Most of the time, when it happens to you, you’re stunned and then become motivated to find an answer before any more financial damage occurs.
There’s almost no one who can afford to have their wages garnished.
Once it happens to you and the legal garnishment process commences, it may take forever to get your paycheque back to where it’s supposed to be.
How do you get your paycheque back so you can pay your bills?
The good news is there are steps you can take that will stop wage garnishment in its tracks.
The bad news is sometimes people don’t move forward with options available to them because they’re so upset or can’t think straight.
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The definition of wage garnishment is that it’s a court order that’s issued that requires your employer to withhold a portion of your paycheck and send it directly to a creditor you owe.
In summary, that means your paycheck continues to be garnished until you pay off the creditor or resolve your creditor issues in another legal way.
It doesn’t matter if you use the word garnish or garnishee, because what they both end up meaning is the same thing.
Many times the money owed to a creditor comes to them through the process of legal garnishment documents.
There are times when the only way to stop the garnishment of your wages is to file for bankruptcy.
Filing for bankruptcy is a viable option when you need to stop wage garnishment because it’s a legal process that supersedes any legal garnishment orders.
If you’ve already received a garnishment order, your creditor has already used the courts to obtain a judgment against you for the amount you owe them.
Finding a way that also uses the courts to hold your creditor off while you get your finances in order through bankruptcy and reorganizing your debt is a good strategic move.
Legal Ways Your Wages are Garnished
There are two ways a creditor can obtain a garnishment order against you.
There are a pre-judgment and post-judgment garnishment.
The pre-judgment means the creditor can attach your assets that include your property and bank account before they even obtain a court order.
The post-judgment garnishment means the creditor can only attach your assets after they win their case in front of the judge.
It’s only the post-judgment orders that apply to wages being garnished.
A court order isn’t necessary for the enforcement of wage garnishment is if you owe unpaid taxes, alimony, or child support to the Canada Revenue Agency.
A court order isn’t necessary if you’ve assigned your wage to a credit union as collateral for a loan or credit contract.
In all other cases, there are steps your creditor went through to garnish your wages legally.
The creditor went to court to seek a legal order that allows them to take a part of your pay and put it towards what you owe them.
Your creditor did that by filing a lawsuit against you for which you were notified.
The creditor was then able to obtain a legal judgment against you, and they filed a separate application to obtain what’s called a garnishment.
The garnishment demands the money be paid to the court, and the court sends it to the creditor.
The exception to this rule is if you have a credit union because they can assign your wages to a creditor or if you’re part of the Canada Revenue Agency (CRA), who can garnish your wages with no court order.
How to Stop Wage Garnishment
In Canada, there are a few ways you can try to stop wage garnishment.
You might be able to negotiate a voluntary repayment plan with your creditor, and if you abide by its term of the agreement, they may never have to garnish your wages.
It is also possible to go to court and request the court take into account that the amount of garnished wages that are given to your creditor is causing you undue financial hardship.
You can quit your job, which means your wage garnishment stops then and there.
But that’s a bit like cutting off your nose to spite your face because now you have no income coming in at all.
You might consider moving to New Brunswick, which doesn’t legally allow wage garnishments.
You always have the option to move to another country and leave Canada.
This probably ensures your wages won’t be garnished at least until they locate you.
Sometimes people don’t leave Canada, but they do move to another province where there are provincial exemptions from wage garnishments that are more favourable.
Finally, there’s a complete answer and one that’s the simplest for starting over.
Candian law regulates how much a creditor can take from your wages each payday.
That amount does sometimes depend on the province.
The range generally accepted by creditors and the court generally ranges from about fifteen to thirty percent of your wages.
Each province in Canada is different, so each province is in charge of determining if the fifteen to thirty percent garnishee amount is based on your net or gross pay.
If your creditor is the Canada Revenue Agency or back child support or alimony order, the amount of garnishment may exceed fifteen to thirty percent of your wages.
Canadian law allows you to ask the register of the court or the judge to reduce the percentage being garnished from your earnings if it’s causing you financial hardship.
You can even ask to be released from the garnishment entirely and try to come up with an installment payment plan the court approves.
If you do ask the court to approve a payment plan with a creditor, you have to have a separate court hearing where the judge evaluates your financial situation and determines what payments work within your budget best.
Negotiating with Your Creditor
If you try to enter into a voluntary settlement with your creditor, that can head off the wage garnishment option if it works.
