If you don’t pay your debts, a creditor can go to court and obtain a wage garnishment. This is what people often refer to as having their wages “garnished”, although the correct term is a garnishee or garnishment.
There are three ways to stop wage garnishment.
Once a wage garnishment starts, there are three ways to get it to stop:
- Repay the debt;
- File a consumer proposal; or
- File for personal bankruptcy.
In virtually all cases a consumer proposal or a personal bankruptcy will stop a garnishment, so we strongly recommend that if you are being garnisheed, or are threatened with a garnishment, contact an Ontario bankruptcy trustee immediately to determine your options.
There are several ways your wages can be garnisheed.
- A creditor can take you to court and sue you, and obtain a Garnishment Order from the court.
- You may have given an assignment of wages to a Credit Union.
- If you have a tax debt the Canada Revenue Agency can garnishee your wages without a court order.
- You may have signed a voluntary wage assignment with a pay day loan lender allowing them to garnishee your wages.
- Unpaid family responsibility payments can also result in a garnishment. These garnishments can only be removed by court order. A bankruptcy does not stop a wage garnishment for unpaid child support or alimony.
In the case of a voluntary wage assignment, you gave your lender permission to garnishee when you applied for the loan. However, since this is a voluntary assignment, you can withdraw it, which then requires your lender to go to court to garnishee your wages.
If a creditor has gone to the trouble and cost of going to court to get a court order to garnishee your wages, they are not likely to lift the garnishment just because you agree to pay. Once the garnishment starts, they are difficult to stop.
How much can be garnisheed from my wages?
Under the Ontario Wages Act, the maximum a creditor can garnishee is 50% of your gross wages. The actual amount that will be taken from your paycheque will be determined by the court, based on your financial situation, and other garnishments that may already be in effect. A typical garnishment in Ontario is 20% of your gross wages, but higher garnishments are not uncommon.
If you are threatened with a wage garnishment, or are currently being garnisheed, we recommend that you contact a licensed bankruptcy trustee immediately to determine your options. The longer you wait to deal with the wage garnishment, the more you will lose from each paycheque.
Stop being garnished now. Book an appointment with an Ontario bankruptcy trustee in your area.