I. Introduction

A. Definition of a consumer proposal

A consumer proposal is a legal agreement negotiated between you and your creditors. It is facilitated by a Licensed Insolvency Trustee. A Licensed Insolvency Trustee (also known as LIT) is a federally regulated professional who is licensed to provide advice and services to persons and businesses who suffer from debt problems. They are licensed by the Office of the Superintendent of Bankruptcy (OSB) and administer consumer and bankruptcy proposals under the Bankruptcy and Insolvency Act (BIA).

B. Importance of discussing financial difficulties

Debt can be a crippling burden and, for many, can turn into a never-ending spiral of making minimum payments, if that, and not getting anywhere. Discussing your financial situation with a trusted friend or loved one can help put things into perspective and set you on a path to financial recovery. In most cases speaking with a financial professional will open up different avenues to debt recovery, so you can make an informed decision on how to proceed.

So, discussing financial difficulties is important as it will put them out into the open, making it easier to face and deal with them.

C. Purpose of the article

In this free blog, we will look into what a consumer proposal is, how it works and what its advantages are. It can be a great option to lead you onto the road to financial recovery, so let’s dig right in.

 

II. What is a Consumer Proposal?

As mentioned above, a consumer proposal is a legal agreement negotiated between you and your creditors through a Licensed Insolvency Trustee. It is a legally binding agreement between you and your creditors to pay back a previously negotiated part of your debt in monthly payments over the course of up to five years. Basically, you and your trustee will discuss your financial situation to determine how much of your total debt you can reasonably afford to pay back. The trustee then will prepare a proposal to submit to your creditors, outlining the payment plan, for them to approve. After the approval has been made, you have to follow the payment plan and any other stipulations strictly. Once you have made all agreed-upon payments, your creditors will discharge the remaining debt, and you will be debt free.

A. Overview of the consumer proposal process

First off, you have to find a Licensed Insolvency Trustee. If you search on Google, you will likely find a fairly large number of LITs in your area. Take some time to do your research. Check the trustee’s website for credentials and experience. Check independent reviews of their services on pages such as Google or TrustPilot to get a better idea of clients’ experiences with their services. Most trustees offer free, confidential, no-obligation consultations, so you can speak to several of them to be able to compare their services and plans. Please note that if you are asked for payment, this could mean that you are not dealing with an actual LIT but an unlicensed debt consultant.

The LIT will then discuss your financial situation with you to determine the best debt-relief option for you. If a consumer proposal is identified as the best way to move forward, they will go through all debts and assets to come up with a payment plan that you can afford. Then they will create the proposal and submit it to court. From this moment, your creditors will have 45 days to respond and accept or reject the proposal. If they reject the proposal, your trustee will work with you to amend and improve it and resubmit it.

In the case of an acceptance, the court will approve your proposal within 15 days. Then you begin to make the agreed-upon payments and are on your way towards eliminating your debt and rebuilding your credit. This process also includes two mandatory credit counselling sessions. After all payments have been made and all conditions that were outlined in your consumer proposal are met, you will receive a Certificate of Completion, which is the document legally releasing you from all debts included in your proposal.

B. How consumer proposal differs from other debt-relief options

A consumer proposal differs from other debt-relief options in several ways. Where a debt management plan will put forth a proposal to your creditors on how you will pay back your debt, it will not change your actual debt burden, while a consumer proposal can reduce your total debt by up to 75%, which will vary from case to case.

On the other hand, bankruptcy will also discharge you from your debt; however, you will have to surrender all non-exempt assets you have to your LIT, and it will have an even bigger negative effect on your credit rating.

C. The benefits of choosing a consumer proposal

There are several benefits to a consumer proposal.

Reduced debt

One of the biggest benefits is that a consumer proposal can reduce your debt by up to 75%.

Consolidated lower monthly payments

Not only will your monthly payments be considerably lower than before the proposal, but instead of dealing with payments to all the different creditors, you only have to make one payment to your LIT, who will then distribute the money as per the payment plan.

You can keep your assets

As opposed to bankruptcy, your assets are protected, meaning that you can keep all tax refunds, investments and home equity.

