How to Get Your Bank Account Unfrozen

Having your bank account frozen is not fun. A frozen bank account will paralyze your ability to pay your bills because essentially money can go in but no money can go out. Depending on who the authority freezing your bank account was, you may or may not have an opportunity to get your account unfrozen and then get some or all of your money back.

Let’s begin by reviewing who can freeze your bank account and how they can do it.

A creditor can freeze your bank account if 1) they sue you; 2) they successfully obtain a judgement against you; and 3) they are approved by the court to take enforcement action against you. The creditor then takes the proof from the court that they have a judgement and can freeze your account and sends it to your bank. Your bank can accept the document and freeze the funds in your account for a period of time. In the Ontario small claims court for example, the bank would hold the funds in your account for 30 days. At the end of the time period the funds are sent to the court. The court then holds the money for an additional period of time and then it is released to the creditor.

In the case of a frozen bank account with respect to a tax debt to the Canada Revenue Agency, the CRA does not need a court order to freeze your bank account. The CRA will send a notice to your bank - this notice is called a ‘Requirement to Pay’. The bank then will freeze your account and again will hold the funds in your account for a period of time. Once the allotted time period has expired the funds will be directed to the CRA.

In the case of a frozen bank account that results from unpaid family responsibility, the court will issue an order that the account can be frozen. The funds will be held for a period of time and then released to either the Family Responsibility Office or the court, which will later release them to the other parent. If your account has been frozen as a result of unpaid family responsibility you will need to speak to a lawyer to see if he or she can go to court on your behalf to request an order to lift the freeze.

If the case of a bank account that is frozen by the CRA or as a result of a small claims court order, you will need to get financial help, and this help will need to come from a financial consultant who is experienced and capable of combatting a frozen bank account under these circumstances. A good financial consultant can qualify you for programs that will stop the enforcement action being taken against you, freeze the interest accumulating on the debt, potentially reduce the size of the debt and allow you to make a monthly payment that you can afford.

If your bank account is frozen and you need help call DebtCare at 888-890-0888 or visit www.debtcare.ca.

Spring Cleaning Should Include Cleaning Up Your Finances

The sun is shining and spring is in the air. Cars are lined up at carwashes and the parks are filled with people taking advantage of the warm weather. And, with the advent of spring comes the inevitable ‘spring clean’. From a financial perspective, the spring clean also represents the perfect opportunity to get your finances cleaned up.

Still feeling weighed down by a financial boulder? You are not alone. Canadians everywhere are dealing with rising debt loads and relying on credit to pay for everything. If you are struggling with debt, it is time to take control and clean up your finances. We’ve compiled a list of ways to help you manage this spring clean.

Financial Spring Clean Tip #1: Make a list. Sure this list won’t include things like washing all of the windows or cleaning out the garage, but it should include those financial goals you want to achieve in the coming months. It is easier to stick to something if you can physically tick things off of that list.

Financial Spring Clean Tip #2: Create a budget. Sure this seems like a band-aid solution that many individuals attempt – but if you are serious about taking out the ‘debt’ trash, creating a realistic budget and sticking to it is crucial. A budget, one that takes into account every aspect of your monthly finances, can show you exactly where you need to sweep away some of that extra spending and where you can save.

Financial Spring Clean Tip #3: Organize. Just as you would organize those closets or bins collecting miscellaneous junk, organize your debt. A great way to do this is to consolidate. Instead of having several different credit cards, loans, and lines of credit, consolidating debt merges all of these into one, neat, tidy monthly payment. The added bonus here is that this also reduces the amount of your monthly interest. So, just like purging your closet gets rid of those items collecting dust, consolidation gets rid of that extra financial burden.

Financial Spring Clean Tip #4: Call in the professionals. Rather than attempting to tackle that mountain on your own, seek the guidance of someone that knows exactly how to help you get out of debt. A professional financial consultant can give you the advice you need and present the options that will help you get rid of your debt. Whether it be budgeting tips, a consumer proposal, or bankruptcy, a seasoned financial consultant, one with your best interest in mind, will get you on the right track to financial spring cleaning.

Don’t let another year of debt build up. See spring as the perfect opportunity to get your finances under control and regain your financial independence.

To get started on your financial spring cleaning and get rid of your debt for good, please contact DebtCare Canada online or call 888-890-0888.

 

3 Reasons Why You Should Not Try to Negotiate with the CRA Directly

Thousands of Canadians struggle with tax problems. One of the worst things that you can do if you have a tax problem that has or will result in a debt that you can’t pay is to try to negotiate with the CRA directly. The reason for this is because the CRA has a single mandate and that is to close your file, whether the money is successfully collected from you or not.

It may sound like it doesn’t make sense, but in fact it does. When a taxpayer is behind filing tax returns or has a large tax debt, the CRA’s success is actually benchmarked by files closed and not dollars collected. This means that, as time goes on, interest and penalties accumulate and by the time you file late returns or decide to try to pay your tax debt, bam – your tax debt may have doubled or even tripled in size.

How does the CRA close files? By coming after you! Leveraging tactics like wage garnishments, sending garnishments to your clients (in the case of self-employed people and contractors), freezing your bank account, placing liens on your property and more… Sometimes one tactic will be deployed or multiples will be deployed all at once. Doing this forces you to do one of two things – pay the debt or go bankrupt or file a consumer proposal – all three result in your file being closed.

