an unpaid student loan. If the government wants to place a garnishment on your wages, they don’t have to obtain a court order to do so. If you want to know how to stop a garnishment on your wages, the answer is pretty much black and white. You either have to make an acceptable voluntary repayment plan with the government so that they agree to lift the garnishment on your wages or participate in a Federal Government program to seek debt relief. Wage garnishments that are issued by the government can be applied at up to 100% of your wages.

    The second most common reason that a wage garnishment is issued is when one party sues another party in the Superior Court of Justice and is awarded judgement. Once awarded judgement he or she can apply to garnish the individual’s wages. A common occurrence is when an individual defaults on a debt to a creditor and then the creditor sues him or her in the Small Claims Court. When a wage garnishment is issued through the Small Claims Court in Ontario your wages can be garnished up to 20% of your net earnings. If you want to know how to stop a wage garnishment issued by the Superior Court you have three choices. Make a voluntary payment plan arrangement with the party who sued you where they agree to lift the wage garnishment, to make a motion to the Court offering a voluntary payment plan and asking that the wage garnishment be set aside, or by applying to a Federal Government program for debt relief.

    The third most common reason wage garnishments are issued is as a result of child support arrears. If you want to know how to stop a wage garnishment for child support arrears you have only one choice and that is to apply to the Court to have it removed. This can be very challenging to accomplish. A Federal Government program will not stop a wage garnishment for unpaid child support.

    The fastest most effective way to stop a wage garnishment is through a Federal Government program. The benefit achieved by leveraging a Federal Government program to stop a wage garnishment is that the garnishment will be stopped, interest will be frozen, in many cases you can have the principal amount of the debt that you owe reduced and make a voluntary monthly payment.

    Participating in a Federal Government program will require that you include all debt that you owe. If you have debt to other creditors like credit card providers, loan providers, unpaid cell phone bills etc., these debts will also be covered under the Federal Government program. This will mean that they too will have their interest frozen and in many cases the principal debt reduced. In the event that you had several debts you would make a single monthly payment under the Federal Government program.

    If you are having a financial problem and your wages are being garnished it could lead to increased financial hardship. You don’t have to suffer and there are options available.

    For more information about wage garnishments in Canada and how to stop a garnishment on your wages please contact Michael Goldenberg at DebtCare Canada by calling 416-907-2582 or visit www.debtcare.ca.

  • Debt Consolidation Options in Ontario – We List the Different Types of Debt Consolidations

    In Ontario, when consumers or businesses finds themselves in financial trouble there are a number of financial options available to help deal with their debt. In this article, we list the different types of debt consolidation to help you understand which options are available to you if you are having problems managing your debt.

    Debt consolidation option number one – use your home to consolidate debt. If you have some equity in your home, it is a very effective choice for consolidating debt. Refinancing your first mortgage, taking out a second mortgage or a home equity line of credit will enable you to obtain low  interest financing to consolidate your debt. Mortgages enable you to amortize your monthly payments so you will often have more flexibility when negotiating the amount of those payments.

    Debt consolidation option number two – an unsecured loan or line of credit. Where this option is concerned, do lots of research. There are finance companies that offer unsecured consolidation loans at sky-high interest rates. Interest rates that are higher than what you may be paying on your credit cards. They may try to sell you on the benefit of a single monthly payment, which may be lower than what you are paying now – but this could cost you big time in the long run. If you cannot pay your minimum monthly payments any longer and your bank does not approve you for a prime rate loan or line of credit to consolidate your debt, take time to think about your choices before jumping into a high interest consolidation loan with a finance company.

    Debt consolidation option number three – credit counselling. Credit counselling agencies are not for profit organizations who obtain funding from the big banks. They will offer you a single monthly payment and pay your debts on your behalf. While you may think that you have received a debt consolidation loan because you are making a single monthly payment, this is not a consolidation loan. Your creditors will receive significantly less than what you owe and these credit counselling programs will cause major damage to your credit report. The repayment could be over 5-6 years and the credit counselling program will be reported on your credit report for 3 years from the date it is paid in full.

    Debt consolidation option number four – consumer proposals. Like credit counselling this is not a consolidation loan but many trustees in bankruptcy promote them as though they are because they involve a single monthly payment lower than what you have been paying on a monthly basis. They are a better choice than a credit counselling program because, if negotiated properly, they can significantly reduce the overall amount of debt that you owe. Like credit counselling, a consumer proposal will stay on your credit report for 3 years from the date it is paid in full, however, they do often offer shorter repayment terms. They also offer you protection from your creditors and will stop a wage garnishment or other enforcement option because they are federally mandated whereas credit counselling is not.

    How do you know which debt consolidation option is the right one for you? For starters, consider a debt consolidation the same way you would a big ticket purchase. This truly is an example of buyer beware, because when you go to a bank, finance company, credit counselling agency or Bankruptcy Trustee, their objective will be to sell you their products and services. When working with a financial consultant or debt counsellor you can determine the right option and obtain professional guidance to secure the best outcome.

    For more information about debt consolidation options in Ontario or to obtain advice with respect to your personal financial situation contact Michael Goldenberg at DebtCare Canada by calling 416 907 2582 or visit www.debtcare.ca