Putting a Stop to Wage Garnishment in Canada

When your household takes on significant debts, your creditors may take steps to ensure that they take what they’re owed from you.

Whether you’ve been making good on your scheduled repayments or not, creditors can garnish your salary, taking their repayments directly from your monthly pay before you receive it.

This is perfectly legal and very common in Canada.

In fact, the only province in which wage garnishment is not allowed is New Brunswick.

Nonetheless, even if you live in a province that is permissive of wage garnishment, there are ways in which you can put an end to it, and take back control of your debts and your finances.

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What can I do to stop creditors from garnishing my wages?

There a number of things you can do to stop wage garnishment in Canada.

Any of the following may prove effective, depending on your debts, your creditors and your personal circumstances…

Renegotiate repayment terms

It may be that your creditors are amenable to stopping wage garnishment if you’re able to renegotiate repayment terms under a Debt Management Plan.

There are lots of non-profit Credit Counselling services which can help you to set this up.

They may even be able to help you to negotiate better terms so that you pay less in interest.

Consolidate your debts or file with OPD

If your creditors are not amenable to renegotiation, you may be able to buy out your debts with a Debt Consolidation Loan.

This will replace all of your existing debt with a single, manageable monthly repayment which will most likely have a more favourable rate of interest than you were paying previously.

It’s important to remember, however, that Debt Consolidation Loans are still commercial loans and if you have a poor credit history or a lot of outstanding debts you may not quality.

However, if you live in Alberta, Saskatchewan, Prince Edward Island, or Nova Scotia you may be able to get an Orderly Payment of Debts- a consolidation order which can significantly reduce interest rates and make your debts more manageable.

Pay off you creditors with another commercial loan

If you do not live in a province where you can get an OPD and your circumstances prevent you from getting a Debt Consolidation Loan, you may choose to pay off your creditors with another commercial loan.

This is a risky strategy, but if you can find a low-interest product for which you qualify, it might be worth considering to cease wage garnishment and take control of your finances.

File a Consumer Proposal

A Consumer Proposal is an alternative to bankruptcy that can put an immediate stop to wage garnishment and other punitive measures taken by creditors.

What’s more, it can nullify all interest charges and even write off up to 80% of your principal debt.

Although a Consumer Proposal will have a lasting impact on your credit rating, it can help you to get debt-free in as little as 5 years.

File for Bankruptcy

Alternatively, you may find that filing for a Personal Bankruptcy is a more effective way to put an end to wage garnishment and help you to live a life that’s free of debt.

Many Canadians are wary of Bankruptcy, but in many cases it can give them the fresh start that they both need and deserve.

A Licensed Insolvency Trustee can advise you as to whether a Consumer Proposal or Bankruptcy is the best option for you based on your debt, your income, your circumstances and your assets.

Quit your job

This is a very extreme option, but you wouldn’t be the first to consider it.

Your creditors can’t garnish wages that you’re no longer earning.

How does wage garnishment in Canada work?

Creditors can’t just start garnishing your wages when they feel like it.

They need to adhere to a strict procedure before they can put this measure into place.

In order to enact wage garnishment, they must first raise a lawsuit against you and successfully obtain a judgement from the courts.

Once they have this, they need to file a separate application to the court for a garnishment order.

The only exception to this procedure is if you default on government debts like student loans or money owed to the CRA.

Once this order has been obtained, it must be served on your employer or whichever party from whom they are trying to seize funds.

Keep in mind that a garnishment may not necessarily be limited to your employer.

It may be served on your bank, or if you are self-employed it can be served on your clients or anyone else who owes you money, in order to seize your receivables.

Once this party receives the garnishment order they are legally obliged to follow it, unless provincial legislation dictates otherwise.

Funds received from things like employment insurance, social assistance and government pensions cannot be garnished in most provinces.

How much of my wages can my creditors garnish?

If you work for an employer, the amount which can be garnished will depend on the province in which you live and work.

For instance, in British Columbia the maximum a creditor can garnish is 30% of a debtor’s take-home pay.

In other provinces, like Alberta, things are decidedly more complicated.

Debtors are entitled to keep the first $800 of monthly income, and creditors may garnish up to 50% of your monthly net income between $800 and $2400, and as much as 100% of any net income above $2400.

However, the exemption limit is increased by $200 for each dependent you support.

So if you have one child, you get to keep the first $1,000 of your wages without garnishment.

We can help you to put a stop to wage garnishment

If you want to put a stop to wage garnishment, we can advise you on the fastest and most effective way to do it for your unique circumstances.

If you’re ready to take back control of your debts and your finances, call us today on (877)879-4770 to arrange a risk-free, zero-obligation and 100% confidential callback.

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