This is why negotiating directly with the CRA can be dangerous. The average person doesn’t know what the CRA is capable of, so in good faith will try to negotiate, resulting in more personal exposure.

The CRA will play good cop, bad cop – having one agent go after you and then another swooping in and being nice, delicately extracting your personal information to be used against you at a later date. The CRA may accept a temporary payment plan or suspend an enforcement measure “if” you complete a financial disclosure form that includes telling them any assets that you own, where you work and where you bank.

While the CRA has methods to find out your personal information, why serve it up to them on a silver platter, making it that much quicker and easier for them to come after you?

At the end of the day, if you have a tax debt that you cannot pay you have a financial problem. A financial problem can be resolved through a consultation with a financial consultant who routinely deals with CRA matters. Don’t go it alone – good help is out there.

If you have a tax debt and you need help please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

 

What to Do if Your Wages Are Being Garnished

If your wages are being garnished then no doubt you are feeling the pain. Having your wages garnished results in severe financial problems and even embarrassment at work. There are different types of wage garnishments that have financial impacts.

If your wages are being garnished as a result of family responsibility there is little that you can do outside of working with a lawyer to try to get the amount of the wage garnishment reduced or to work towards paying up your arrears and then moving to a voluntary monthly payment plan. There isn’t really any protection for individuals who have unpaid child support. Child support wage garnishments can consume up to 50% of your income.

If your wages are being garnished as a result of a judgement in small claims court you do have some options. You can make a motion to the local small claims court and ask a judge to reduce the amount of the wage garnishment or to lift it and allow for an agreed-upon voluntary monthly payment. While this can be effective, the courts do have the final say, and can say no. It also depends on your creditor. You can also look at working with a financial consultant to make a proposal to your creditor so that they agree to lift the judgement. This can be quite effective and even result in the interest that is accumulating on your debt being frozen. A garnishment imposed through the small claims court can consume up to 20% of your wages in most Canadian provinces.

If your wages are being garnished by the Canada Revenue Agency (CRA) this is by far the most dangerous type of garnishment. A CRA garnishment can consume up to 50% of employment income and up to 100% of secondary income. For example, if you are a contractor the CRA can demand that your client send 100% of your earnings. This is the most dangerous type of garnishment because a CRA imposed garnishment can literally make it impossible to pay for the necessities of life, such as food, transportation and shelter. Those who are self-employed may lose business or have clients simply walk away because dealing with the garnishment is just too much hassle.

Like judgements issued through small claims court, a good financial consultant can also help you to combat a CRA garnishment. There are programs and protections available that can stop a garnishment (even one issued by the CRA), freeze interest and even reduce the amount of the debt.

Do not continue suffering in silence. If a wage garnishment is holding you back, help is only a phone call away. For more information please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

What is the CRA Late Filing Penalty?

In Canada, if you file your income taxes late you will be subject to a CRA late filing penalty. This CRA late filing penalty can vary depending on how many times you have filed your income taxes late in the past. In addition to a CRA late filing penalty, you will have to pay interest on both the tax debt and the CRA late filing penalty. 

Here is an outline of current CRA late filing penalties: 

1.       The CRA late filing penalty for not filing your income taxes on time in 2012 is 5% of the balance owing. In addition, the CRA will also charge a further late filing penalty of 1% per month that you haven’t filed, up to a maximum of 12 months.

2.       Now, if you were charged a CRA late filing penalty in 2009, 2010, or 2011 because you filed late on any of those tax years, your CRA late filing penalty for filing late in 2012 may be increased to 10% of the balance owning. You may also be subject to an additional late filing of 2% for each month you haven’t filed, up to a maximum of 12 months.

3.       The interest that will be added to the tax debt and penalties will compound daily.

Individuals who find themselves behind filing taxes for many years can wind up in serious financial trouble. Once many years of tax returns are assessed at one time, the tax debt is determined, the penalties are applied and the interest is applied on the sum, your tax debt can grow to a size that can become impossible to pay.

                       

Once this occurs, the CRA will demand their money. First you will receive a letter, then perhaps a call, and once your cheque hasn’t arrived your file will be turned over to CRA collections and that’s when the real trouble begins.

The CRA collections department has the authority to do many things in an attempt to force you to pay.

·         They can garnish up to 50% of your wages

·         They can garnish up to 100% of the income of subcontractors and small businesses

·         They can notify your clients of your tax problem

·         They can freeze your bank account

·         They can place a lien on your home, vehicle and business assets (such as equipment)

A tax problem that spirals out of control can seem impossible to stop. The good news is that there are financial programs designed to deal with tax debt. These financial programs are quite effective in stopping CRA collection action and enabling you to make a monthly payment that you can afford. Some programs even involve reducing your tax debt and freezing the interest.

The best thing you can do if you are behind filing returns is to file them. For each month that passes, penalties grow, and for each day that passes, interest grows. Get in to see a financial consultant as soon as possible to start coming up with a financial plan to deal with your tax debt so that you can make arrangements and avoid collection action.

For more information about CRA late filing penalties or if you need help with your tax debt please contact DebtCare Canada at 1-888-890-0888 or visit www.debtcare.ca.