Eliminate Your CRA & Income Tax Debt with a Consumer Proposal

How to Erase Your CRA & Income Tax Debt with a Consumer Proposal

Dealing with debt can be intimidating, particularly when it arises from taxes owed to the Canada Revenue Agency (CRA). The financial stress can be overwhelming, pushing individuals to explore different debt management options. One such effective solution is a Consumer Proposal. This article will guide you on how to eliminate your CRA and income tax debt with a consumer proposal.

Understanding Consumer Proposal

A consumer proposal is a legal agreement between you and your creditors, facilitated by a Licensed Insolvency Trustee (LIT). It’s a strategic plan that enables you to reduce your total unsecured debts, including tax debt, and repay them over a period without accruing interest. It’s worth noting that income tax debt is an unsecured debt and, therefore, can be handled effectively through a consumer proposal.

Benefits of Consumer Proposal

There are several reasons why a consumer proposal can be a viable solution to manage your income tax debts:

1. Debt Reduction

One of the primary benefits of a consumer proposal is the potential for debt reduction. It allows you to negotiate a reduced amount of debt with your creditors, including the CRA. This negotiation often leads to a significant reduction in the total debt amount, making your financial management less daunting.

2. Protection from Creditors

Once you file a consumer proposal, your creditors, including the CRA, must cease all collection efforts against you by law. This protection includes halting wage garnishments, lawsuits, and annoying collection calls.

3. Single Monthly Payment

With a consumer proposal, you can consolidate all your debts into one monthly payment. This consolidation simplifies your financial management, enabling you to stay on top of payments, including ongoing bills and potential ongoing income tax obligations.

4. Absence of Interest Payments

Unlike other debt relief options, such as debt consolidation loans, a consumer proposal does not accumulate interest. This means you only repay the principal amount, saving you a considerable amount of money in the long run.

5. Flexible Repayment Terms

A consumer proposal also allows you to negotiate flexible repayment terms with your creditors. You can work out longer repayment periods and lower monthly payments, helping you avoid defaulting on your payments.

Involvement of a Licensed Insolvency Trustee (LIT)

A LIT plays a crucial role as they’re the only regulated professionals with the legal authority to administer a bankruptcy or consumer proposal. Consulting a LIT will help you understand how a consumer proposal can impact your overall financial situation, or they can guide you towards a better-suited alternative if necessary.

Book your free consultation with a Licensed Insolvency Trustee online here.

Conclusion

Eliminating your CRA and income tax debt with a consumer proposal can be an effective strategy. However, it’s crucial to understand the process and implications thoroughly. With a well-structured plan and the guidance of a Licensed Insolvency Trustee, you can manage your debts and regain financial stability.

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