How to Stop a CRA Wage Garnishment
You may be surprised to learn how many people have their wages garnished by creditors on a regular basis. This is such a common collection enforcement method, especially when it comes to the Canada Revenue Agency (CRA). We get calls on a regular basis asking about the ways to stop a CRA wage garnishment. This week we thought we’d tackle the topic and give you some tips to help.
A wage garnishment is a method of collections which requires, in most cases, a court order. This order is then sent to your employer and they are required to remit a portion of your paycheque to your creditor. In the case of the CRA, a court order is not required. If your employer fails to comply, they may be liable for those funds.
How does CRA find out where people work?
- The most common method for finding out where you work is by asking. If, at any point, you’ve called the CRA to try and negotiate a payment plan, to try and discuss relief, etc., you’ve likely provided information regarding where you work.
- Your T4s – your employer files a T4 with the CRA every year – this is part of their own tax obligations.
- Someone you work for is audited by the CRA – meaning all employee documentation becomes part of that audit.
When a wage garnishment is imposed by the CRA, the amount varies, but employment income up to 50% and self-employed income up to 100% is fair game.
There are a few ways to stop a CRA wage garnishment.
- The first, and most obvious, is to pay it off. Once the debt is paid in full, that garnishment will be lifted.
- Going to tax court is another option, but this can be very expensive and there are no guarantees.
- Use an asset to finance the debt, such as your home, through a second mortgage.
- File a consumer proposal offering monthly payments to the CRA (this is often the only way to reduce a tax debt).
- File for bankruptcy.
If you have no equity in assets and no ability to do anything more than make monthly payments, options 4 and 5 are viable options that will stop a garnishment immediately.
When your wages are being garnished, this can take a significant toll on your ability to make payments with respect to other financial responsibilities, so it needs to be taken care of as soon as possible.
Don’t wait – call DebtCare today. We can walk you through the various options and help you get that garnishment lifted. 1 (888) 890-0888.