How to Stop a Wage Garnishment
When you have financial difficulty, you’ll often get calls from your creditors seeking repayment.
These can be inconvenient when you’re barely making ends meet.
Circumstances happen, and probably you did not anticipate such a turn or outcome when you took out a loan.
Nevertheless, you need to find a solution to repay your creditors.
In Quebec, creditors have the possibility of using a wage garnishment to try to obtain payment from the debtor.
A wage garnishment occurs when the creditors seek a court order that allows them to intercept a percentage of your wage.
The court provides the creditor what is known as a seizure summons.
With that, the creditor either tries to seize some of your physical assets or serves your employer with a writ of seizure.
The employer will then cut each month a percentage of your wage for the benefit of the creditors.
Possibilities for stopping the wage garnishment
If you’re hardly making ends meet, it can be extremely difficult if on top of that part of your wage is being cut.
There are certain rules that apply concerning wage garnishment.
However, generally, Canadian law recognizes two forms of wage garnishment
The pre-judgement garnishment
The creditor can attach your assets, including bank account and property before a court order is obtained.
The post-judgement garnishment
The creditor attaches the assets only after winning the court order.
When you owe unpaid taxes to the Canada Revenue Agency (CRA), they do not need a court order to garnish your wages, neither is it necessary if you used your wage as a collateral to obtain a loan from a credit union or a bank.
The garnishment can be higher when it is for unpaid spousal or child support.
When you are self-employed, the creditor can garnish 100% of your income.
That is because being self-employed technically you are not earning a wage.
As a debtor, you have several actions you can take to stop your wages from being garnished.
- Contact your creditors and negotiate other terms with them;
- Apply for an unsecured personal loan to pay off your creditors;
- Apply for bankruptcy or a consumer proposal.
The best options to stop wage garnishment is to either file for bankruptcy or a consumer proposal.
Steps creditors follow to garnish wages
You have enough time to take action and stop any wage garnishment before it happens.
Your creditors need to obtain a court order allowing them to proceed, unless your unpaid loan are due to the Canada Revenue Agency.
Apart from payments due to the CRA, the creditors will take the following steps:
- Seek and obtain a court order indicating that they have a claim against you;
- They will then need to be granted a seizure summons which allow the creditor to seize your assets;
- When you have no physical assets the creditor can seize, they will serve your employer with a writ of seizure allowing them to garnish your wage;
- The wage garnishment extend until you have repaid all your debt.
Facts about wage garnishment
When you have debts, it’s important to know what actions can be taken against you by your creditors and how.
Such knowledge allows you to take preventative measures when such a situation occurs and not be surprised.
Apart from harassment over the phone, your creditors also have the option of wage garnishment.
- Wage garnishment is legal under Canadian law.
Both the government through the CRA and private financial institution can proceed to wage garnishment.
However, although the government may inform you in a letter that they are proceeding to wage garnishment, other private institutions need to obtain a court order;
- When garnishment is applied, the requirement is for the money to be paid through the court and never directly to the creditor.
The exception are for credit unions and the CRA;
- When you apply for a loan such as a payday loan, you are indirectly giving them permission for wage garnishment;
- The only effective method to stop a wage garnishment is by filing for a Consumer Proposal or Bankruptcy.