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Tag: wage garnishments

  • Making a Proposal, and We Don’t Mean for Marriage: Consumer Proposals

    Consumer ProposalsWhen debt becomes unmanageable, knowing where to turn can be tough. Knowing the options available to deal with that debt can be difficult – and that is why getting outside advice is often a great idea. One of the most popular options right now, one that requires additional assistance, is a consumer proposal.

    New to this concept but wondering what a consumer proposal is all about? A consumer proposal is a legally binding agreement between you and your creditors.

    Consumer proposals have grown in popularity over the last few years, and for good reason. There are a number of significant benefits to filing a consumer proposal:

    • Provides immediate relief from collectors – stops the calls and the letters.
    • Will stop interest accumulating from the date that you file.
    • Will stop most wage garnishments or frozen bank accounts.
    • May decrease the total amount of your debts.

    Process:

    1. Assessment and Qualification – a meeting with a debt consultant will assess your current financial situation and determine the best route to take. If you qualify, the paperwork can be started.
    2. Repayment Terms – based on your monthly income and current debts, a repayment plan will be established that you can afford and that will please your creditors.
    3. Filing the Documents – your licensed proposal administrator will file all of the required documents. This includes submitting the consumer proposal to your creditors.
    4. Creditors Vote – once the documents are received by your creditors, they have 45 days to vote to accept or reject the proposal. If the vote is 25% or more to reject, a meeting will be held to try and negotiate. Once accepted, you will be required to make the monthly payments to your administrator to be distributed to your creditors.
    5. Completed Proposal – once you’ve completed the consumer proposal you will receive a Certificate of Full Completion as proof of the completed proposal. Typically, after three years following completion, the consumer proposal will be removed from your credit report.

    What if you can’t keep up with the payments?

    If an unforeseen circumstance makes fulfilling payment arrangements impossible (job loss for example), the first thing to do is call your administrator. By law you can miss or defer two payments without consequence, but after that the proposal will be cancelled. At the first sign of trouble, speak with your administrator to find out your options.

    Consumer proposals can offer individuals the chance to start fresh and eliminate financial stress in a major way. If you believe that a consumer proposal might be an answer to your debt problems, don’t wait. The process can take time, so it is best to get it started right away.

    For more information about consumer proposals and the many benefits of filing one please call DebtCare Canada today at 1-888-890-0888.

  • 3 Reasons Why You Should Not Try to Negotiate with the CRA Directly

    3 Reasons Why You Should Not Try to Negotiate with the CRA Directly photoThousands of Canadians struggle with tax problems. One of the worst things that you can do if you have a tax problem that has or will result in a debt that you can’t pay is to try to negotiate with the CRA directly. The reason for this is because the CRA has a single mandate and that is to close your file, whether the money is successfully collected from you or not.

    It may sound like it doesn’t make sense, but in fact it does. When a taxpayer is behind filing tax returns or has a large tax debt, the CRA’s success is actually benchmarked by files closed and not dollars collected. This means that, as time goes on, interest and penalties accumulate and by the time you file late returns or decide to try to pay your tax debt, bam – your tax debt may have doubled or even tripled in size.

    How does the CRA close files? By coming after you! Leveraging tactics like wage garnishments, sending garnishments to your clients (in the case of self-employed people and contractors), freezing your bank account, placing liens on your property and more… Sometimes one tactic will be deployed or multiples will be deployed all at once. Doing this forces you to do one of two things – pay the debt or go bankrupt or file a consumer proposal – all three result in your file being closed.

    This is why negotiating directly with the CRA can be dangerous. The average person doesn’t know what the CRA is capable of, so in good faith will try to negotiate, resulting in more personal exposure. The CRA will play good cop, bad cop – having one agent go after you and then another swooping in and being nice, delicately extracting your personal information to be used against you at a later date. The CRA may accept a temporary payment plan or suspend an enforcement measure “if” you complete a financial disclosure form that includes telling them any assets that you own, where you work and where you bank.

    While the CRA has methods to find out your personal information, why serve it up to them on a silver platter, making it that much quicker and easier for them to come after you? At the end of the day, if you have a tax debt that you cannot pay you have a financial problem.