Creditor protection

An approved consumer proposal will stop all collection calls and garnishments, as well as all interest charges on your debt.

III. Understanding the Consumer Proposal Process

A. Eligibility requirements for consumer proposal

Not everybody is eligible to file a consumer proposal.

To be eligible to file a consumer proposal, there are several criteria you have to meet:

• You have to be insolvent, meaning that you owe more than $1,000 and are unable to pay your debts as they become due.
• You have to be a person, as a business is not eligible for consumer proposals unless it is a sole proprietorship.
• Your debt (excluding the mortgage on your principal residence) cannot exceed $250,000.
• You have to be able to pay the payments as outlined in the plan. (Please note that if you cannot keep up with payments and miss three payments, your proposal will be cancelled and your debt will be reinstalled. All payments paid through the proposal will be lost.)

B. How to file a consumer proposal

Make an appointment with a Licensed Insolvency Trustee

Find a Licensed Insolvency Trustee for a free, confidential, no-obligation consultation to discuss your financial situation, including all debt, income, assets and monthly expenses.

Decide which debt-relief solution is best for you

The LIT will then go over all available debt-relief options to determine which is the best solution for your situation.

Prepare the consumer proposal

Now, the LIT will help you prepare the consumer proposal by determining a reasonable monthly amount you can afford to pay. They will then prepare the document outlining how much of the debt you will repay, how large the monthly payments will be, and over how many months.

File the proposal

The LIT will file the consumer proposal in court and send a notice to all creditors. After the filing, your creditors will have 45 days to either accept or reject the proposal. At this point, interest on your debt will stop, and you will also be protected against calls from collection agencies or wage garnishments.

Creditors accept the proposal

Once the majority of your creditors accepts your proposal, it will be approved by the court within 15 days and then be legally binding for both creditors and yourself. This is the time when you begin making payments as outlined in the proposal.

Make payments as agreed to your LIT

Now, you will make the agreed-upon monthly payments to your LIT, who will then distribute the money received among your creditors.

Attend two mandatory credit counselling sessions

Part of every consumer proposal are two mandatory credit counselling sessions to help you budget and manage your finances.

Release from your debt

Once all terms and payments of your consumer proposal are fulfilled, your LIT will file all necessary paperwork to finish the process. You will receive a Certificate of Completion that will release you from the remainder of your debt.

C. What to expect during the consumer proposal process

After your consumer proposal has been accepted, you must make the monthly payments outlined in your proposal to your LIT for the agreed-upon duration. You also will be required to attend the two mandatory credit counselling sessions.

IV. Benefits of a Consumer Proposal

A. Reduced debt payments

It lies in the nature of a consumer proposal that the overall amount of the debt owed is reduced. This leads to more manageable monthly payments to ensure that the proposed and agreed-upon amount is paid off as laid out in the proposal. Another benefit is that the payment is made to the LIT instead of juggling payments to multiple creditors.

B. Protection from collection agencies and legal action

A proposal will protect you from calls from collection agencies and any legal action such as wage garnishments. It also stops the accrual of any interest on your debt.

C. Avoidance of bankruptcy

Bankruptcy comes with many negative consequences, such as having to relinquish any assets that are not exempt. If your income situation improves during the time of bankruptcy, you will be required to pay more as well, and it has an even bigger impact on your credit rating.

D. Increased flexibility in debt repayment

A consumer proposal allows you to make a one-time lump sum payment upfront, you can structure the term of your proposal from anywhere between three and 60 months, and you have the freedom of making larger payments if you have the financial means to, which can allow you to complete your proposal sooner.

 

V. When is a Consumer Proposal the Best Option?

A. Situations where a consumer proposal may be preferable to other debt-relief options

If you can’t afford to pay off your debt in full or manage the required minimum payments, then the next option is to try and settle your debts for less than the balance you owe. In this case, a consumer proposal is a very viable option as it can reduce your debt owed by up to 75% while avoiding the more negative consequences of bankruptcy.

B. Factors to consider when deciding on a consumer proposal

One of the main factors to consider when deciding on a consumer proposal is if you are eligible for it, such as being insolvent, meaning you are unable to pay your debts as they become due, not owing more than $250,000 (excluding the mortgage on your primary residence) and being able to pay the payments outlined in the plan.

