The CRA (Canada Revenue Agency) is the federal government organization responsible for the fair and equitable collection of tax revenue for the Canadian government. What happens when you owe the CRA and you cannot pay? To some residents of Red Deer, CRA debt is viewed as the same as any other unpaid debt. In fact, many Canadians who owe the CRA ignore the debt in the belief unpaid credit card debt is a more serious matter.
Nothing could be further from the truth. The worst possible thing you can do if you have CRA debt is ignoring it. Although the government may be slower to take collection measures against you than a privately owned credit card issuer may, they will come after you for what you owe, and they have far more power to collect than does a corporation.
You may know that your creditors have legal means of collecting what they are owed, including wage garnishments, bank account attachments, and property liens. Privately held companies must go through a legal process to initiate these collection activities, but the CRA operates by a different set of rules.
For them, initiating a wage garnishment is an administrative matter. They do not have to go through the courts and they will come after you for what you owe. They have to. Would it be fair to those taxpayers who pay in full and on time if the CRA negotiated a settlement with you for less than you owe?
You have heard the commercials for those debt solution companies that promise to cut your debt in half or more. That does not work with Red Deer CRA debt. A debt repayment plan negotiated by a credit-counseling agency or a debt solution company cannot help you with Red Deer CRA debt. How can you deal with CRA debt?
You have two options, depending on how much you owe and your ability to repay the debt. You can try to negotiate directly with the CRA or you can use a licensed bankruptcy trustee for an insolvency filing.
However, before considering a solution you have to verify the amount you owe. People struggling to pay their bills generally have neither the time nor the money to file a tax return ensuring they take advantage of all the deductions they can. Get professional advice or invest the time needed to learn the tax code and make sure you are paying as little tax as legally possible. Most people who do this find they owe less than the CRA says they do.
With that number in hand, you can go to the CRA to try to reach a settlement. If you are in trouble due to job loss, medical emergency, or because of a natural disaster you can apply to the CRA Fair Practices Commission for a waiver of the interest and penalties on what you owe.
While the CRA may be willing to accept monthly repayments, you must be able to pay them off in 12 months. The CRA feels carrying past debt into a new tax year is not advisable. If you simply cannot pay them, you can do nothing and wait for them to garnish your wages or attach your property to collect. If you make little and own nothing, there is little they can do. However, if you have income and property to protect, you may need to declare insolvency to get rid of your CRA debt.
The Bankruptcy and Insolvency Act of Canada outlines insolvency proceedings, which include personal bankruptcy filings and consumer proposals. In both of these, CRA debt is treated the same as any other unsecured debt.
To see if you qualify for an insolvency proceeding as a means of dealing with Red Deer CRA debt you need to meet with a licensed bankruptcy trustee in Red Deer. Bankruptcy trustees are professional debt consultants licensed by the federal government to handle personal and business insolvencies. If you are reluctant to declare bankruptcy, you should know the consumer proposal is another insolvency proceeding that protects your assets and much of your income that might be lost in a bankruptcy.
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