Having a portion of your wages paid into court can be devastating. Your budget was already tight, and now a portion of your earnings are no longer available to you; we understand. Fortunately, filing either a consumer proposal or assignment in bankruptcy protects you from your creditors and stops wage garnishments.
Most creditors, such as banks, credit card companies, cell phone companies, and landlords must first obtain a judgement against you, which is simply an order of the court stating that you owe money to that creditor. This process starts when a creditor files a “Statement of Claim” and serves you with a copy. You can then file a “Statement of Defense”, but in most cases, there is nothing to defend as the money is in fact owed. Assuming no defense is filed, the creditor will then obtain default judgement against you. Once the judgement is obtained, it can then be enforced by having your wages garnisheed.
Up to 20% of your pay can be garnisheed. Any funds garnisheed are paid by your employer to the court. The court then allocates those funds among all creditors who have obtained a judgement against you (assuming there is more than one).
Other creditors can garnishee your wages without a court order including the Family Responsibility Office for unpaid support, or the Canada Revenue Agency for unpaid taxes. Both of these organizations can garnishee up to 50% of your pay, or 100% of receivables for self-employed individuals. While a consumer proposal or bankruptcy does stop Canada Revenue Agency garnishments, it does not stop Family Responsibility Office garnishments.
Having your wages garnisheed is a common sign that its time to get some free advice from a Licensed Insolvency Trustee who will take the time to review your entire financial situation, and explain your options. Don’t feel overwhelmed or scared. Protect your pay cheque and educate yourself on your options.
If you can’t afford to pay your debts, you may be eligible to file a consumer proposal or bankruptcy. Both services provide immediate protection from your creditors and stop garnishments (as well as interest and collection calls).
Suffer no longer. Get some free information about your options, and get relief from debts and garnishments once and for all.