Tuesday, 16 October 2012

Garnishment of Wages Blog Series Part 3 of 3 - Garnishment of Wages by the Canada Revenue Agency and Your Options


One of the scariest and most serious garnishments of wages that exists is a garnishment of wages issued by the Canada Revenue Agency. When a tax debt is owed, the Canada Revenue Agency has a vast arsenal of tools at their disposal that they can deploy to collect money from you. A wage garnishment is one of these tools.  

What you may not know is that the Canada Revenue Agency does not need to sue you or obtain a court order against you if they want to impose a garnishment on your wages. The Canadian Income Tax Act gives them the power to require that your employer garnish your wages on notice. If you owe the Canada Revenue Agency money, a garnishment of wages should not be a surprise.

The Canada Revenue Agency will send out a series of notices before a garnishment of wages occurs: 

1.       First, you will get a notice that you have a tax debt.

2.       Second, you will get a notice demanding payment in full.

3.       Third, you will get a final notice for payment.

4.       Fourth, you will get a notice indicating that your wages are about to be garnished.

5.       Finally, your employer will receive notice to garnish your wages and remit payment directly to the Canada Revenue Agency. 

In a perfect world, you would immediately begin looking for a solution to deal with your tax debt before things go so far. Generally people who ignore notices and end up with a garnishment of their wages simply don’t have the money to pay their debt. 

A wage garnishment can involve up to 100% of your income depending on what type of income you have. The problem is that once a garnishment of wages ensues it can cause incredible financial hardship that is difficult to recover from. 

Even if your wages are currently being garnished and the situation seems hopeless, there are financial options that can enable you to stop a wage garnishment from the CRA. Your personal financial situation will have to be thoroughly reviewed by a professional because the route you choose will depend on your personal financial circumstances. Solutions can range from:

1.       Securing financing to pay the debt or enough of a lump sum payment that the CRA agrees to lift the garnishment of wages.

2.       Participating in a program designed to provide relief from tax debt which would involve legislated options that can stop a garnishment even if is being imposed by the government. 

Both solutions will involve the guidance of a financial professional skilled at working with people who have tax problems and the resources to make a plan to deal with a tax debt work.  

A tax problem is a very serious one that shouldn’t be taken lightly. If ignored, a tax problem will only snowball: the debt will grow and the Canada Revenue Agency will only become more aggressive. If the Canada Revenue Agency garnishes your wages you may think that it is the extent of the collection action that they are going to take against you, but this may not be the case. The Canada Revenue Agency has been known to deploy multiple enforcement measures at the same time to force you to pay. This could include garnishing your wages and freezing your bank account or placing a lien on your home. 

If you have a tax debt and are facing a wage garnishment or if your wages are being garnished, help is just around the corner. Contact DebtCare today at 416-907-2582 or visit www.debtcare.ca. If you have a bank account that has been frozen by the CRA be sure to check out our article about how to deal with a frozen bank account.

1 comment:

  1. Hello! I will be looking forward to visit your page again and for your other posts as well. Thank you for sharing your thoughts about wage garnishment in your area. I am glad to stop by your site and know more about wage garnishment. Keep it up! This is a good read.
    In Minnesota, there are five limits on wage garnishment. Creditors cannot garnish wages for social security benefits, retirement benefits, welfare payments, workers' compensation benefits, or income associated with disability or unemployment insurance.
    The IRS/State file tax liens to protect their interests. Recorded with one or several county recorders, a tax lien basically tells the world that you owe back taxes, and is generally devastating to the taxpayer's credit. This makes it very difficult to obtain credit or to sell real estate.

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