Making a Proposal, and We Don’t Mean for Marriage: Consumer Proposals

When debt becomes unmanageable, knowing where to turn can be tough. Knowing the options available to deal with that debt can be difficult – and that is why getting outside advice is often a great idea. One of the most popular options right now, one that requires additional assistance, is a consumer proposal.

New to this concept but wondering what a consumer proposal is all about? A consumer proposal is a legally binding agreement between you and your creditors.

Consumer proposals have grown in popularity over the last few years, and for good reason. There are a number of significant benefits to filing a consumer proposal:

• Provides immediate relief from collectors – stops the calls and the letters.
• Will stop interest accumulating from the date that you file.
• Will stop most wage garnishments or frozen bank accounts.
• May decrease the total amount of your debts.

Process:

1. Assessment and Qualification - a meeting with a debt consultant will assess your current financial situation and determine the best route to take. If you qualify, the paperwork can be started.
2. Repayment Terms – based on your monthly income and current debts, a repayment plan will be established that you can afford and that will please your creditors.
3. Filing the Documents – your licensed proposal administrator will file all of the required documents. This includes submitting the consumer proposal to your creditors.
4. Creditors Vote – once the documents are received by your creditors, they have 45 days to vote to accept or reject the proposal. If the vote is 25% or more to reject, a meeting will be held to try and negotiate. Once accepted, you will be required to make the monthly payments to your administrator to be distributed to your creditors.
5. Completed Proposal – once you’ve completed the consumer proposal you will receive a Certificate of Full Completion as proof of the completed proposal. Typically, after three years following completion, the consumer proposal will be removed from your credit report.

What if you can’t keep up with the payments?

If an unforeseen circumstance makes fulfilling payment arrangements impossible (job loss for example), the first thing to do is call your administrator. By law you can miss or defer two payments without consequence, but after that the proposal will be cancelled. At the first sign of trouble, speak with your administrator to find out your options.

Consumer proposals can offer individuals the chance to start fresh and eliminate financial stress in a 

major way. If you believe that a consumer proposal might be an answer to your debt problems, don’t wait. The process can take time, so it is best to get it started right away.

For more information about consumer proposals and the many benefits of filing one please call DebtCare Canada today at 1-888-890-0888. 

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.

Wage Garnishments in Canada - How to Stop a Garnishment on Your Wages

Thousands of Canadians have their wages garnished each year. In the past few years there have been more instances of individuals having their wages garnished because of the turbulent economy. Wage garnishments in Canada occur when one party believes that another party owes him or her money and pursues enforcement action.

Wage garnishments in Canada are generally issued in one of three ways.

The first most common reason a wage garnishment is issued is when a debt is owed to the government and the individual is unable to make a satisfactory, voluntary repayment arrangement. Some examples of this are: tax debt owed to The Canada Revenue Agency or The Minister of Finance or a debt owed to the Province and/or Federal Government for an unpaid student loan. If the government wants to place a garnishment on your wages, they don’t have to obtain a court order to do so. If you want to know how to stop a garnishment on your wages, the answer is pretty much black and white. You either have to make an acceptable voluntary repayment plan with the government so that they agree to lift the garnishment on your wages or participate in a Federal Government program to seek debt relief. Wage garnishments that are issued by the government can be applied at up to 100% of your wages.

The second most common reason that a wage garnishment is issued is when one party sues another party in the Superior Court of Justice and is awarded judgement. Once awarded judgement he or she can apply to garnish the individual’s wages. A common occurrence is when an individual defaults on a debt to a creditor and then the creditor sues him or her in the Small Claims Court. When a wage garnishment is issued through the Small Claims Court in Ontario your wages can be garnished up to 20% of your net earnings. If you want to know how to stop a wage garnishment issued by the Superior Court you have three choices. Make a voluntary payment plan arrangement with the party who sued you where they agree to lift the wage garnishment, to make a motion to the Court offering a voluntary payment plan and asking that the wage garnishment be set aside, or by applying to a Federal Government program for debt relief.   

The third most common reason wage garnishments are issued is as a result of child support arrears. If you want to know how to stop a wage garnishment for child support arrears you have only one choice and that is to apply to the Court to have it removed. This can be very challenging to accomplish. A Federal Government program will not stop a wage garnishment for unpaid child support.

The fastest most effective way to stop a wage garnishment is through a Federal Government program. The benefit achieved by leveraging a Federal Government program to stop a wage garnishment is that the garnishment will be stopped, interest will be frozen, in many cases you can have the principal amount of the debt that you owe reduced and make a voluntary monthly payment.

Participating in a Federal Government program will require that you include all debt that you owe. If you have debt to other creditors like credit card providers, loan providers, unpaid cell phone bills etc., these debts will also be covered under the Federal Government program. This will mean that they too will have their interest frozen and in many cases the principal debt reduced. In the event that you had several debts you would make a single monthly payment under the Federal Government program.

If you are having a financial problem and your wages are being garnished it could lead to increased financial hardship. You don’t have to suffer and there are options available.

For more information about wage garnishments in Canada and how to stop a garnishment on your wages please contact Michael Goldenberg at DebtCare Canada by calling 416-907-2582 or visit www.debtcare.ca.