If you’ve reached the point where you are ignoring calls or letters from collection agencies, you’re likely feeling the emotional effects of your debt, such as stress, anxiety or feelings of helplessness. But did you know there can be other personal and legal ramifications of ignoring collection calls as well?
If you don’t pay your debts, taxes or child support, your creditors can take your case to court to obtain a wage garnishment. This order can force your employer to send up to 20% of your wages to your creditors to repay your debts (50% for child support). For many people, this is embarrassing and often damages their reputation at work.
People often refer to this action as having their wages “garnished”, but the correct legal term is a garnishee or garnishment.
How Wage Garnishments Work
In order to garnishee your wages in the Province of Ontario, your creditor must take you to court, sue you and obtain a garnishment order. The order must validate that the debt is indeed yours, and that you are obligated to pay it.
There are exceptions to this including a Credit Union that you have given an assignment of wages to, a payday loan company where you have signed a voluntary wage assignment, or the Canada Revenue Agency, which can begin wage garnishing without obtaining a court order.
What are My Options To Stop A Wage Garnishment?
You can stop a garnishment order, even if your wages are already being garnished. You can consider the following options:
- If they order has not yet been made, you can try to make a repayment deal by negotiating with your creditors. You can even call the creditor or their lawyer and offer to make a settlement.
- File a consumer proposal. This solution can stop garnishments that have been obtained by banks, credit card companies, Canada Revenue Agency, payday loan companies and more. However, it cannot stop garnishment for child our spousal support.
- Your last resort would be to consider personal bankruptcy, which in most cases will immediately stop all wage garnishments. It will not stop garnishment for child our spousal support.
What are My Rights?
According to the Ontario Wages Act, the maximum a creditor can garnishee is 20% of your pay and up to 50% for child support. The court will decide how much is taken from your paycheque based on your personal financial situation and other garnishments that may currently be in effect.
Keep in mind that your employer cannot terminate you or demote you if they are given a garnishing order for your wages.
The only way you can stop a wage garnishment on your own is to wait until your debt is paid off via the garnishee, or if your creditor agrees to stop it. However, if one of your creditors has gone through the effort of garnisheeing your wages, they are unlikely to halt the garnishment if you offer to repay your debt. This is because they usually only garnishee people who have a history of non-payment, or whom they believe will not pay for some reason.
Remember, the longer you wait to deal with your wage garnishment, the more money you will lose from each of your paycheques. If you work with a consumer proposal and bankruptcy professional like Hoyes, Michalos & Associates, we can often have a court order sent to your employer to stop wage garnishment within a few hours. If you’ve chosen to file bankruptcy, you will have to provide proof to your employer that you are bankrupt to halt wage garnishment.
If you’ve found yourself threated with a wage garnishment, or are already being garnisheed, call or email us immediately to start talking about your options.