How to Deal With a CRA Tax Debt Before The CRA Catches Up With You
Tax debt can be terrifying; terrifying because owing the CRA money when you can’t pay will most certainly result in collection action. Tax debt is one of the main reasons people get behind filing income tax returns. Individuals get behind filing because the money to pay isn’t there and they fear that once the returns are filed the CRA is going to come looking for the money.
If you have a tax debt or know that you will once you file late returns, don’t wait until the CRA catches up with you. You can beat them to the punch and get a plan together that will effectively deal with your tax debt.
You see, you have more options to deal with a tax debt when the CRA has not begun enforcement action. A great example is homeowners who have tax debt. If you own a home, have a tax debt and the CRA puts a lien on your home, this will greatly reduce your options if you really cannot repay them monthly because the CRA will become a secured creditor.
There are many financial options to effectively deal with tax debt. Look at a consumer proposal for example. By leveraging a consumer proposal you can freeze the interest accruing on your tax debt, potentially reduce the size of your tax debt and stop collection action such as a wage garnishment.
The challenge is that your chances of being able to make a consumer proposal are greatly reduced once the CRA has taken enforcement action, secured through a lien on your home for example.
The same is true for bankruptcy. If you were holding the bankruptcy card in your back pocket or hoping that filing for bankruptcy might seem like a way to get out of the tax debt, this too would no longer be a viable option once the CRA becomes secured on an asset like real-estate.
The faster you deal with a tax debt the better. Never mind issues like enforcement action and financial planning; the existence of a tax debt and CRA collection action against you can result in damage to your relationships with your family or with lenders like your bank or mortgage holder, embarrassment at work and even health problems if you become stressed and have difficulty coping with your stress.
You don’t have to put yourself through this. There are companies that can help you with your financial tax debt problem. Choosing the right solution for you can be easier said than done, but not if you know your options. Working with a financial consultant hired by you to represent your best interests is one excellent way to review your options and formulate your plan.
Dealing with your tax debt before the CRA catches up with you will enable you to breathe a sigh of relief and move forward on a fresh footing.
For more information about how to deal with a tax debt or if you have a tax debt and need help, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.