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Protecting Your House When You Have a Tax Problem

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Protecting Your House When You Have a Tax Problem

Tax season is officially upon us, and many Canadians have already filed or have at least started the process. While a bit of a hassle, it is usually not accompanied by a great deal of stress. However, if you are like one of the countless individuals sitting with the knowledge that a tax debt is looming once you file, or if you’re still dealing with a tax problem from previous years, stress is likely something you are dealing with on a daily basis. Today we talk about how to protect your home when a tax problem is hanging over your head.

If you own your home and have a tax problem, you really do have to act fast. You need to have a plan to deal with the debt before it becomes a major issue.

Why? The Canada Revenue Agency is very strict when it comes to obtaining money owed. Enforcement action is very common, and when you own your own home a property lien is an effective method to achieve this. Once a property lien is in place, it becomes very difficult to access any equity to secure a loan, the CRA becomes a secured creditor, meaning a proposal or bankruptcy becomes more difficult, and if you choose to sell, they get your equity to cover the tax debt.

When there is no lien you have options:

Refinancing your home to pay the tax debt is an important option to consider. Accessing the equity you currently have may give you the ability to cover a significant debt, thereby avoiding enforcement action.

If you don’t have enough equity, or your credit will not support a refinancing of your home, a consumer proposal or bankruptcy may be good to consider. Both can help you deal with a tax problem before it balloons.

What about transferring the home into someone else’s name – won’t that solve the problem? No! Doing so will only transfer the tax debt to that person. The CRA uses Section 160 of the Income Tax Act on a regular basis against those who attempt to avoid a tax problem in this way.

Protecting your house means acting fast and looking at what you can leverage now to deal with the tax problem is crucial. As mentioned, the moment the CRA places a lien on your home, your options decrease exponentially.

When a tax problem has you losing sleep, get in touch with DebtCare. We can help you get the debt sorted and help you protect your home in the process.

Call 1-888-890-0888 today.

 

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