How to Stop Wage Garnishment in Canada

Stopping a Wage Garnishment in Canada

Michael works in a manufacturing facility.

His wife stays home with their three-year-old son.

Michael takes home $2,175 every two weeks – that’s his take-home salary after tax cuts.

Unfortunately, Michael has a couple of credit cards that he hasn’t paid.

One evening, Michael’s boss calls him into his office to explain that the company had received a Garnishment Order from one of the credit card companies.

So instead of receiving his usual $2,175 salary, he would receive in $1,522.50.

The rest would be paid directly to the credit card company.

Michael and his family have to live on a 30% salary cut until his credit card is paid in full.

Wage Garnishment can cause difficulties, but you can do something to stop wage garnishment in Canada.

Here’s a look at what wage garnishment is, and how you can avoid it.

What is wage garnishment?

Wage garnishment is a legal court order that allows creditors who are owed money by an individual to seize a percentage of that individual’s income until the money owed is paid back in full.

A wage garnishment court order can be obtained for not paying your taxes, debts, or child support.

The Canada Revenue Agency (CRA) can garnishee your wages or take funds directly from your bank account without the need to sue you first.

Even payday loan companies and credit card unions can garnish your wages if you have signed a ‘voluntary wage assignment’ that permits them to garnish your wages until all your loans are paid in full.

How to stop wage garnishment in Canada

Garnishing wages is a prevalent practice among creditors.

The good news is that it does not matter if your creditor is threatening to garnish your wages or has set a date to serve a garnishment order to your employer – you can still stop garnishment of your salary.

1. Quit your job.

With no job, you have no income that can be garnished.

However, this is a short-term solution.

You cannot outrun a debt forever, by simply quitting your job.

Quitting your job will not help you outsmart the system.

You would have to find a job eventually, and your lenders will ensure they get their money back.

Consider quitting your job only if you do not rely on your salary and can continue to afford your everyday expenses without a job.

For most people, this is not possible.

However, there are other options.

2. Negotiate your repayment terms with your creditor

Don’t wait until the last minute to negotiate terms of repayment with your creditor.

Most creditors are reluctant to withdraw a wage garnishment order until they receive their money.

Approach your creditors before they get a wage garnishment order against you, and find out about alternative payment options.

While some creditors won’t be willing to talk to you until you are well past due, others are concerned about your situation and are eager to help.

Some alternatives that can be negotiated with your creditor include:


  • Making no period for a specified period.
  • Making partial payments for a specified period.
  • Reducing the interest rate.
  • Paying interest only for a specified period.
  • Offering to make a settlement payment of a lesser amount than what is owed.


3. Obtain a loan to pay off your debt in full.

If your creditor threatens to garnish your wages, you can obtain a personal loan to pay off your debts.

Do that as soon as possible – don’t wait until your creditor goes to court and gets a wage garnishment order against you.

You should be able to get a personal loan to pay off your debts – even if you have the garnishment on your credit report.

This way, you can pay off your debts in a lump sum, get quick and immediate relief, and avoid the stress associated with a prolonged series of payments.

If you find it hard to obtain a personal loan because of the garnishment order on your financial records, consider borrowing money from a family member.

But remember that no matter who give you credit, it is given to you in good faith, and you must repay it on time.

4. File a consumer proposal

If your employer has been served a wage garnishment order against you, a consumer proposal plan can provide relief from wage garnishment.

A consumer proposal is a legally binding arrangement that is negotiated with your creditors via a Licensed Insolvency Trustee (LIT).

This proposal is the only debt settlement program that has been sanctioned by the Canadian Government.


When you file a consumer proposal:


  • Most wage garnishments are stopped immediately.
  • Interest stops accumulating from the date you submit the proposal.
  • Collection companies/creditors cannot contact you for payment.
  • Your assets will not vest immediately with the LIT.
  • You offer a settlement where you pay only a part of the debt.
  • You have a maximum repayment time of five years.


A debt proposal can provide you with immediate protection from:


  • Credit card debts
  • Bank loans
  • Payday loans
  • Tax debts
  • Some types of student loan debts.
  • Declare Bankruptcy


Your final choice to stop wage garnishment is to file for personal bankruptcy.

As harsh as this sounds, filing for personal bankruptcy gives you a chance to start fresh.

When you file for bankruptcy, you surrender every that you own to a LIT or Licensed Insolvency Trustee, in exchange for eliminating all your debts.

Different provinces have different bankruptcy rules.

Here are some points to consider before filing for personal bankruptcy.

You can file bankruptcy if you owe a minimum of $1,000 and if you cannot meet your debts as and when they must be paid.

You are entitled to an automatic discharge from a state of personal bankruptcy in nine months.

However, you must remember that filing for bankruptcy can affect your ability to obtain credit once you are discharged, as the bankruptcy will remain on your credit report for a long time.

Bankruptcy takes care of unsecured debts such as credit cards, income tax, personal loans, and overdrafts.

Some unsecured loans, such as some student loans, alimony, and child support, are not discharged.

Some secured loans cannot be erased – such as car loans and mortgages.


You will have enough time to think about the repayment of your loans.

Your creditor would have sent you notices, letters, and even tried to call you or send you emails regarding your delayed payments.

So, you will have time to realize that a wage garnishment notice is in order.

Instead of waiting until your employer is served with a wage garnishment order against you, take measures to stop it.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

Need a Licensed Insolvency Trustee?

Licensed Insolvency Trustees Near Me

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