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How to Stop a CRA Wage Garnishment

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How to Stop a CRA Wage Garnishment

debt2You 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.

  1. The first, and most obvious, is to pay it off. Once the debt is paid in full, that garnishment will be lifted.
  2. Going to tax court is another option, but this can be very expensive and there are no guarantees.
  3. Use an asset to finance the debt, such as your home, through a second mortgage.
  4. File a consumer proposal offering monthly payments to the CRA (this is often the only way to reduce a tax debt).
  5. 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.

 

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