Is Your Bank Account Frozen Because of Income Tax Debt? Learn Your Rights and Choices
If the Canada Revenue Agency has sent you a notice titled “Requirement to Pay” threatening enforcement action or mentioning your bank, chances are they are going to freeze your bank account. A “Requirement to Pay” should be taken seriously.
If the Canada Revenue Agency freezes your bank account, your bank will be obliged to send any money that’s in the account directly to the Canada Revenue Agency. Once your bank account is frozen by the Canada Revenue Agency a number of consequences come into effect:
- Direct debits and payments, such as mortgage payments and other payments to creditors, will bounce.
- It will cause considerable damage to your relationship with your bank.
- You will lose all of the money in the account.
- Banking going forward will be difficult and challenging, everything will have to be moved to a different bank, and you will have to start from scratch. This can be especially disruptive if it is a business account.
If you have received a “Requirement to Pay” by mail, and your account hasn’t been frozen yet, you should act fast to protect your money, along with your financial relationships. If your account has already been frozen, there are still options open to you.
The first thing you should look at is the total amount of the tax debt, and then balance the debt against your total financial situation. If your financial situation is dire, your choices may be limited as opposed to having assets or savings that could be leveraged to pay off your tax debt.
For those of you who are in dire financial straits, there are programs that have been made available by the Federal Government that can help you get out of debt and stop the Canada Revenue Agency collection action. This includes stopping the Canada Revenue Agency before they freeze your bank account. In the cases where they have already frozen it, the result will be the freeze being lifted.
The trick is choosing the right program for your specific financial situation. If you have an abundance of equity in your home or in investments, you may have to bite the bullet and use it to raise capital to pay your tax debt. If you have no assets or investments but have a good income and reputation, you don’t want to make bad financial choices that humiliate you at your workplace. If you have limited income, no significant assets, you are in a completely different boat.
The bottom line is, regardless of your situation, if you are facing collection action by the Canada Revenue Agency, you would benefit from the expert advice and guidance of a DebtCare Financial Consultant. Keep in mind, you control your financial future and that future is dependent on the choices you make. For more information visit www.debtcare.ca or call 888-890-0888.