Monday, 25 May 2015

Fighting a Wage Garnishment that Wasn't Issued by the Court

The only type of wage garnishment that is not issued by the court is one that relates to government debt, like debt to CRA, or other less common debts, like debts related to EI overpayments.

Where CRA garnishments are concerned, if you owe money, CRA can issue a wage garnishment without notice to you and without a court order. The wage garnishment could be up to 50% of your earnings. Once your employer is served with a wage garnishment from CRA they have to honour it or they too could get stuck with responsibility for your tax debt.

Wage garnishments are very embarrassing and often CRA finds out where you work and where to serve them because you gave them this information. Oh yes….remember that nice CRA agent who phoned and said that if you filled out some financial forms including where you work that you could make a payment plan for 3 months. Only the payment plan you agreed to was more than you could afford and Bam! Wage garnishment.

Once a wage garnishment is put in place by CRA you have 4 options:

1.       Pay the tax debt – beg, borrow, steal to get the money (we were kidding on the steal option – the other 2 are viable). Perhaps you can refinance your mortgage or borrow the money from your family. This still leaves a debt outstanding but at least your creditor is not the government.

2.       Ask CRA to reduce or remove the wage garnishment – we wish you good luck with this option. Likely this option will lead to you divulging more information to CRA for them to use against you. In all seriousness, CRA agents are very skilled at what they do – if you plan to try to negotiate directly with CRA, it is best to do so through a seasoned financial professional who is experienced at dealing with them!

3.       Go to tax court – if you can’t pay the debt in full it is highly unlikely, especially with your shiny new wage garnishment, that you can afford to go out and get a lawyer. Tax court is not like what you may remember from Peoples’ Court – it is not a good idea to go to tax court without a lawyer. You will be going up against a trained CRA lawyer who works in the tax court daily and knows the law intimately.

4.       Consumer proposal or bankruptcy – either option would immediately stop a CRA wage garnishment. Whether or not this is an option will depend on other financial circumstances.

The options are clear. However, where the less common government debts that arose as a result of fraud are concerned, EI overpayments being a good example, option number 4 will not work because debts that arise from fraud are not protected in a consumer proposal or bankruptcy.

If you owe CRA a debt, don’t ignore it. Seek out professional financial assistance and get that debt dealt with. DebtCare can help. Call us today at 1-888-890-0888.

No comments:

Post a Comment