Understanding wage garnishment in Canada

2022-10-21  3 minute read

Vicky Samuels

Debt Solutions

Imagine yourself working hard to pay off a large sum of debt, but due to misfortune, mistakes, or any other circumstance, you’re falling behind. Your family depends on your income, and you are living paycheque to paycheque barely making ends meet. This situation causes you stress and anxiety, but you’re determined to keep chipping away at your debt a little at a time.

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For many Canadians, this situation is not imagined, it’s a reality.

Now, imagine one day you receive a court order in writing, warning you that your paycheques will start getting smaller in the near future. And not just a little smaller, but cut in half. How would you react? What emotions would this invoke in you?

This written court order is called a garnishee order, and the smaller paycheques are a result of a process called wage garnishment.

What is wage garnishment?

Wage garnishment is a means your creditors can use to compel you to pay down your debts when you are behind on payments. Money is taken directly from your paycheque, before it reaches you, and is sent to the lenders instead.

To kick off the process, your creditor has to obtain authority by the court pursuant to the Civil Enforcement Act to have your employer or bank turn over a portion of your wages. The creditor will often send written warnings before taking this type of legal action, and you will be served with notice and court date.

Wage garnishment is a fairly drastic measure for a lender to take; just obtaining the court order can be time-consuming and costly for them. It’s typically only used as a last resort to collect on debt owed, after less arduous steps fail: for example re-negotiating your debt terms, seizing assets, etc.

Dealing with garnishments

It’s understandable to feel panic when you’ve been served with a garnishee order from a court. Depending on what province you live in, the amount of your wages that will can be garnished is around 30 – 50 percent.

If you’ve experienced wage garnishment and wonder how you will put food on the table or pay bills on time, you are not alone. Especially now, many creditors are no longer deferring payments or working on payment plans with their clients.

One way to stop all legal action from your creditors, including wage garnishments, is to file a Consumer Proposal or Bankruptcy with a Licensed Insolvency Trustee (LIT). Once you sign the documents, a stay of proceedings is immediately in place which prevents the creditors from garnishing your wages. This process covers all kinds of debt, including tax debt.

How MNP can help

LITs are the only professionals in Canada legally authorized to administer the Proposal or Bankruptcy process, and can provide a lifeline when you are in over your head in debt. In addition to having the protection from your creditors, you will have some relief from your debt and a plan to move forward with a fresh start.

MNP is home to some of Canada’s most experienced LITs, who will help you gain peace of mind. The initial consultation with an LIT is free of charge and free of judgment

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