With unmanageable debt, individuals and businesses often find themselves in grave situations with their creditors. One of the most formidable situations is when owing a tax debt to the Canada Revenue Agency.

With the strength and reach of governmental power backing them, the CRA can start enforcement actions against a debtor without the need to go to court. The CRA has the ability to enforce payment in three major ways:

• Freezing of bank accounts
• Property liens
• Garnishment

Frozen Bank Accounts

The Agency has the right to freeze assets in a debtor's bank account. Before it does so, it sends a Requirement to Pay. This is a letter that instructs the bank to start proceedings to freeze the debtor's funds.

Once the bank has frozen the assets of a debtor, it forwards the funds to CRA after a certain period of time. Consequences of this action can be serious, as it often creates personal financial hardship or leaves business debtors unable to carry on operations.

Property Liens

If you own properties, then CRA has the right to register liens against them. When a lien is placed on a debtor's property, the individual is unable to sell or refinance it.
In order to have the lien removed, most debtors must pay the entire outstanding amount.

Garnishment

The CRA has a wide variety of powers when it comes to garnishment of wages or business income.

This includes the right to force business clients and owners to forward all collectibles to the CRA. In such actions, the CRA could demand up to 100 per cent of business invoices.

Ways to contest CRA enforcement actions do exist. Through skillful negotiation and communication with the CRA, enforcement actions can be postponed, or stopped altogether.

Individuals and businesses facing CRA enforcement actions should consult with an experienced debt collection lawyer.