Wage garnishment in BC, also known as wage assignment, attachment, or garnishee, is a legal procedure often employed by creditors to recover debts. This method involves the seizure of a portion of the debtor’s income following a court order. This guide provides detailed insights into the process, instances when wage garnishment is applicable, parties involved, and options available to individuals facing wage garnishment.
Understanding Wage Garnishment in BC
Wage garnishment is a legal mechanism that enables creditors to collect a debt by seizing a portion of the debtor’s income. This procedure is initiated after obtaining a court order, effectively directing a third party, typically the debtor’s employer, to remit a portion of the debtor’s earnings to the creditor.
Who Can Initiate Wage Garnishment?
Wage garnishment can be initiated by a range of creditors, provided they adhere to the necessary legal processes. These could include:
- An individual to whom money is owed.
- Consumer creditors such as banks, credit card companies, and collection agencies.
- Government agencies like the Canada Revenue Agency (CRA) and Family Maintenance Enforcement Program (FMEP).
Process of Starting a Wage Garnishment
For most creditors, initiating wage garnishment involves a legal process that usually takes time. The process involves the following steps:
- The creditor obtains a court judgment, known as a payment order, validating the debt owed by the debtor.
- After securing the judgment, the creditor seeks a garnishing order, directing a third party (usually the debtor’s employer) to remit payments to the creditor.
- On receipt of the garnishing order, the debtor’s employer withholds funds from the debtor’s paycheque and remits it to the court.
- The creditor then applies to the court to receive the withheld funds.
This process may differ slightly for self-employed individuals, where the garnishing order notice is directed to the individual’s client instead of an employer.
Payment Hearings
Before initiating wage garnishment, a creditor may apply for a payment hearing. This court proceeding allows both the creditor and debtor to present their case, after which the court issues an order detailing payment terms.
Exceptions to Court Order Requirements for Wage Garnishment
The CRA and other government agencies have the power to issue a “requirement to pay” under several Canadian statutes, bypassing the need for a court order. In such cases, the CRA can send a requirement to pay notice directly to the debtor’s employer or client (if self-employed).
Extent of Income That Can Be Garnished
The portion of income that a creditor can garnish varies by province. In BC, up to 30% of the debtor’s net income may be garnished. However, this limit does not apply to CRA or FMEP, and up to 100% of income from self-employment can be garnished.
Additional Costs Incurred by the Debtor
A garnishing order may permit the creditor to recover additional costs such as court filing fees, serving orders, and swearing affidavits, thereby increasing the amount owed by the debtor.
Alternative Forms of Garnishments
Aside from wage garnishment, creditors can also recover debts by seizing money from:
- Bank accounts.
- GST/HST credits.
- Investment proceeds.
- Rent or lease payments.
- Insurance claim proceeds.
Stopping Wage Garnishment
If faced with wage garnishment, individuals have a few options to stop the process:
- Apply to court to have the garnishing order set aside or request the registrar to increase the amount of exempted wages.
- Negotiate a payment schedule with the creditor.
- File a Consumer Proposal or declare bankruptcy.
In conclusion, understanding the process, implications, and solutions to wage garnishment in BC is crucial for individuals facing potential wage garnishment. It is advisable to seek professional advice from a Licensed Insolvency Trustee to explore the best options based on the individual’s specific circumstances.
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