A big part of your pay cheque has just been garnisheed to pay the government for unpaid taxes, child support, or your debts. What do you do?
How to Stop a Wage Garnishment
There are 3 ways to stop a wage garnishment:
A wage garnishment is a legal proceeding and it can only be stopped by either negotiating a repayment plan or through a similar legal process by filing a consumer proposal or bankruptcy. The protection provided by bankruptcy law is called an automatic stay of proceedings. This benefit of a bankruptcy or proposal can only be achieved through the Bankruptcy & Insolvency Act.
What is a Wage Garnishment?
If you don’t pay your debts, taxes, or child support, a creditor can go to court and obtain a wage garnishment. This order forces an employer to send up to 50% of your wages to your creditors to pay unpaid debts. People often refer to this as having their wages garnished. The correct legal term is a garnishee or garnishment. A similar order can be obtained against your bank account.
Any creditor can begin garnishment proceedings against someone for unpaid debts. Collection agencies, Canada Revenue Agency, the Court, credit card companies, payday loan lenders, or any creditor can enforce collection through a wage garnishment.
In order to garnishee your wages in Ontario, a creditor must take you to court, sue you, and obtain a Garnishment Order from the court. The only exceptions would be a Credit Union that you have given an assignment of wages to, or Canada Revenue Agency (Revenue Canada can garnishee your wages without a court order).
How Much Can be Garnished from my Wages?
Under the Ontario Wages Act, the maximum a creditor can garnishee is 50% of your gross wages (earnings before deductions).
Options When Facing a Wage Garnishment
If you are facing a garnishment you need to act now, before you lose part of your next pay. If a creditor has gone to the trouble of garnisheeing your wages, they are not likely to stop the garnishment because you agree to pay – they only garnishee people with a history of not paying, or whom they believe will not pay.
Before your employer receives a garnishee summons you should try to make a deal with your creditor.
If a settlement is not possible, stopping a garnishment with a consumer proposal or personal bankruptcy are your likely options. In virtually all cases a consumer proposal or a personal bankruptcy will stop a wage garnishment. The longer you wait to deal with the wage garnishment, the more of your pay you will lose.
If you are threatened with a wage garnishment, or are currently being garnisheed, we recommend that you call one of our bankruptcy offices in Ontario or e-mail us immediately to determine your options.Get Help Immediately