    A financial problem can be resolved through a consultation with a financial consultant who routinely deals with CRA matters. Don’t go it alone – good help is out there. If you have a tax debt and you need help please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • What to Do if Your Wages Are Being Garnished

    Wages Being GarnishedIf your wages are being garnished then no doubt you are feeling the pain. Having your wages garnished results in severe financial problems and even embarrassment at work. There are different types of wage garnishments that have financial impacts.

    If your wages are being garnished as a result of family responsibility there is little that you can do outside of working with a lawyer to try to get the amount of the wage garnishment reduced or to work towards paying up your arrears and then moving to a voluntary monthly payment plan. There isn’t really any protection for individuals who have unpaid child support. Child support wage garnishments can consume up to 50% of your income.

    If your wages are being garnished as a result of a judgement in small claims court you do have some options. You can make a motion to the local small claims court and ask a judge to reduce the amount of the wage garnishment or to lift it and allow for an agreed-upon voluntary monthly payment. While this can be effective, the courts do have the final say, and can say no. It also depends on your creditor. You can also look at working with a financial consultant to make a proposal to your creditor so that they agree to lift the judgement. This can be quite effective and even result in the interest that is accumulating on your debt being frozen. A garnishment imposed through the small claims court can consume up to 20% of your wages in most Canadian provinces.

    If your wages are being garnished by the Canada Revenue Agency (CRA) this is by far the most dangerous type of garnishment. A CRA garnishment can consume up to 50% of employment income and up to 100% of secondary income. For example, if you are a contractor the CRA can demand that your client send 100% of your earnings. This is the most dangerous type of garnishment because a CRA imposed garnishment can literally make it impossible to pay for the necessities of life, such as food, transportation and shelter. Those who are self-employed may lose business or have clients simply walk away because dealing with the garnishment is just too much hassle.

    Like judgements issued through small claims court, a good financial consultant can also help you to combat a CRA garnishment. There are programs and protections available that can stop a garnishment (even one issued by the CRA), freeze interest and even reduce the amount of the debt.

    Do not continue suffering in silence. If a wage garnishment is holding you back, help is only a phone call away. For more information please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • Filing a Consumer Proposal in Ontario – What you SHOULD know

    If you are thinking about filing a consumer proposal in Ontario there is a lot that you should know. Filing a consumer proposal can be a sound option for dealing with debt depending on your personal circumstances. When making a consumer proposal you are essentially making an offer to your creditors under the laws and regulations set out in the Bankruptcy and Insolvency Act (BIA). The BIA is federal legislation so the process to file a consumer proposal is the same whether you are filing a consumer proposal in Ontario or BC.

    Here is how the process works:

    1.       The amount of the consumer proposal is determined using a formula based on your income and ability to repay the proposal on a monthly basis, and then that payment is multiplied by a term of 4-5 years. The sum is the amount of the proposal. This can result in the debt being reduced.

    2.       Once the consumer proposal offer has been formulated, the official offer is made through a trustee in bankruptcy.

    3.       Your creditors then have 30 days to accept or reject the proposal. As long as creditors that represent 51% of the debt in your proposal vote yes, the proposal is accepted. Creditors who do not respond or vote lose their vote and go on record as not opposing the consumer proposal.

    4.       If your consumer proposal is accepted (and many are) you will then make a single monthly payment to the bankruptcy trustee for the term of the consumer proposal.

    Consumer proposals offer many benefits:

    • They can be paid off early so if your financial situation improves you can pay off the proposal at any time.
    • While the consumer proposal will have a short term negative impact on your credit report, the consumer proposal is removed from your credit report 3 years from the date it is paid in full, so the sooner you pay it off, the sooner you can rebuild your credit – the ball is literally in your court.
    • They stop collection action. All collection action with respect to unsecured creditors included in the consumer proposal will stop. This includes wage garnishments.
    • They offer a single monthly payment which is very convenient.

    Now that we have covered how a consumer proposal works and the benefits, let’s look a little bit closer at the process of actually filing a consumer proposal in Ontario. 

    Consumer proposals are administered by a trustee in bankruptcy. The trustee in bankruptcy has an obligation to act both in the best interest of yourself and your creditors. Going to a trustee in bankruptcy directly to discuss a consumer proposal is dangerous because they will probe you and use your financial information to pay your creditors the maximum monthly payment. This leaves many without much financial breathing room which is why many consumer proposals fail. Trustees are also compensated based on a percentage of your proposal. A larger proposal means more compensation for the trustee. It is for these reasons that you should seek out your own independent financial representation if you plan to file a consumer proposal.