It is also important to note that not all debt is eligible to be included in a consumer proposal. Court-ordered debts, such as arrears of alimony or child support, student loans that are less than seven years old and secured debts, such as mortgages, car loans or home equity loans and lines of credit, cannot be included in a consumer proposal.

C. Comparison of consumer proposal to other debt-relief options

Depending on the kind of debt, you can try to negotiate the interest rate of your debt, like with credit cards, or hire a reputable debt relief agency to negotiate lower interest rates for you or find other solutions.

Another option is a consolidation loan, with which you can pay off multiple debts and then only have one payment to worry about at the lowest interest rate possible. While this will not reduce your debt, it can help you consolidate everything into one payment instead of having to keep up with several of them, and potentially at a lower interest rate than with the other debt you already have.

A debt management plan is not unlike a consumer proposal but involves a licensed credit counsellor and a debt payoff plan that also is administered by the counsellor. It does not, however, reduce your debt but only helps you manage the debt better.

Finally, bankruptcy comes into play when you have accumulated so much debt that you can’t repay even a portion of what you owe. It will also lead to a debt discharge. However, it will require you to relinquish all non-exempt assets, potentially pay more if your income situation improves and will also have a bigger negative impact on your credit rating.

VI. Conclusion

A consumer proposal provides you with an opportunity to eliminate the crippling burden of debt while reducing the amount by up to 75%. It allows you to keep your assets and consolidate all payments into a single monthly payment, and you can spread it out up to five years, making it more manageable to comply with. And it also freezes all interest on your debt, stops calls from collection agencies and puts an end to any legal action, such as wage garnishments.

It is critical for you to seek professional advice when you notice that you are having increased problems managing your finances and see debt starting to pile up. A professional can analyse your financial situation and advise you about all available options for debt recovery. They have the experience and expertise to find a solution that works best for you.

Risman Zysman has over 45 years of experience providing quality debt solutions. Our team of professionals understands the fears and frustrations of individuals facing financial difficulty. At Risman Zysman, we make sure to present each client with a full range of options and guide them to make the right choices so they can move forward.

To find out how we can help you, call us at 416-222-4600 and get a free, confidential, no-obligation consultation today! Risman Zysman can help you on your way on the road to financial recovery.

One very unfortunate consequence of outstanding tax debt is a frozen bank account by the CRA. It can create big problems and a lot of stress on both your finances and your life. With a frozen bank account, you cannot withdraw or transfer money. You are also not able to pay for daily essentials such as groceries or gas, rent or insurance.

I. Introduction

 

A. What is the CRA?

The CRA, or Canada Revenue Agency, administers tax laws for the Government of Canada and for most provinces and territories and administers various social and economic benefit and incentive programs delivered through the tax system.

B. Brief overview of why the CRA may freeze bank accounts

The CRA can freeze your bank accounts if you have an outstanding tax debt without contacting it concerning payment arrangements. It does not require a court order to be able to do so. Generally, the CRA is fairly reasonable regarding payment arrangements for your tax debts. In most cases, communication and cooperation are all they ask for, and they will only resort to freezing your bank accounts if you fail to communicate or do not arrange payment. The CRA generally sees this as a last resort.

C. Purpose of the article

In this article, we will have a look at when the CRA can freeze your bank account, how to avoid this from happening and also what to do to solve the problem.

 

II. When Can the CRA Freeze Your Bank Account?

 

A. Situations in which the CRA may freeze a bank account

The CRA can freeze your bank account when you have a tax debt and have missed making payments without communicating with a CRA account manager. The CRA is a very powerful creditor as it can legally freeze your bank account without having to notify you or obtain permission from the court.

B. Explanation of the legal process that must be followed before the CRA can freeze a bank account

Before starting legal action, the CRA must do the following:

• make 3 attempts to give verbal legal warning by phone
• send 1 written legal warning letter

Such a legal warning is valid for 180 days. At any time during this period, the CRA can start legal action, even if the balance on the account changes.

After the first 180-day period has expired without any legal action taken, the CRA has only to give one legal warning, whether verbal or written, to renew the warning.

