What are my Options if My Wages Are Garnished?

Having wages garnished can have a very negative impact on a person and their family.

A garnishment can be especially hard if you open your paycheque and it is much smaller than you expected.

Having wages garnisheed can come at any time, and depending on the province you live in, a significant part of your wages can be garnished.

If your employer receives a garnishment order from the court, they are forced to abide by such orders, and withhold a certain percentage or amount of your paycheque.

Fortunately, you have options if you have had your wages garnisheed.

If you are confused and unsure of what to do next, please read on to learn more about your options for stopping a garnishment of your wages.

You have a number of options of options if your wages have been garnished by your creditors:

• Negotiate a debt settlement with your unsecured creditors. You will have to wait 6 months from your last payment on an unsecured debt before a creditor will consider a debt settlement;
• You can go to court to attempt to have the wage garnishment reduced based on a financial hardship application;
• Quit your job;
• Move to New Brunswick, which doesn’t allow wage garnishments;
• Move to a province with more favorable laws;
• Speak with a LIT (Licensed Insolvency Trustee) for more information on filing bankruptcy;
• Speak with a LIT (Licensed Insolvency Trustee) for more information on making a consumer proposal.

Negotiating a Voluntary Settlement With Creditors

When you have had your wages garnisheed by a creditor, you can speak with your creditor garnishing your wages, or all of your unsecured creditors, and attempt to make a voluntary debt settlement.

Your creditors are under no obligation to accept your settlement proposal.

You can offer to make a settlement in a one-time lump sum or you can offer a series of payments over a period of time.

If your creditor agrees to your settlement, you can ask the judgment creditor to lift the garnishment on your wages.

You can often get your creditor to accept a debt settlement if you get them their money faster, even if the creditor would receive more money waiting for the garnishment of your wages to complete.

If you get your judgment creditor – or an agent working in their behalf – you must get written confirmation of the settlement.

Going to Court

If you are facing a garnishment of  your wages, you can go to court and possibly attempt to have the payment reduced based on financial hardship.

You can ask a judge to have the monies taken from your wages reduced.

You must prepare the documents and schedule a court hearing to plead your case.

It is possible to go to court on your own, or you can speak with a lawyer about them assisting you.

Quit Your Job, Which Will Effectively End The Garnishment

If you quit your job you can end a wage garnishment with your current employer.

This can be an effective strategy for some debtors, although this is obviously a more serious option.

If you are used to changing jobs, and can find a new job relatively easy, then this can be a good solution, as it will end the garnishment of your wages.

If your judgment creditor can find your new employer, they can start a new order, although it might take time for the creditor to discover your new employer and set a new garnishment order in place.

You might be able to avoid an outstanding judgment by quitting your job.

Move to New Brunswick

In New Brunswick a wage garnishment is not permitted by law.

If you can arrange to move to New Brunswick, you can avoid paying any monies to your creditors that have a garnishment order against you.

You can also move out of the country, which can make it very challenging for a creditor to collect monies from you.

Move to a province with a favourable exemption on Wage Garnishments

When your wages are being garnished, only a certain percent of your wages may be taken from your paycheque.

The amount of your wages that can be garnished are based on a formula based on the provincial exemption on your wages being garnished in the province your reside in.

The provincial exemptions

Alberta – In Alberta between $800 and $2,400 can be garnished from your wages, depending on the size of the debtor’s monthly income;

BC – A maximum of 30% of your wages can be garnished except the exemption amount cannot be less than $100 for a single person with no dependents or $200 for a person with 1 or more dependents;

Manitoba – A maximum of 30% of your wages can be garnished except the exemption amount cannot be less than $250 for a single person with no dependents or $350 for a person with 1 or more dependents;

New Brunswick – Wage garnishments are not permitted by New Brunswick law;

Newfoundland & Labrador – An employee who has no spouse, co-living partner, or dependents can have $649 garnished from their wages. If the employee has a dependent the garnishment can be a maximum of $963 + $47 for each additional dependent in the family;

An employee with a spouse or co-living partner can have an exemption of up to $1,019; if the debtor has dependents the wage garnishment can be $1,059 plus $47 for each additional dependent;

Nova Scotia – A garnishment can be 15% of a debtor’s wages, although the net wage the employee receives must be at least $450 a week for debtors supporting a family, and $330 a week for other employees;