    Hiring your own representative is a small expense that can save you thousands of dollars. A good financial consultant who is versed in the BIA can look at your financial picture and help you to craft proposal terms to push with the trustee. They can also arrange the proposal with the trustee and represent you throughout the process. This is money well spent!

    If you would like more information about filing a consumer proposal in Ontario please call DebtCare at 1-888-890-0888 or visit www.debtcare.ca.

  • 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.

  • Debt Relief in Canada Blog Series Part 3 – Are There Consequences to Filing for Bankruptcy?

    There are many options for debt relief in Canada, and one of the most common is bankruptcy. If you have financial problems, bankruptcy may seem like a scary option because of the consequences that many people associate with filing for bankruptcy. Hopefully this article will help you to understand bankruptcy better and determine if in fact it could be an option for debt relief that you should consider.

    Bankruptcy is generally filed by people who have limited income or significant debt in relation to their income. Most first-time bankruptcies last either 9 or 21 months. When an individual files for bankruptcy, a trustee in bankruptcy will assess the bankrupt’s household income, assets, liabilities and personal circumstances. Personal circumstances include the number of people in the household and the number of dependents that the bankrupt has. Based on bankruptcy guidelines, if your income, once all factors are considered, is below a specified threshold, then the monthly payments in bankruptcy will last for 9 months. If the income is above a specified threshold, then it will be determined that the bankrupt has surplus income. This will result in higher payments in bankruptcy over a specified period of time, in most cases 21 months.

    Some of the pros of filing for bankruptcy are:

    • Immediate relief from collection action from unsecured creditors (such as wage garnishments).
    • A monthly payment that is less than what you are likely contractually obliged to pay to your creditors now.
    • The opportunity for a fresh start to get out of debt in a short period of time, enabling you to rebuild your credit and finances.

    Many people don’t know that, in many cases, when you file for bankruptcy you are able to keep your home and vehicle.

    Some of the cons of filing for bankruptcy include:

    • If your financial situation improves during your bankruptcy you could be subject to additional surplus income. If there was no surplus income when you filed for bankruptcy and your bankruptcy repayment is over 9 months, surplus income during bankruptcy could result in your monthly payment in bankruptcy being extended to 21 months.
    • The bankruptcy will remain on your credit report for 6 years from the date it is discharged. With that said, most financial institutions will do business with a bankrupt individual who has 2 years of re-established credit after bankruptcy.
    • Having a number of assets with equity in them will complicate things. In this case, a consumer proposal may be a better option than bankruptcy.

    Bankruptcy is a very viable debt relief option in Canada, and while there are some consequences of filing for bankruptcy, in many cases there are many more benefits. Bankruptcy is an option for debt relief in Canada that can provide you with immediate relief, not only from collection action, but also the stress that accompanies a financial problem. If you have creditors that are currently after you, perhaps even suing you, this is relief that can provide you with a breath of fresh air, enabling you to think clearly again and get your personal and financial situation back on track.

    For more information about options for debt relief in Canada or to see if you are a candidate for bankruptcy please call DebtCare at 416-903-4000 or visit www.debtcare.ca.

  • Canada Revenue Agency Collections Authority and How to Stop Them

    Thousands of Canadians owe money to the Canada Revenue Agency. Thousands more will fall behind filing their tax returns, hoping that by not filing their returns they can buy time to come up with a way to pay the tax that they know they will owe.

    What many people don’t realize is that whether you file or not, the Canada Revenue Agency can still take collection action against you if they believe you owe them money. Whether you file or not, the CRA could have tax slips on file, filed by others who have paid you and based on that can notionally assess you, make their own determination as far as how much income they believe that you earned and then take enforcement action accordingly. In fact, the Canada Revenue Agency can even proceed with enforcement action against you without notionally assessing you. The Canada Revenue Agency collections agents will often leverage enforcement actions to force you to file or comply with whatever information they are requesting from you.

    The size of an individual’s tax debt will in many cases be the result of his or her conduct. An individual who files his or her returns late, fails to declare income and has his or her returns re-assessed or audited will be subject to Canada Revenue Agency interest and penalties. This can, in many cases, double and even triple the size of the tax debt depending on the individual’s record with the Canada Revenue Agency. Each time a taxpayer is not compliant the Canada Revenue Agency records the non-compliance and the next time there is an infraction, the penalties are increased. Interest charged on Canada Revenue Agency debt is high and compounds daily.