A legal warning period also does not expire, even with ongoing legal action.

The process itself starts with the CRA issuing a so-called Requirement to Pay to both you and your bank. This note informs you and your bank that you owe money to the CRA. This notice also orders the bank to freeze your account and direct any money directly to the CRA to cover your tax debt. The bank is legally obligated to comply and forward both funds in your account and any future deposits to the CRA until either your debt is paid or it receives a legal notification from the CRA to unfreeze your account.

The reason the CRA does not issue notifications to you that it will freeze your account is to avoid debtors trying to move their funds out of their accounts to avoid seizure.

C. How to find out if your bank account has been frozen

Usually, the first sign that your bank account has been frozen is when you try to pay at a store with your debit card, which is declined. A call to your bank will then confirm that the CRA has frozen your account.

 

III. How to Avoid Having Your Bank Account Frozen

 

A. Tips for staying on top of your tax obligations

One of the most important things is to make sure to be on top of your finances. Have all documents ready and file your taxes on time. Then the most important step to avoid the CRA freezing your bank account is to ensure to pay your tax debt as soon as possible.

If you can’t pay your tax debt in full, contact a CRA account manager to arrange a payment plan. In most cases, this is all the CRA asks for, to communicate with them and show that you are willing to take care of your debt and take steps toward doing so.

B. Importance of communication with the CRA

The CRA will only freeze your bank account as a last resort. They are generally very reasonable when it comes to payment arrangements, so communication is key when it comes to the Agency. In general, the CRA only asks for communication and cooperation and will only look at freezing your bank account if you refuse to communicate or set up payment arrangements.

C. Understanding payment arrangements and installment plans

The CRA has an expectation that you will pay your tax debt immediately, so arranging a payment plan will require you to negotiate carefully. In many cases, the CRA will offer you a short-term payment plan. This will require you to disclose information to them, such as your income, your employer, assets, and more, so you have to ensure that you have a good strategy in place to propose, otherwise, they might not negotiate a plan with you. You also have to ensure that you can and will stick to any plan you set up with them, otherwise, they might rescind the plan and may take further action, such as freezing your account.

D. Seeking professional advice

If you see that you are having problems staying on top of your finances and that debt is building up, it is best that you speak with a financial professional for advice. They have the experience and expertise to review your finances and develop different solutions to help you get on the path to financial recovery.

 

IV. What to Do If Your Bank Account is Frozen by the CRA?

 

A. Steps to take if your bank account has been frozen by the CRA

If the CRA has frozen your bank account, it is recommended to review your finances to determine if you can afford to pay off your tax debt in full. If this is not possible, then try to come up with a plan of which kind of payments you can afford. Then you can contact the agency to negotiate a payment plan. Alternatively, you can also consider filing a consumer proposal or bankruptcy if your financial situation does not allow you to make payments.

B. How to challenge a bank account freeze

There are no ways to challenge a bank account freeze by the CRA as they are legally entitled to do so to recover outstanding tax debt. The only way to release a frozen bank account is to take steps to solve the situation.

C. Explanation of how the CRA may release a frozen bank account

There are several ways to get the CRA to release a frozen bank account.

Pay your tax debt in full

If you are able to pay your tax debt in full, it will immediately stop all collection measures taken by the CRA. If you don’t have the money yourself, you can ask to borrow from a family member or trusted friend, as long as you are sure you can repay them in a timely manner.

Make payment arrangements with the CRA

If you can’t pay your tax debt immediately, you can reach out to the CRA to set up a payment schedule. You must have a solid strategy to show them for the agency to be willing to negotiate a plan. In most cases, this will lead to the CRA releasing your frozen bank account. Please note, however, that failing to stick to the agreed-upon schedule can lead to the CRA rescinding the plan and reinstating your debt with all legal consequences.

Open a new bank account

While this does not release your frozen bank account, opening a new bank account with a different financial institution can at least bring short-term relief to direct pay cheques into this new account so you can still make sure rent or mortgage payments go through and that you can pay for daily necessities such as groceries or gas.

