Revenue Canada and Student Loan Blues?

By Bonnie Krisher (K&G Debt & Credit Professionals)

It is commonly known that the government can behave in ways that most other creditors cannot in order to obtain payment for debts that are owed to them. For example, if you owe money to Revenue Canada, it is well within their means to freeze bank accounts, garnish wages, GST, or tax refunds, often times without your knowledge. These are only a few of the things that Revenue Canada can do if you become delinquent on your payments or any money owed to them.

What are some options? Well you can:

• Apply to the Fairness Committee. If possible, do so in person. You may be able to arrange a special payment plan or have a portion of the debt forgiven. Remember, if you have little or nothing that they can take from you, then you are in a great position to negotiate. Especially, if you have access to resources from external means (i.e. friends and family).
• Request your personal file from CRA and prolonged the process. This is an important option if you want to dispute the debt.
• If you have a high debt load you can claim bankruptcy and have a portion of your CRA debt forgiven; usually, penalties and interest (consider speaking to a bankruptcy trustee for more information; remember that not all trustees are created equally).
• Finally, there are lawyers that are prepared to take on cases when the debt is over $100,000.00. They will try and have a portion of the debt forgiven or cleared. We are still searching for a company that will take on debts under $100,000.00.

The good news is that the US government is starting to privately settle for a lump sum payment of less than what is owed. It is common for Canada to follow changes that occur in the United States. Revenue Canada has also been sued for breaching the Statute of Limitations (6 years) and has lost. They are often difficult to deal with, but not impossible to fight.

Student Loans on the other hand are becoming easier to resolve than taxes owed.

1. Student loans are treated in much the same manner as other unsecured debts once they have entered into collections. The collections department will often take a settlement of less than what is owed. It is important to be persistent.
2. Student loans can be dealt with in a bankruptcy, but it must be 10 years since your last day of school.
3. If a judgment is obtained and is followed by a garnishment, the government can garnish 15-50% of your cheque as long as it does not cause you hardship. If it does cause you hardship, then represent yourself and let the judge know.

In conclusion, the government can be difficult to deal with, but there are options for you, so do your homework.

Bonnie Krisher, CDA / K&G Debt & Credit Professionals, www.kgdebt.ca