Wage Garnishment Advice in Canada
When you’re unable to pay your bills, your creditor may seek to garnish your wages.
Wage garnishment is a court proceeding that lets them take the money you owe directly from your paycheque.
When you’re already struggling to make ends meet, this measure can make your financial situation even more dire.
Below is a list of 5 facts about wage garnishment in Canada.
They explain what the process consists of, how much can be garnished, and what you can do to stop it.
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Your Creditor Usually Needs A Court Order First
None of your creditors, from Visa to Telus, can automatically seize a percentage of your income because you’ve missed payments.
If it appears that you can’t voluntarily pay off the debt, a creditor can seek a judgment and writ of seizure that gives them the authority to seize your assets.
If you don’t own a home or motor vehicle with sufficient equity left in it to pay the debt, they can approach your employer to garnish your wages.
There Are Exceptions To The Court Order Requirement
There are certain conditions that don’t require a creditor to get a court order before garnishing your wages.
- If you owe back taxes, the Canada Revenue Agency can commence wage garnishment without getting a judgment against you first.
- Credit unions typically ask borrowers to sign an agreement that includes an assignment of wages. This means that you agree to have the debt deducted from your wages without the institution having to take you to court.
- A court order is not mandated if your wages are being garnished for child support or student loans arrears.
There Are Provincial Limits On How Much Can Be Garnished
How much can be taken from your wages depends on which province you live in.
- In British Columbia, creditors can garnish 30% of your wages.
- For Ontario, creditors can garnish up to 20% of your wages unless you owe child support, in which case the limit is 50%.
- In Alberta, your creditors cannot garnish the first $800 of your paycheque. Anything between $800 and $2400 can be garnished at 50% and anything over $2400 can be seized completely. There is an exemption of $200 for each dependent, so if you have one child, the first $1000 ($800+$200) is safe.
No matter how much is actually taken, wage garnishment can be extremely humiliating and damage your reputation at work.
Provincial Exemptions Don’t Always Apply
The provincial exemptions referenced above don’t apply to all kinds of debt.
If you are employed and owe money to the CRA, it can claim 50% of your wages.
Self-employed individuals can lose up to 100% of their income when they owe money, although most creditors tend to accept a more reasonable amount to prevent job switching.
Bankruptcy Can Stop Wage Garnishment
Filing for bankruptcy will immediately stop a wage garnishment order, even if it is already in progress; the sole exceptions are orders for unpaid spousal or child support.
Although bankruptcy should always be looked at as one of your last options, it can be the best solution given your financial circumstances.
Visiting a licensed trustee in bankruptcy can help you determine whether it is right for you.
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