File a consumer proposal or bankruptcy

When speaking to a financial professional, such as a Licensed Insolvency Trustee (LIT), they can lay out ways to handle your debt. The two most common options are a consumer proposal and bankruptcy.

A consumer proposal is a legally binding agreement negotiated between you and your creditors through a Licensed Insolvency Trustee. It will outline how to pay back a previously negotiated part of your debt in monthly payments over the course of up to five years. Basically, you and your trustee will discuss your financial situation to determine how much of your total debt you can reasonably afford to pay back. The trustee then will prepare a proposal to submit to your creditors, outlining the payment plan, for them to approve. After the approval has been made, you have to follow the payment plan and any other stipulations strictly. Once you have made all agreed-upon payments, your creditors will discharge the remaining debt, and you will be debt free.

Bankruptcy goes one step further and comes into play when you have accumulated so much debt that you can’t repay even a portion of what you owe. Here you sign over all non-exempt assets to your LIT, who will use them to cover part of your unsecured debt, which includes tax debt. Bankruptcy comes with pretty strict regulations and impacts your credit rating even more than a consumer proposal, but it also offers you a fresh financial start.

 

V. Conclusion

The Canada Revenue Agency can freeze your bank account if you have outstanding tax debt and have not communicated with a CRA account manager to negotiate a payment arrangement. They are legally entitled to seize bank accounts without prior notice and do not require a court order to do so.

So it is very important to take action before it comes to this by either paying your tax debt in full, making payment arrangements, filing a consumer proposal, or bankruptcy.

It is critical for you to seek professional advice when you notice that you are having increased problems paying your taxes and have fallen behind on payments. A professional can analyse your financial situation and advise you about all available options for debt recovery. They have the experience and expertise to find a solution that works best for you.

Risman Zysman has over 45 years of experience providing quality debt solutions. Our team of professionals understands the fears and frustrations of individuals facing financial difficulty. At Risman Zysman, we make sure to present each client with a full range of options and guide them to make the right choices so they can move forward.

To find out how we can help you, call us at 416-222-4600 and get a free, confidential, no-obligation consultation today! Risman Zysman can help you on your way on the road to financial recovery.

How to Repair a Bad Credit History?

More often than not, bad credit is an issue many Canadians face at least once in their lifetime and are left in the dark when it comes to solving this issue. One may obtain bad credit due to inconsistent payments that result in ongoing debt, and it can be quite difficult to break the cycle.

This article will go through the consequences of having bad credit history and showcase adequate solutions for you to repair your credit. Read on to find out what you can do about your bad credit and discover how Risman Zysman can assist you.

What Causes Bad Credit and How Does it Affect My Life?

It is possible for someone to obtain a bad credit score due to inaccurate or late payments, very high balances, bankruptcy filing, or inconsistent credit history. Having a positive line of credit is essential for people who wish to get benefits from banks and lenders, and receive more trust from dealerships or mortgage lenders in the future – however, with a bad credit history, it becomes difficult for banks and lenders to trust that an individual will be able to keep up with their financial obligations.

If you currently face an issue with bad credit, not taking appropriate steps to solve the problem and improve the quality of your credit score can bring negative effects on other aspects of your life. Not fixing your bad credit can prevent you from receiving approval for new credit cards or personal loans, applying for a mortgage or financing a car.

Depending on your professional experience and work field, a bad credit can stop you from getting certain job opportunities, getting insurance you would otherwise be eligible for, starting a business, or renting a place to live.

Fixing Bad Credit: How You Can Do It

Lenders can easily reject any credit requests from you if you don’t take the initiative to repair your credit – and repairing bad credit requires a lot of patience since it is a process that takes time. There are no easy fixtures for a bad credit situation.

However, by adopting certain habits, your score can certainly improve over time. Such habits are as follows:

Check your credit report often

By looking at your report every week or every month, you can easily have a clear picture of where your expenses are going and how you can improve your credit balance. You can also keep track of your monthly payments, bills and all credit cards you owe.

Make full payments on time every month

 

When you pay your credit card balance on full every month, you are showcasing to your bank that you are a responsible consumer who pays their credit card debt on time. Paying off your statement balances to their full amount on a monthly basis ensures that your credit score recovers fast.

