Wage Garnishment and debt

Wage Garnishment and debt

As we continue our series of posts about debt and mortgage payments during this pandemic, we decided to talk about the financial support payments that have been introduced by the government of Canada. It is important to understand what CERB is all about as well as wage garnishment.

What is a wage garnishment?
In Canada, it is a legal order from the court which allows a creditor, who is owed money by an individual, to seize a certain percentage of that individual’s income until they are paid back in full. If another party holds the borrower’s wages, the lender can take it directly from that third party. If this garnishment was applied to your wages before losing your job due to covid-19, it is important you know if CERB (Canada Emergency Response Benefit, whose purpose is to provide financial assistance to those who lost income due to the pandemic) is also subjected to a wage garnishment.

Can CERB be garnished?
Generally speaking, no, but we could be looking at some exceptions. You are allowed to keep the full amount of these CERB support payments without them being garnished as they are a means to provide financial assistance to Canadians during the lockdown. For this, the individual should fully benefit from these payments without having to give a percentage to the lender. However, it doesn’t mean you don’t have to make payments. Once you receive the CERB financial support payment (as it is deposited into your account) it is considered cash which is subject to legal right offset from your bank. This is where the exceptions come into play. The CERB money payment can’t be garnished but the creditor may still try to get a payment. You should not allow this as it is there to help you through this difficult time. If you owe your bank money, the bank has the right to seize it once it becomes available on your account.

What you should know about CERB payments
They are not considered income or property if you choose to declare bankruptcy, neither can they be assigned or given as collateral for financing. They are meant to help an individual through the pandemic and can’t be garnished.

Last, but not least, beware of scammers. Do not respond to any communication asking you to make payments or personal information, click on links, or send passwords. Contact us to know more about this.