Manage CRA Debt with a Consumer Proposal in 2025

If the CRA keeps sending letters you’re too stressed to open — or you’re losing sleep over tax debt — you’re not alone.

Owing money to Canada Revenue Agency (CRA) can feel overwhelming, but here’s the good news: you have options.

The sooner you deal with your CRA debt, the better. Ignoring it can lead to frozen bank accounts, wage garnishments, or worse. But with the right plan — like a consumer proposal as your CRA debt solution — you can reduce what you owe, stop collections, and finally breathe easier.

Wondering “Can you do a consumer proposal when you have CRA debt that you owe?” or “Does CRA accept consumer proposal offers?” We’ll walk you through everything you need to know — and how to get the relief you deserve.

How CRA Manages Tax Debt

CRA is in charge of collecting a wide range of taxes — like income tax, GST/HST, and payroll deductions. If you fall behind, they won’t ignore it.

While they might start by offering a payment plan, CRA can take more serious steps like garnishing your wages or freezing your bank account if things go unpaid.

However, when tax debt gets overwhelming, exploring a CRA debt relief option (like a consumer proposal) could help stop these actions and set you on a better path.

CRA Debt Collection Actions to Know

CRA is serious about collecting unpaid taxes. If you’re behind on your income tax or other CRA debt, here’s what might happen:

• Your bank accounts can be frozen
• Your wages can be garnished
• Your assets (like your car or even your house) can be seized or have liens placed on them.

If you’ve received a CRA notice, try to respond within 30 days to avoid legal escalation. And remember, if the stress is getting too high, a consumer proposal or CRA debt plan with a Licensed Insolvency Trustee (LIT) can stop collection actions right away.

What Debts Does CRA Collect in 2025?

CRA doesn’t just chase you for unpaid income taxes. In 2025, they also collect on things like overdue GST/HST, payroll deductions (if you’re a business owner), and even certain government penalties. If you fall behind, they won’t hesitate to take action.

That’s why it helps to know your options early—like using a consumer proposal for CRA debt—to get ahead of the stress and regain control of your finances and tax obligations.

Can You Negotiate with CRA Directly?

Yes, you can! If you’re up for it, you can talk to CRA on your own. You’ll need to share info about your income, expenses, assets, and debts so they can figure out if a payment plan makes sense.

You can upload documents, check your balance, and message CRA through their My Account portal. It’s a solid option if your situation isn’t too complex and you’re comfortable managing everything yourself.

CRA Payment Plans and Settlements

If paying your debt all at once isn’t realistic, CRA can offer monthly payment plans. They’ll ask you to fill out a worksheet to figure out what you can afford, then set up a plan based on that.

Just know this: if you miss a payment or pay less than you agreed to, CRA can start collections again. So if this process feels overwhelming — or if you know you can’t repay the full amount — filing a consumer proposal for your CRA debt may be the better path. It can lower the total amount of debt you owe and pause collections immediately.

What is CRA’s Voluntary Disclosures Program?

The Voluntary Disclosures Program (VDP) is for people who made a mistake on their taxes or didn’t file everything properly — and want to fix it before CRA finds out.

If you apply before CRA contacts you, you could get relief from penalties or some of the interest. But heads up: it won’t erase the full tax debt.

To qualify, you need to include all the missing forms, be at least a year overdue, and send in the full picture, not just a few details.

As of 2025, you can submit your VDP application online, which makes the process a lot smoother. But if your tax debt is just too high to handle, a consumer proposal to deal with CRA debt might still be the better long-term option.

What is a Consumer Proposal that settles CRA debt?

Think of a consumer proposal as a reset button for your finances. It’s a legally binding agreement — set up with a Licensed Insolvency Trustee (LIT) — that lets you repay only part of your debt (including CRA tax debt), interest-free, over up to five years.

And the moment it’s filed? CRA has to stop all collection activity. That means no more wage garnishments, frozen bank accounts, or stressful phone calls/letters. Now you just have to manage one monthly payment you can afford, which is often way less than the full amount owed.

Some people cut their debt by up to 80%.

Worried that CRA won’t go for it? Don’t be. If your offer is fair and realistic, they’re likely to approve it.

How CRA Handles Consumer Proposals in 2025

As soon as your Licensed Insolvency Trustee submits the proposal, everything goes on hold. No more threatening letters or frozen accounts. CRA usually reviews proposals within 10 to 45 days after it is filed — and your LIT manages all the back-and-forth communications. We will keep you fully informed and updated though.

That means less stress for you and a lot more breathing room.

CRA’s Role in Consumer Proposal Negotiations

Since CRA is often your biggest creditor, they get a major say in whether your proposal is approved. They’ll look at your income, your assets, and your tax history.

If they think the offer is fair, they’ll say yes. If not, they might ask for more. That’s why it’s so important to work with a Licensed Insolvency Trustee who’s experienced with CRA-driven consumer proposal cases — they’ll know how to build a plan thatCRA is more likely to accept.

Tips for Navigating CRA Negotiations in 2025

Don’t leave anything out, CRA has access to a lot of your financial information already, so honesty goes a long way.

Don’t try to do this alone! Having a Licensed Insolvency Trustee on your side can make a huge difference in how your proposal is received.

And don’t wait too long — if CRA is already sending collection notices, now’s the time to act.

Farber’s Solution for CRA Debt

At Farber, we get how scary CRA debt can feel. You don’t have to face it alone. We’ve helped more than 200,000 Canadians since 1979, dealing with everything from tax debt to wage garnishments to mounting bills.

Our LITs know how to work with CRA and put together consumer proposal plans that give you real breathing room. We’ll handle the full process (yes, from start to finish) and support you every step of the way.

Book your free consultation today, and let’s figure out what works for you.