Keep your credit utilization ratio low

The ideal percentage credit utilizations should have is that of 30% – so, for example, if your credit card limit is a thousand dollars, your credit utilization should be $300. This ratio is the ideal balance amount you’d have to pay every month.

Reduce the number of credit cards you have

It’s alright to have a few credit cards, but not too many – lenders can easily check where you have credit card debt and how much you owe in different accounts and cards. If you have extended bad credit among different cards, it might be difficult to keep track of all of them and make payments whenever necessary.

Don’t keep too many credit accounts active

Having multiple accounts can give lenders a bad impression on your behalf – when you open many accounts in a short period of time, you become suspicious of risky activities. Similarly to having a few credit cards, it is best to have a few accounts and keep a close eye on them.

Another way of repairing bad credit is by relying on credit repair companies; however, in order to do so, you must ensure the company is legit and reliable. Thanks to the Credit Repair Organizations Act (CROA), consumers are now able to avoid credit repair scams that have happened in the past – the Act states that credit repair companies are:

• Forbidden from demanding payments until their services are complete
• Forbidden from altering a client’s credit account or identity in order to change their credit history
• Required to provide consumers with a legit and clear written contract with the provides services and proper terms and conditions
• Prohibited from forcing consumers to sign any documents other than the contract
• Unable to mislead consumers regarding the services they offer

Counting on credit repair companies can be of great help and get debt relief for some people as long as such companies are professional and honest.

If You Have a Bad Credit, Talk to Our Trustees at Rysman Zysman Today

Our licensed insolvency trustees are more than capable of helping you with repairing your credit. We have years of experience assisting our clients with their poor credit scores and can come up with solutions that are tailored to your situation.

To know more, call us at 416-222-4600 and get a free consultation today!

FAQ

How long will it take me to repair my credit?

The timing varies depending on each situation – if your credit history was gravely affected by bad credit, it might take a long time until you can fully repair your credit.

How can I repair my credit?

To easily repair your credit, first know that the process takes time and requires patience. Secondly, make sure to pay your balance on time and keep your utilization as low as 30%. If you have any doubts, talk to a licensed insolvency trustee at Risman Zysman.

It might be tempting not to file your taxes if you are afraid that you can’t afford to pay what you owe. However, the Canada Revenue Agency (CRA) has systems to check if you have unpaid or unfiled taxes. For example, the CRA has a system in place that enables them to receive a copy of T4 slips from your employer, so it is not difficult for the CRA to find out if you have paid your taxes or not.

What Happens If I Don’t File My Taxes in Canada?

There are several potential consequences to failing to file your taxes, from penalties and interest to, in the worst case, criminal charges for tax evasion.

The CRA will charge late-filing penalties of 5% if you fail to file your taxes by April 30 and an additional 1% per month for every month after that date until you pay, up to a maximum of 12 months. 

Additionally, if the CRA charged a late-filing penalty for any of the last three tax years and has requested a formal demand for a return, your late-filing penalty will rise to 10% of your balance owed. You will also be charged an additional 2% for every full month that you file after the due date, up to 20 months.

In case you are unable to make your instalment payments on time, the agency also may charge a tax instalment penalty if your instalment interest charges surpass $1,000.

Should you not be able to meet your tax obligations due to circumstances beyond your control, you may request the CRA to cancel or waive penalties or interest. If your request is granted, the CRA may grant relief within ten years from your request date.

Filing Taxes Late In Canada

If you fail to submit your tax return by April 30, the CRA will charge a late-filing penalty of 5%. For every month after this date, they will charge an additional 1% per month until you pay, up to 12 months total.

On top of this, if the CRA has charged a late-filing penalty for any of the last three tax years and has requested a formal demand for a return, your late-filing penalty will be 10% of your balance owed and an additional 2% per month after, up to a total of 20 months.

Is There a Penalty for Filing Taxes Late if You Owe Nothing?

The CRA can’t apply interest on taxes you don’t owe, so you obviously will not see any additional charges. However, even if you don’t owe anything, filing your taxes late can lead to other consequences and complications. 