Sometimes creditors will take a lump-sum one-time payment or accept a series of pre-dated cheques equaling the amount you owe them.
If your creditor is interested in these options, you can sometimes have them lift the garnishment of your wages while you try to pay down your debt to them.
Creditors will often consider this settlement offers in place of the garnishment of wages because it allows them to get their money back quicker.
The creditor will often take a hit of getting less money than they would have gotten through wage garnishment.
But creditors realize it’s money in their bank account now rather than later.
If you do negotiate with your creditor and they agree to any restitution instead of proceeding with your wage garnishment, you must get their agreement in a written document.
Give the written document to the court for the record to protect your financial interest in this case.
The One Lump Sum Settlement Offer
Remember, different provinces have different garnishment percentage amount limits, so that has to be taken into consideration when making a one lump sum settlement offer.
British Columbia creditors can garnish thirty percent of your wages.
In Ontario, creditors can only get twenty percent of your wages unless it’s child support.
If you owe child support in Ontario, the courts can garnish fifty percent of your wages.
Since you already know from the information above, you can offer a lump sum settlement you want to make it one that will stop garnishment proceedings.
You can offer less than what you owe in a lump-sum settlement offer.
For instance, you may owe $20,000 to your creditor, so you offer them a lump sum offer of $15,000.
The creditor may say no and counter with another amount they’ll accept like $17,500.
Then it’s up to you to decide if this full and final settlement offer is worth taking so you can satisfy the judgment and get your garnishment notice lifted.
Moving Options and Choices That Help End the Garnishment of Your Wages
There’s no doubt you can end your wage garnishment at your current employer by quitting your job.
If you think you can find another job easily for around the same amount of money, this might be a viable choice.
Most of the time, it’s not as effective as it sounds.
That’s because eventually, your creditor may locate you once again at your new job, and the garnishment process begins again.
Moving to New Brunswick is always a viable option because wage garnishments aren’t permitted.
Again, a significant factor to take into account before you make this decision is knowing you’ll be able to find work once you get there.
Moving to another country is a big deal, and doing it to avoid having your wages garnished needs to be considered very carefully before proceeding.
It’s true that most collection agents and creditors don’t want to spend the time or money tracking you down to a new country to garnish your wages.
But do you have a job, friends or family where you’re moving to or can you find a job once you get there?
Best Case and Worst Case for High-Income Earners and Wage Garnishment
If you’re a high-income earner, you may want to make friends with some provinces that have favourable exemptions when it comes to dealing with wage garnishment percentages.
- Ontario – eighty percent of your net wages are exempt from any wage garnishment
- Quebec, British Columbia, and Manitoba – seventy percent of your wages are exempt from any wage garnishment
- Nova Scotia – eighty-five percent of your net wages are exempt from wage garnishment
That being said, if you move to Alberta, fifty percent of your wages can be garnished, so you might want to think these options over carefully before relocating.
Four Categories of Provincial Exemptions From Wage Garnishment
Provinces in Canada can have their percentages and legal exemptions when it comes to wage garnishment.
In general, we’ve gone over a few of those in the above information.
But it’s essential to know some category breakdowns on wage garnishment exemptions.
#1 Net Wage Percentage that’s Exempt from Wage Garnishment
Ontario doesn’t have a minimum dollar amount, which is exempt from wage garnishment to protect low-income earners.
Still, wage garnishment is based on eighty percent of the debtor’s net wages being exempt from wage garnishment.
#2 Low-Income Earners are Protected From Wage Garnishment in Some Provinces
Alberta, Saskatchewan, Newfoundland, and Labrador provide wage garnishment low-income shields to help protect low-income earners.
But if you’re a middle of the road income earner or high-income earner there’s no wage garnishment relief offered.
Several provinces have wage garnishment calculated based on a percentage of the debtor’s wage but take into consideration if they need a low-income shied.
The provinces are Manitoba, Nova Scotia, and Quebec.
#4 Prince Edward Island
In Prince Edward Island, a court official decides the wage garnishment amount after they meet with and interview the judgment debtor.
Your Next Step in Stopping a Wage Garnishment
The next step you take maybe your most important one in determining how best to handle an ongoing or new wage garnishment issue.
Stop your wage garnishment today with a bankruptcy or consumer proposal by meeting with a Trustee for free, so your future is a chance to start over.