CRA Wage Garnishments – What You Need to Know
A 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.