How to Prevent a Wage Garnishment
While it can often seem like a standard part of the national conversation, debt is a terrifying reality.
It’s easy, on paper, to state that almost half of Canadians are just $200 away from being unable to pay their bills, but this is significant cause for concern on a personal level.
Far from being figures on the page, the 28% of Canadians report struggling to meet debt payments are living with this reality every day.
This can lead to all manner of mental distress, especially when matters like wage garnishment come into play.
This cruel creditor trick can push individuals who are already on the brink.
That’s why we’re going to help you understand and, hopefully, stop wage garnishment proceedings where necessary.
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What exactly is wage garnishment?
Wage garnishment is a legal order that gives creditors the right to access your wages directly.
Such an order goes straight to your employer and can force them to send as much as 50% of your wages directly to a creditor.
The bad news is that, from a legal standpoint, any creditor, collection agency, or lender can file such an order using a statement claim.
In most cases, they will first need to supply you with a garnishment order and provide you with 21 days to respond, but this isn’t a given.
Agencies like Canada Revenue Agency and even some payday lenders able to access your wages directly, depending on your agreement.
The amount such lenders can take will vary depending on:
- Your location;
- The type of debt;
- The agreement you settled on at the commencement of your debt.
Ultimately, though, creditors seeking to reimburse child credit or similar can access the full 50%, often without court proceedings beforehand.
Is it possible to stop wage garnishment?
It’s a petrifying concept.
Luckily, while your options for action are limited, they aren’t altogether out of reach.
For one, you may be able to use your 21-day respite to file a statement of defense that disputes debt if you have grounds to do so.
Otherwise, the three primary solutions you face include:
Filing a consumer proposal
Canadians filed 71,567 consumer proposals between 2018-2019, and doing the same could be your best shot at stopping wage garnishment.
After all, these legal proceedings will likely come to the fore after some disagreement between you and your creditor, which is precisely what consumer proposals aim to avoid.
In this instance, a licensed trustee will work across parties to arrange manageable payments, often at a fraction of overall debt amounts.
Creditors will typically prefer this option, as it ensures some payment, as well as saving them money through legal garnishment expenses.
You can also protect your income this way thanks to manageable payment amounts, and frozen interest rates.
Bankruptcy is another viable option in cases of extreme money troubles.
Unlike a consumer proposal, this involves entirely scrubbing your debt slate clean, leaving creditors legally unable to pursue wage garnishment.
There are apparent downsides here, including the need to hand over any assets and risk surplus income during your discharge period.
Ultimately, though, this step at least allows you to protect a steady income of sorts.
It also means that you can rebuild your financial standing without the worry of old debts on your shoulders.
Making a direct deal with creditors
Though it’s not advisable once a case has already been made for wage garnishment, it is also possible that you could make a deal directly with your creditors.
Remember that, ultimately, they just want payment in some form.
As such, you’ll likely find that they’re willing to make a deal with you, but be wary that it may not be legally binding, meaning that wage garnishment could still arise later on.
Finding a trusted trustee
Once they understand your case, they’ll be able to advise you in how to proceed, and thus help you to put an end to the threat of wage garnishment orders.
Whether you’re considering proposal, bankruptcy, or just need advice, contact our local trustees today to ensure that your wages never come under debt fire again.
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