    Once the Canada Revenue Agency collections department has decided to target you, they are able to deploy enforcement measures that can cause personal embarrassment and financial hardship. The most common enforcement measures deployed against individuals by Canada Revenue Agency collections agents are wage garnishments (50% of gross employment income and up to 100% of secondary income), property liens and using a document called a “Requirement to Pay” to freeze bank and investment accounts. Where businesses are concerned, the Canada Revenue Agency collections agents will commonly freeze bank accounts but also send notices to the businesses’ clients directing them to forward payment of all invoices to the Canada Revenue Agency. This is very similar to a wage garnishment, only instead of the Canada Revenue Agency collecting 50% of your income in this case, they can collect 100%. This measure forces many businesses out of business.

    If you owe money to the Canada Revenue Agency and can pay, great! But, what happens if you owe money to the Canada Revenue Agency and can’t pay?

    Consumers and businesses also have avenues that they can take to potentially reduce the amount of money that they owe to the Canada Revenue Agency. Programs like the Voluntary Disclosure Program enable Canadians to voluntarily declare income with the potential to avoid interest and penalties. Relief provisions enable clients who have a medical problem, financial hardship or have faced some other extraordinary circumstances to file an application to have some or all of the interest and penalties associated with a tax debt cancelled.

    The Canada Revenue Agency will not allow a consumer to directly propose a settlement on a tax debt. With that said, a consumer or business can stop Canada Revenue Agency collections action through Federal Government programs. When a consumer participates in a Federal Government program, the CRA in most cases will immediately cease collection action. Federal Government programs under the BIA are the only way that a consumer can reduce a principal tax debt and get a fresh start.

    Whether you owe a tax debt, think you will in the future or if you think that you cannot pay, you are best advised to seek professional help before the Canada Revenue Agency collections department begins to take action on your file.

    For more information about Canada Revenue Agency collections and how you can stop them please call DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Dealing With Canadian Income Tax Debt

    Tax time is here. For those who anticipate a large refund it is an exciting time. For those who know they will have to pay it is quite the opposite. Thinking about doing your taxes, knowing that you are about to face a large Canadian income tax debt, one that you know you will not be able to pay in full, can be dreadful.

    One reason it is so scary is because once the Canada Revenue Agency assesses the amount of your Canadian income tax debt they will demand to be paid in full. The Canada Revenue Agency also has powerful authority to collect Canadian income tax debt that’s owed to them. Canada Revenue Agency collection practices range from demand letters, to calls, to enforcement action like wage garnishments and tax liens.

    Fear of what the Canada Revenue Agency will do once they determine that you owe a Canadian income tax debt is the main reason that individuals procrastinate and avoid filing their tax returns. This is the worst thing you can do if you have a Canadian income tax debt because it is illegal. In addition, the Canada Revenue Agency can add interest and penalties that can cause your Canadian income tax debt to double in size.

    So what can a Canadian taxpayer do when he knows that once he files his Canadian income tax return he will owe more than he can pay?

    The solution to any problem will come with a plan. First, you do not have to go it alone. There are many organizations that help people deal with Canadian income tax debt. Debt and financial consultants are a great resource to get the help you need.

    A plan will involve looking at your income, assets, and personal debts (debts that you have in addition to your Canadian income tax debt like loans and credit card balances etc.) and coming up with scenarios so that your representative can make a proposal to the Canada Revenue Agency enabling you to repay your Canadian income tax debt in a manner that you can live with.

    So what happens if you review your financial situation and there is no additional ability to pay anything to the Canada Revenue Agency? Well you can’t draw blood from a stone but you also can’t ignore the problem resulting in the Canada Revenue Agency taking action against you that can severely disrupt your life.

    If it happens that there is no way for you to repay your tax debt, you can find relief through Federal Government programs that can eliminate interest, penalties and even principal tax debt. Participating in one of these programs can enable you to breathe a sigh of relief because it may be the route that enables you to deal with your Canadian income tax debt upon terms you can live with.

    You don’t have to be afraid of your Canadian income tax debt because there are resources to help you face your tax debt before everything spirals out of control.

    For more information about dealing with Canadian income tax debt contact DebtCare Canada at 416-907-2582 or visit www.debtcare.ca

  • 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.