A Garnishee Order, often known as wage garnishment, is a legal tool in Canada, used by creditors when a debtor stops making payments. Essentially, it involves the courts and results in either your employer or bank being legally obligated to divert a portion of your earnings directly to your creditors.
Wage Garnishment Limits in Ontario
Ontario’s wage laws dictate the maximum percentage of your income that can be garnished. Commercial debts, including credit cards and bank loans, can result in garnishment of up to 20% of your wages. Arrears owed to the Family Responsibility Office could lead to a garnishment of up to 50% of your wages.
Circumstances Where Court Orders Aren’t Required for Wage Garnishment
In Canada, two specific situations don’t necessitate a court order for wage garnishment:
- When you’ve voluntarily assigned your wages to a Credit Union as part of a loan agreement.
- If you owe money to the Canada Revenue Agency (CRA).
Certain types of income are immune to garnishment, including:
- Employment insurance.
- Social assistance.
- Pensions.
However, once these funds hit a bank account, that account may be frozen, forcing you to use the funds to pay off debt.
Stopping Wage Garnishment: The How-To
The only surefire solution to halt wage garnishment is through filing a consumer proposal or personal bankruptcy with a Licensed Insolvency Trustee. Thanks to a federal law — the Stay of Proceedings — a garnishee order can be stopped at any stage of the legal process.
The Canada Revenue Agency’s Power to Garnish Wages
The CRA operates differently compared to traditional creditors. They can garnish wages without a court order or prior notice. That means you might discover your paycheque reduced without any forewarning.
For salaried employees, the CRA can garnish up to 50% of wages. If you’re self-employed, a contract worker, or a pensioner, the CRA can seize up to 100% of your income.
To prevent this, you need to file a consumer proposal or personal bankruptcy as soon as possible. This action will stop the wage garnishment, help prevent further loss of income, and help you start rebuilding your credit score.
Taking Charge of Your Financial Future
If you’re struggling with wage garnishment and its consequences, don’t hesitate to reach out to our expert trustees. We have hundreds of locations across Canada.
Remember, understanding what a Garnishee Order means in Canada is the first step to regaining control of your financial health.
