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.

CRA "Requirement to Pay Issued" - What is it and what can you do?

If you owe money to the Canada Revenue Agency they have many resources at their disposal to collect the money from you. One very common resource that they deploy is called a “Requirement to Pay.”

A CRA “Requirement to Pay” is a document that the Canada Revenue Agency will send to a third party, like a bank requiring them to remit to the Canada Revenue Agency any funds that you have held there. The CRA “Requirement to Pay” will indicate the amount of debt that you owe and will indicate the CRA agent who is assigned to your file. When a CRA “Requirement to Pay” is issued to a bank for example, the bank will freeze your bank account. The bank then holds your frozen funds for 30 days and then remits the money to the Canada Revenue Agency.

Before a CRA “Requirement to Pay” is issued, the Canada Revenue Agency will usually send you a letter demanding payment first. In the demand letter the Canada Revenue Agency will demand that you pay the debt in full or make arrangements within a prescribed period of time.

Many times consumers will receive a demand letter from the Canada Revenue Agency and contact the Canada Revenue Agency to make payment arrangements. Sometimes the Canada Revenue Agency will accept a short term payment plan (3 months – 6 months) with the condition that the consumers make complete financial disclosure to them. This includes where they bank, where they work and with the understanding that after 3-6 monthly payments they will once again review the taxpayer’s financial ability to pay. This financial disclosure can result in a CRA “Requirement to Pay” being issued at the end of the 3 or 6 months because the Canada Revenue Agency will now know where the taxpayer has his or her bank account.

If you have a debt with the Canada Revenue Agency it is important to take action. Owing money to the Canada Revenue Agency can be intimidating, especially when you know that you have no ability to pay off the debt. Waiting for collection action to occur can present many challenges and where a CRA “Requirement to Pay” is issued to a bank, it can harm a taxpayer’s relationship with his or her bank and even result in an account closure. If it is an account where payroll is deposited, it presents an incredible inconvenience and financial hardship because once the bank account is frozen any funds deposited into it will be held and remitted to the Canada Revenue Agency. This is worse than a wage garnishment because in this case the Canada Revenue Agency can not only seize your savings but can also capture 100% of any payroll payment deposited to the account.

Your best plan is to acknowledge that you have a financial problem and work with a debt counsellor who has the expertise, tools and resources to help you avoid a CRA “Requirement to Pay” or work to get your funds returned to you if a CRA “Requirement to Pay” has been filed.

The worst thing that you can do is attempt to negotiate with the Canada Revenue Agency yourself, making financial disclosure to receive a short term payment plan. The CRA has incredible authority and resources and your best chance at being successful is by working with a professional who knows how to deal with them.

For more information about CRA Requirements to pay or if you have had a CRA Requirement to Pay issued against you please call DebtCare Canada at 416-907-2582 or visit www.debtcare.ca.