What about tax debt? Is there any way to get rid of it?

The main thing to remember at this time of year - is to file your taxes. CRA will be more willing to work with you on paying arrears if you are up to date with your returns.

Sometimes, pensions are not taxed at the source and so the government comes to the person later asking for money. People who are self-employed or working multiple jobs also often get charged more taxes than they anticipate. Unfortunately, when people cash out their RRSPs (possibly to pay-off other debts), they are then required to pay tax on that money. It is easy to see how many people can wind up in debt with the Canada Revenue Agency (CRA).

A common misconception that people have is that the Canada Revenue Agency is special and that there is no way to solve debt problems with them. In reality, the only thing special about the CRA is that it has more power than other creditors. While other creditors may call you or garnish your wages, the CRA can do these things and also withhold any government benefits (income tax returns, child tax benefits) until you pay the money you owe them.

Many people I speak with are surprised to learn that in the case of a personal bankruptcy or a consumer proposal, the CRA is treated just like any other creditor. So, the consumer proposal is legally binding on them if the majority of creditors agree and in the case of bankruptcy, tax debts are wiped clean when you file.

By filing your taxes on time each year, at least we ten have a clear understanding of the problems you face with how much you owe to CRA and we can then give you options to deal with those debts accordingly.

If you have many debts including tax debt and you would like to find a way to get rid of them, I would be happy to help. Call 519-622-3773 or send me an e-mail and I would be happy to discuss your options of filing a consumer proposal or personal bankruptcy. Together, we can find the best plan for you to get rid of your tax debt and have a fresh start!