Depending on whom the creditor is, if you have owed substantial amount of money such as debt, loans, taxes, and child support for a long time, the your wages can be garnished. Wage Garnishment in Canada is a legal term and process where a creditor uses a third party to collect the funds owed through the debtor’s bank account or wages. If you fail to pay your creditor, they can seek a court order to obtain the funds that are owed to them and ask for a garnishment from the debtors. Through garnishment, they can seize portions of your salary, tax refunds, money in your bank, or other wages.
A court order is not always required in Canada; when the assignment of wages is turned over to a credit union, or when taxes are owed to the CRA (Canada Revenue Agency). The CRA may issue garnishments from your employer. A wage levy is similar to garnishment. The employer is required by law to withhold the specified amount in the order from the wages of the debtor. The difference between a levy and garnishment is that the CRA does not need a court order. As an official agency, it can initiate a levy on its own governmental authority.
You can stop wage garnishment in Canada by either paying off what you owe, filing a consumer proposal to your creditors, or chew your pride and file for bankruptcy. A licensed bankruptcy trustee can help you with consumer proposals or filing for bankruptcy. Essentially, all three of these will stop garnishments. If you are threatened with garnishment, or you believe you will be, you should act proactively and do any of the three methods of stopping wage garnishment.
The Ontario Wages Act stipulates that only a maximum 50% can be garnished from gross monthly wages by creditors. There are exceptions to the rule, such as whether you are receiving employment insurance, pension payments, or social assistance; the funds cannot be garnished even if they are deposited at a financial institution. If you receive money from a source that is considered legally garnish-able, creditors must go to court and notify you of the court proceeding in order to actually garnish your income. Generally, resorting to using the courts to issue a garnishment is the last resort because the process is costly and time-consuming.
If you are unable to pay your taxes, debts, and other creditors that can issue garnishments against your wages because of financial difficulty and hardships, you can speak with a lawyer and explore your options or you can attempt to handle the legal process pro se. If you speak with a consolidation company or lawyer, they can help you explore options that would ultimately generate a newly structured payment plan with less money owed.