How to stop A wage garnishment
A garnishment is a legal proceeding used to collect money on a debt. It allows a creditor to take a portion of your wages before you can even receive that income. Here is an example of a wage garnishment situation:
Claire works for a warehouse company. At the end of every pay period, her employer owes her a pay cheque. However, she has an outstanding amount owing on her credit card that she has been ignoring. If the credit card company takes her to court and obtains a judgment, they can intercept part of her wages and have that portion paid to the court, pursuant to a garnishment. Then, the court will send the money to the creditor.
Facts about wage garnishment
In order to garnishee your wages, a creditor must file a lawsuit, obtain a judgment (a decision of the court that you owe the money) and make a separate application to obtain a garnishee
Certain types of income cannot be garnisheed; your BDO trustee will explain if your income is not subject to garnishment.
A garnishment always requires that money is paid to the court and never paid directly to the creditor; the only exceptions are a credit union that you have given an assignment of wages, or the CRA, which can garnishee your wages without a court order
If you have signed a voluntary wage assignment with a pay day loan lender, it can also garnishee your wages because you gave it permission when you applied for the loan (however, you can also withdraw it since it is a voluntary assignment). Bankruptcy stops wage assignments as well as garnishees.
Wage garnishment rules vary from province to province, as the law generally restricts a garnishing order for wages to attaching or intercepting 20 percent of the wages. For obligations, such as child or spousal support, up to 50 percent can be garnisheed, depending on your income and the number of dependents (the actual amount that will be taken from your pay cheque will be determined by the wages act or other relevant law in your province, your financial situation, and other garnishments that may already be in effect).
How to stop a wage garnishment
To stop your wages from being garnished, you have options available:
Repay the debt
Appeal to the court. If the garnishing order created seriously impacts your financial situation and creates hardship, you can ask a judge or registrar of the court to release the garnishment and allow you to pay the judgment by installments; contact the court registry where the order was issued and make an appointment to have a hearing in front of the registrar
Having your wages garnished can cause a great emotional and financial stress, as well as embarrassment. BDO can help you put an immediate stop to a garnishment order and get back on track through a proposal to creditors or filing for bankruptcy. Contact us today.