Many people who owe money to the CRA actually live in fear of the repercussions of this debt going unpaid. They are aware that this government body has a lot of power to collect, and one cannot fight them easily. Then there are other people who adopt the attitude that “you can’t get blood out of a stone, or bring it on”. This is made under the assumption that they really don’t own anything so what is the Canada Revenue Agency going to take? Besides, with the back logs in the courts it will take forever to get it before the courts.
First of all in many cases the CRA can impose several collection actions without even having to take it to court.
Garnisheed wages:
If you are working then you had better hope that you can live off of half of what you are making. The CRA can garnishee your wages up to 50%. But it may be worse because if you have other types of income it could be 100% garnisheed. If you have clients who owe you money the CRA may contact them for their payment to be made directly to them. So if you were counting on some receivables they may no longer exist. Plus your clients are now aware that you are in a tax mess.
The frozen bank account:
While you may have a outstanding CRA debt, you have managed to keep up on your other financial commitments, like paying your mortgage or rent, and other living expenses. All of a sudden you start getting a gambit of phone calls that your creditor’s checks have bounced. Or you are lined up at the grocery checkout with a basket full of groceries which you are going to pay with your debit card and the card isn’t accepted. You can figure out what is going on, as you know you had money for all these expenses in your account. What has probably happened is the CRA has froze your bank account. They sent a letter to your bank, outlining the tax debt and the terms of the requirement to pay. The money will now sit frozen in your bank account for a period of time, then eventually be sent to the CRA to be applied against what you owe.
Property Lien:
If you own property the CRA may put a lien against it. This will make it very difficult for you to sell it, plus your mortgage holders will be notified.
The bottom line is don’t underestimate the power of the CRA without physically taking you to court. It is imperative that you make every attempt possible to negotiate some type of payment plan with them. You may not be facing just one of these legal actions but all of them, in any combination they feel is going to be the most successful at recouping the debt.
