Wage Garnishments

Are you currently having your wages seized or has a creditor threatened to garnishee your wages? We can help!

If you have defaulted on a loan payment or have outstanding debt, a creditor may take legal action to obtain a judgement against you for the funds owed. If the creditor is successful, the Court may issue a writ of seizure resulting in a wage garnishment. If you are employed, your employer must withhold funds from your paycheque in compliance with the wage garnishment and direct the seized funds to the Court, which will direct the money to the judgement creditor. To make matters worse, interest will continue to accumulate on the debt, despite the fact that your wages are being garnisheed!

As a rule of thumb, the following percentages can be garnisheed from your wages:

  1. Under the Wages Act, a regular creditor can garnish your wages up to twenty percent (20%) of your gross income. If multiple regular creditors each have a garnishment against your wages, they must all share in the same twenty percent. Creditors are not entitled to twenty percent each.
  2. There are some exceptions:
    • Unpaid spousal or child support can result in a garnishment of up to fifty percent (50%) of your gross income. However, if you have a support order and a regular creditor has a judgement against you, the maximum that can be garnished remains at fifty percent (50%).
    • The Wages Act does not bind the Canada Revenue Agency, which can seize thirty percent (30%) or more of your monthly income. The Canada Revenue Agency also has the power to seize your pension funds as a right of offset.

What options do I have if I receive a notice that my wages will be garnisheed?

  1. Allow your employer to take the prescribed amount from each paycheque you receive to pay the creditor slowly. In this scenario, interest will continue to accrue on the debt and the garnishment of your paycheques will continue until the judgement creditor is paid in full.
  2. Borrow money to pay the creditor who is garnishing your wages in full. However, if you are already having your wages seized, it is unlikely you would meet the criteria set by a new lender.
  3. Under the Bankruptcy and Insolvency Act, filing a consumer proposal will stop a garnishment immediately with few exceptions. Filing a consumer proposal will also stop the interest on your debts. A proposal may allow you to compromise the amount of debt you owe and provide you with an extension of time to pay the debt. Once accepted, a consumer proposal is binding on all of your unsecured creditors and you make one monthly payment to the Licensed Insolvency Trustee. In this way, a consumer proposal can help alleviate your wage garnishment issues and financial stress.
  4. Under the Bankruptcy and Insolvency Act, a bankruptcy filing will stop a garnishment immediately, with few exceptions, and it immediately terminates the obligation to pay most creditors.

To deal with the ongoing stress of a wage garnishment, it is best to seek the guidance and advice of a Licensed Insolvency Trustee. A bankruptcy filing or a consumer proposal will stop wage garnishments with few exceptions. A Licensed Insolvency Trustee will apply experience and knowledge of the Bankruptcy and Insolvency Act legislation to assess your situation and provide you with options to allow you a fresh start.

If you need immediate relief from wage garnishments, call us today. Our associates will listen to you, review options with you, and explain to you how we can help protect you from most ongoing or impending garnishment of your wages.

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