Paying Off CRA Debt

Occasionally, we have dealt with homeowners who have found themselves in a predicament with CRA. I have seen outstanding balances as low as $40,000 and as high as 200k. In each case, the debtor owed money elsewhere as well, whether credit cards or lines of credit.

This often happens to small business owners or those self-employed as a sole proprietor. Sometimes, you may access to pay this debt off from a line of credit buy many times it is not an option.

If you own a home and have some decent equity, we can access that equity to provide a solution to pay the CRA debt off

Ways Home Equity can be used to pay CRA arrears

Keep in mind, when there is a CRA debt, very few traditional lenders want to complete a mortgage refinance before the debt is paid off. In such a predicament, there are a few options that can be used to make it work.

If you already have a Home Equity Line of Credit (HELOC), and you have room left to just pay CRA, write them a cheque and it’s all taken care of. You then just need to focus on reducing the balance on your HELOC.

If you have a family member you could borrow the money from to pay the CRA debt off, then we could look at setting up a HELOC which could be used to pay back your family.

We can look at arranging a private second mortgage, pay off the CRA debt, then look at refinancing your home to pay off the existing first and private second into one new mortgage at a much lower interest rate.

Refinance your home with a new first mortgage with a “B- lender” (alternative lender). The new mortgage amount would need to be high enough to clear your existing mortgage balance plus what is owed to CRA and all the fees.

The right solution would clearly depend on the circumstances of each situation. We are trained to find solutions to eliminate debt whether CRA or other. The benefit of owning your own homes gives you more options available to rectify the situation. The most important aspect is having enough equity in your property to provide a solution.

The key is to deal with the issue ASAP. This situation will not work itself out and CRA will not just give up and go away. If you are struggling with CRA debt or any other debt or know someone who is, let them know, they have options. We just need to work on finding the perfect solution to make the repayment as simple and stress-free as possible.