Follow @DebtInCanada

Will my proposal payments change if CRA keeps my tax refund?

0
3.64K viewsAsk a TrusteeConsumer Proposal
0

I filed a consumer proposal in 2017 with a total owing of approx $13,000. Which was agreed to by my creditors.

In my proposal was my Revenue Canada amount owing of  $5,000 aprox. I did my taxes for 2017 and had a refund of $4,000.aprox, which C R A kept in the right to off set.

My question is since the C R A kept my refund I expected the $4,000 to come off my balance owing to the trustee of $13,000 which should bring my balance owing to approx $9,000. I am being told no. That my balance in my proposal will be the same amount minues my monthly payments that I have made.

And that the $4,000 extra will be dispersed to my other creditors.

I am not understanding this why would they give my creditors more when a amount has already been agreed on, and If I would of got the refund my self and went in and put it towards the proposal it would of came of my balance owing to the trustee.

Please could you give me some information on this.  Thank you.

 

1 Answer

0

Hi Dana,

Your Trustee is correct – your consumer proposal of $13,000 was what your creditors had agreed to when your Trustee presented it to them. This is a fixed amount irrespective of what happened with your refund.

In a perfect world, this is what would have happened before you actually filed your consumer proposal:

  1. You were able to hold off your creditors from harassing you or garnishing your bank accounts and wages until you filed your 2017 tax return in early 2018 and had it assessed by CRA
  2. CRA would set off the $4,000 refund against the $5,000 you owed them, leaving a net balance owing to them of $1,000
  3. Since you owe $4,000 less to your creditors than before your filed your tax return, you could have made a proposal that was less than the $13,000 proposal you actually made.

This is simply unrealistic: I’m assuming that there was some urgency for to file your proposal back in 2017 because you were being harassed by your creditors. Also, there’s no way your Trustee could have known back in 2017 that you’d be getting a refund this tax season.

And had you not filed a consumer proposal until you filed your 2017 tax return (which I’m assuming you did recently), CRA still would have kept the $4,000 refund and set it off against the $5,000 you owed. You wouldn’t have received the refund money anyways because CRA has the legal right of offset.

Neither you or your Trustee had any control over this outcome. So if your creditors will end up receiving more money than they initially expected when your Trustee presented your proposal to them, you should see this a positive rather than as a negative.

 

Your Answer

0

Hi Dana,

Your Trustee is correct – your consumer proposal of $13,000 was what your creditors had agreed to when your Trustee presented it to them. This is a fixed amount irrespective of what happened with your refund.

In a perfect world, this is what would have happened before you actually filed your consumer proposal:

  1. You were able to hold off your creditors from harassing you or garnishing your bank accounts and wages until you filed your 2017 tax return in early 2018 and had it assessed by CRA
  2. CRA would set off the $4,000 refund against the $5,000 you owed them, leaving a net balance owing to them of $1,000
  3. Since you owe $4,000 less to your creditors than before your filed your tax return, you could have made a proposal that was less than the $13,000 proposal you actually made.

This is simply unrealistic: I’m assuming that there was some urgency for to file your proposal back in 2017 because you were being harassed by your creditors. Also, there’s no way your Trustee could have known back in 2017 that you’d be getting a refund this tax season.

And had you not filed a consumer proposal until you filed your 2017 tax return (which I’m assuming you did recently), CRA still would have kept the $4,000 refund and set it off against the $5,000 you owed. You wouldn’t have received the refund money anyways because CRA has the legal right of offset.

Neither you or your Trustee had any control over this outcome. So if your creditors will end up receiving more money than they initially expected when your Trustee presented your proposal to them, you should see this a positive rather than as a negative.

 

Category: Tags: asked March 10, 2018

1 Answer

0
Hi Dana, Your Trustee is correct - your consumer proposal of $13,000 was what your creditors had agreed to when your Trustee presented it to them. This is a fixed amount irrespective of what happened with your refund. In a perfect world, this is what would have happened before you actually filed your consumer proposal:
  1. You were able to hold off your creditors from harassing you or garnishing your bank accounts and wages until you filed your 2017 tax return in early 2018 and had it assessed by CRA
  2. CRA would set off the $4,000 refund against the $5,000 you owed them, leaving a net balance owing to them of $1,000
  3. Since you owe $4,000 less to your creditors than before your filed your tax return, you could have made a proposal that was less than the $13,000 proposal you actually made.
This is simply unrealistic: I'm assuming that there was some urgency for to file your proposal back in 2017 because you were being harassed by your creditors. Also, there's no way your Trustee could have known back in 2017 that you'd be getting a refund this tax season. And had you not filed a consumer proposal until you filed your 2017 tax return (which I'm assuming you did recently), CRA still would have kept the $4,000 refund and set it off against the $5,000 you owed. You wouldn't have received the refund money anyways because CRA has the legal right of offset. Neither you or your Trustee had any control over this outcome. So if your creditors will end up receiving more money than they initially expected when your Trustee presented your proposal to them, you should see this a positive rather than as a negative.