Ontario – 80% of an employee’s wages are exempt from a wage garnishment;

PEI – The garnishment exemption will be determined by the court, based on the needs of the family and the number of dependents in the employee’s family;

Quebec – If the employee is supporting a spouse, child, or other relative 70% of wages over $180 a week + $30 for each dependent over 2. If the employee is not supporting dependents 70% of wages over $120/week are exempt from a wage garnishment;

Saskatchewan – $500 of wages are exempt, plus $100 for each dependent in the family;

NWT – In the Northwest Territories 70% of an employee’s net wages are exempt, although the exemption amount must be at least $1,000 + $250 for each dependent;

Nunavut – The exemption is $1,500 plus $300 a month for each dependent or 70% of an employee’s net pay up to $3,500 a month plus $300 a month for each dependent, whichever amount is higher;

Yukon – 70% of an employee’s net wages are exempt, although the amount shall not be less than $600 a month, or $1,000 for people with 1 to 3 dependents. If the employee has 4 or more dependents the minimum monthly exemption will increase $150 a month for fourth and each additional dependent.

What if I am a High Income Earner?

If you make a large salary each month, a wage garnishment can take a large amount of monies from your salary.

If you make a large income, there are certain provinces that are more favourable for a high income earner to live.

The provinces that are most advantageous for high income earners are Nova Scotia, Quebec, Ontario, British Columbia, and Manitoba.

The provinces with the least favourable exemptions are Saskatchewan, Newfoundland and Alberta.

In Saskatchewan, for example, a debtor can only exempt $500 of their wages (plus $100 per dependent).

What if I am a Low Income Earner?

If you make a low salary each month, the provinces with the most favourable exemptions are Alberta, the three territories, Nova Scotia and Newfoundland & Labrador.

The provinces with the least favourable exemptions are BC and Ontario.

How is a Wage Garnishment Exemption Calculated?

There are 4 different categories on provincial exemptions in Canada – percentage of net wages, minimum dollar amount of wages available to creditors, hybrid calculations based on percentage of wages, but with a low income earner protection, and in PEI a court will determine the amount paid.

Percentage of Net Wages

The only province that calculates a garnishment on a percentage of your net wages is Ontario.

Under Ontario law, eighty percent of an employee’s wages are protected from a wage garnishment.

Only 20% of an employee’s take home pay in Ontario is available to be garnished.

Ontario law has no protection for a minimum dollar amount to be exempt.

Provinces With Protection for Low Income Wage Earners

Some provinces shield a minimum dollar amount of an employee’s salary available under a wage garnishment.

If you are a low income earner who lives in a province with a low income protection clause, and a judgement creditor gets a garnishment order against you, you might not have any of your paycheque garnisheed, or you might have a nominal amount garnished from your wages.

The provinces which have this law include Alberta, Saskatchewan and Newfoundland.

Hybrid Calculations

Several provinces calculate the garnishment amount based on a hybrid of percentage collected, and low income protection.

The hybrid provinces are Manitoba, Nova Scotia, and Quebec and in these provinces the exemption is calculated on a percentage of wages, after a low-income shield calculation is taken into account.

A percentage of your wages are available for your creditors after a certain minimum dollar amount exemption is taken into consideration.

PEI

If a creditor obtains a wage garnishment against you in Prince Edward Island, a court official will determine the amount you have to pay.

You will be interviewed by the court official.

Should I Move?

In certain cases you might want to consider moving to a province with more favourable rules regarding exemptions.

There are many factors to take into consideration, but in some cases moving to another province, such as New Brunswick can be very advantageous.

If you earn a low income in BC and Ontario, you could be much better off moving to another province.

If you are a high earner living in Alberta, Saskatchewan, or Newfoundland, you might be better off living in a province that exempts a significant percentage of a person’s wages from being garnished.

New Brunswick doesn’t allow any garnishments.

Speaking With a Licensed Insolvency Trustee About Going Bankrupt or Filing a Consumer Proposal With Your Creditors to Stop a Wage Garnishment Order

Finally, you can stop a garnishment of your wages by filing personal bankruptcy or making a consumer proposal to your creditors.

You can schedule a free, no obligation consultation with a government Licensed Insolvency Trustee. You can learn more about stopping a wage garnishment with a bankruptcy filing or a consumer proposal.