Wage garnishment

Wage garnishment

Since last week’s post, we’ve been contacted by people willing to know more about wage garnishment. We’ve decided to dedicate this post to the topic of garnishment in Canada when it comes to your wages.

As we stated on the last post, wage garnishment 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.

What are the steps into garnishment?
Just because a creditor is allowed to get money they’re owed, it doesn’t mean that this creditor can simply start garnishing your wages. In order to do so, the creditor must obtain a judgement from the court – this will recognize the fact that the creditor has a claim against the debtor. Once this recognition is granted, the creditor must also be granted a seizure summons which will give the creditor the ability to look for assets to seize. There are provincial and federal laws to dictate what types of assets can be seized and the percentage of income that be garnished. For example, creditors cannot seize a line of credit because there is no actual cash to take, but they can seize cash directly from your bank account. If the debtor possesses no physical assets for the creditor to legally seize, then the creditor can inform the debtor’s employer with a notice of seizure and start garnishing the wages. This will continue until the debt has been paid off.

Wage garnishment and the self-employed
If you are self-employed, you could have up to 100% of your income garnished. Since the rules for this process apply to wages, as a self-employed person you technically don’t earn a wage. However, most creditors won’t do this, and in order to garnish the income of a self-employed person, a creditor must serve one of their clients.

How can I stop wage garnishment?
If you are in this situation, you can try contacting your creditor to negotiate a new payment plan and ask them to remove the garnishee if they are in the process of doing so. You can also try to apply for a personal loan in order to pay off the creditor or consider a consumer proposal or personal bankruptcy (see post on this). A consumer proposal or bankruptcy will immediately protect you from your creditors, but will also have a great impact on your credit.

If you are currently having your wages garnished, speak to us. We will provide you with the information you need and possible solutions.