Not filing your taxes on time can disqualify you from government benefits and certain assistance programs, such as the Canada Child Benefit (CCB), the GST/HST credit, or the Guaranteed Income Supplement (GIS). There are also other provincial or territorial assistance programs or benefits that you may lose your ability to qualify for.

Filing Your Tax Return

In general, the amount of income tax you pay directly correlates with how much money you earn in a year. Then you are able to reduce the amount of tax you have to pay by claiming qualifying expenses and tax credits. 

In most cases, your employer will deduct the income tax from your pay and send it to the CRA. Even in these cases, you may have to determine how much you owe and pay the amount to the CRA.

Every year, you should file your tax return to report how much money you earned, ensure that you have paid all income tax you are supposed to, and access benefits and tax credits. After the CRA assesses your tax return, it will send a notice of assessment to indicate if you have paid too much income tax or not enough, advising you if you owe taxes or are eligible for a refund through credits and benefits.

How to apply for tax credits and benefits?

A few things to note are the tax deadlines, which are different depending on your situation, as well as tax credits and benefits.

As an employed individual, you should file your tax return by April 30. It is important to note that if you are submitting your taxes by mail, your letter should be postmarked before April 30 to avoid potential penalties.

If you or your spouse are self-employed, the deadline to file your income tax and benefit return is June 15.

If you are a small business owner, you also should file your income tax return by June 15. However, you should pay off any balance owing from the previous tax year by April 30.

In the case of corporations, income tax returns should be filed up to six months after the end of the tax year. This will make this date variable depending on the corporation’s fiscal period.

Other important factors are tax credits and benefits you may be eligible for. There are basically two different types of tax credits that you might be eligible for, refundable and non-refundable tax credits. Refundable tax credits are credits that can reduce the amount of income tax you owe. But you may also be eligible for them if you don’t owe taxes, like the Ontario Energy and Property Tax Credit. Non-refundable tax credits can reduce the amount of income tax you owe, such as certain donations and gifts.

Have confusions or queries? Don’t worry, Risman Zysman is here to help you or answer all your queries.

Tax Return FAQs

How long can you go without filing taxes in Canada?

There is no definitive time that you can go without filing taxes. The CRA has systems in place that allow them to search for people who have not paid their taxes, so it is very difficult to avoid paying your taxes for a longer period of time.

There also is a Voluntary Disclosure Program that has been set up by the CRA, which allows people that are behind in the filing and reporting of their income tax to disclose this fact and repay their taxes without the imposition of penalties. However, should the CRA find out that you have failed to file your taxes and contact you about it before you contact them, then you will have to pay all penalties and interest applied to the amount you owe.

What is considered tax evasion in Canada?

Any individual or corporation that fails to file their tax returns as they should, fails to declare their income completely and accurately, or claims false expenses on their tax return, is committing tax evasion.

Can the CRA check my bank account?

Yes, the Canada Revenue Agency can check your bank account and freeze any assets.

Can I file 2 or 3 years of taxes at once?

Yes, it is possible. However, the later you file your taxes, the harsher the potential penalties may be.

How long can you go without filing taxes in Canada?

According to the CRA, a taxpayer has ten years from the end of a calendar year to file an income tax return.

What happens if I haven’t filed taxes in 10 years in Canada?

Filing your taxes late might result in penalties and accruing interest from the CRA.

What happens if you haven’t filed taxes in 3 years in Canada?

The CRA can issue an arbitrary Notice of Assessment if you have several years of outstanding returns. In most cases, these assessments require you to pay a higher amount of tax than you normally would have paid if you had filed a return.

Is there a penalty for not filing taxes if you don’t owe Canada?

If you don’t owe any taxes, there is no penalty for not filing your income tax. However, you may lose your eligibility for certain benefits and assistance programs.

Debt can affect many people throughout their lives and can be quite a stressful experience. Many need to learn how to pay their creditors while facing high pressure and demand to complete their payments.

Debt can also affect seniors. This group’s primary source of income comes from their retirement savings plan and social security; therefore, it can be easy to worry – especially if seniors end up outliving their expenses and still have debts to pay.

However, there is no need for fear – the solution is to look for reliable and responsible licensed insolvency trustees. At Risman Zysman, our trustees are friendly and ready to explain all your debt-relief options. Contact us at 416-222-4600 for more information.

