Effect on Consumers And What You Can Do About It
What does it mean to have your wages garnished?
When you don’t pay your debts, your creditors can obtain a court judgment to garnish your wages. To “garnish” means to attach (money due or property belonging to a debtor) by way of garnishment. This means that money will be taken from your pay cheques and given over to the creditors.
A judgement is an agreement from a judge in a court of law which states that you owe a debt to your creditor. Creditors may apply for judgement from the court in order to garnish your wages. With this legal document, a judgement, your employer may be forced to send a portion of your pay directly to your creditor. The amount of the garnishment usually ranges from 30-50% of your wages to pay debts you owe. Often, individuals refer to this as wages being “garnished”, but the legally correct terms are “garnishee” or “garnishment”.
In some cases, when the Canada Revenue Agency is particularly frustrated with a debtor, they have been known to seek and receive garnishment orders of 100% against individual debtors. Yikes!
How Garnishments Work:
In British Columbia, your creditors can garnish your wages if they take you to court and sue you to receive a garnishment order. This order must indicate that you owe the debt, and that you are required to pay it. It can also include fees or costs your debtor incurred in order to make the appearance in court.
There are some exceptions to this procedure where a court order is not required. For instance, debts owed to the CRA (Canada Revenue Agency) often have their own internal procedures, thus can garnish your wages, or seize your bank account without a court order. Further, a payday loan contract, credit unions, or other creditors to which you have voluntarily assigned your wages do not need a court order to have the agreed to amounts (plus fees) scooped from your bank.
What Are Your Rights
In British Columbia, the maximum that can be deducted from your paycheck is 50%. The exception is the CRA, which can garnish 100% in some cases. You can reduce the amount being garnished by applying to court and demonstrating that this garnishment will create a serious hardship for you.
It is illegal for an employee to be fired or demoted because of a garnishment to their wages.
To stop a wage garnishment, you must pay off the debt or have the creditor agree to halt the garnishment. If the creditor has gone through the effort of garnishing your wages, it would be unlikely for them to remove it, for fear that they will not receive due payment.
What Are Your Options?
Should you fall victim to wage garnishment, you should consider the following options:
- Negotiate with your creditors. Try and come to an agreement about payment before they seek a court judgement. Call your creditors as soon as possible to see if you can come up with a settlement.
- A consumer proposal can stop garnishments that have been obtained by most institutions, including CRA garnishments. However, it cannot stop garnishment for child or spousal support.
- Personal bankruptcy may also be an option. Again, this will not stop garnishment for child or spousal support, but will stop all other wage garnishments including all action by CRA.
If you are being affected by a wage garnishment, it is best to speak with a bankruptcy trustee to consider your options. You can always attend a free initial consultation with C.E Craig and Associates to talk about your options if your wages are being garnished.