What Are Some Signs of Debt Problems?

Here are some signs that you or a senior you know has debt problems:

• • You go through wage garnishments
  • You can’t pay bills on time
  • The debt consumes more than 20% of your income
  • It becomes difficult to save money
  • Creditors start contacting you for payments
  • You delayed payment, which resulted in cuts in your bills or subscriptions
  • Your debt balance keeps on growing
  • You have only one line of credit to pay for bills and mortgage
  • You pay your credit card with minimum payment only
  • You are using your RRSP to pay your debt

If some of these points sound familiar to you, then you must contact a professional insolvency trustee to manage your payments and assist you with your options.

What Happens When You Do Not Pay Your Debt?

If you need to know where to start and end up delaying your payments, creditors will begin to call your number or will send you letters. This can be particularly stressful for seniors, who may need more resources to make payments or often forget about them.

Creditor calls and demands can also add stress if seniors deal with health issues or family problems.

Failure to pay for your debt will leave a bad mark on your credit. An adverse credit line can affect any mortgage renewals or deny applications for new credit cards – and this can significantly impact the lives of seniors. There are other risk to debt relief options.

If you need assistance with paying your debt, Risman Zysman provides a debt calculator you can use – you can find it here.

What Are the Options and Resources Seniors Have for Debt Relief?

A competent and reliable licensed insolvency trustee can provide seniors with the best debt relief option, as cashing out the retirement savings plan is not advisable – many seniors have no assets, and their Registered Retirement Savings Plan is their only source of income.

Risman Zysman insolvency trustees are licensed, reliable and trustworthy. We will be able to provide you with efficient options and resources for you or any senior you know to go debt-free. 

Some of these debt relief options include:

Consumer Proposal

A consumer proposal is an agreement between the consumer – in this case, the senior on debt – and creditors. A consumer proposal suggests debt payment during a set period of time based on someone’s budget. This method does not hurt the consumer’s line of credit and allows them to have up to 80% of their debt forgiven.

Bankruptcy

Declaring bankruptcy is another option for seniors to receive debt forgiveness. This method harms someone’s line of credit. However, keeping their home and retirement savings pan is most important for seniors.

When declaring bankruptcy, seniors can do so by liquidating assets. Although a standard method, personal bankruptcy shows up on the line of credit for as many as ten years. However, seniors can still rebuild their credit over time.

Government Programs for Seniors

This is yet another option seniors can run to for debt relief. Licensed Insolvency Trustees can advise seniors about any debt relief programs the government has available. In Canada, many people have their registered retirement plans protected in cases of consumer proposals or bankruptcy declarations.

Seniors can also simply inform creditors that they cannot pay for the debt – especially if their source of income is mainly through their retirement plan. If an income is limited, seniors can tell the Canada Revenue Agency that they are unable to pay for their debt.

Payday Consolidation Programs

Another option for seniors to pay their debt is to enroll in a payday loan program. They are easy to get and assist seniors with their short-term loans through affordable monthly payments.

Debt Settlement

In a debt settlement, seniors will negotiate with creditors and agree on a payment amount that is suitable for them. Once they make the necessary payment, they will be debt free.

Reverse Mortgage

With this option, the requirement is that seniors must be 62 years old to qualify. If they have equity in the house and can make monthly payments for taxes or insurance, then a reverse mortgage might be a good loan payment option. 

In this method, the mortgage can be paid or sold to balance out the loan payments.

Contact Us

Do not cash out of your Registered Retirement Savings Plan anymore! Seniors can contact Risman Zysman about their debts. We have 45 years of experience as licensed insolvency trustees and can better advise you in your debt-free journey. 

How Risman Zysman Can Assist You?

Our friendly licensed insolvency trustees offer many debt relief services for the best interests of their clients. We will explain to you all of your options and help you get back on track with your money and credit and remain debt-free.

With decades of experience, we can reduce your debt by 80%. Contact us today for a free consultation by filling out our consultation form or calling us at 416-222-4600 or 844-222-6824.

At Risman Zysman, we help you get out of debt.