A garnishee order is a legal process that allows a creditor to collect a debt by deducting money directly from your wages, bank account, or other sources of income.
Here we explain what a garnishee order means for you, what types of debts can be garnished, and how to stop a garnishee order.
What is a wage garnishee order?
If you don’t pay your debts, a creditor can apply to the court for a garnishee order or wage garnishment on your employer or bank account.
If they are successful, they must legally comply with the order, and the creditor can deduct a portion of your wages to satisfy the debt.
In Canada, garnishee orders are governed by provincial and territorial laws, so the amount that can be garnished depends on where you live.
How does a garnishee order work?
The wage garnishment process begins when a creditor applies to the court to garnish your wages. It’s then up to the court to decide after reviewing your financial situation.
Once a creditor has obtained a court order, they must supply written notice. A legal document called a garnishee summons is delivered to the person who owes the money, usually by certified mail.
You must respond within three weeks, or the creditor will be granted the garnishee order.
How much of your wages can be garnished in Ontario?
The Ontario Wages Act lets creditors garnish a maximum of 20% of wages after deductions for consumer debt, such as loans and credit cards. For child and spousal support, the maximum is 50%.
How much of your wages can be garnished in Alberta?
The wage garnishment rules in Alberta are as follows:
- The first $800 of your income after taxes and deductions is exempt from wage garnishment.
- Creditors can garnish up to 50% of your income over $800 and 100% of any amount above $2,400.
If you have children or dependents, the amount of money that can be garnished is lower.
For example, if you have one child, $1000 of your income is protected, with a 50% wage garnishment applied to amounts above $1000. Any amount over $2600 can be garnished for the full amount.
The amounts increase based on how many dependents you have.
How much of your wages can the CRA garnish?
The CRA can garnish up to 50% of your wages if you are employed. If you are a contract worker, self-employed, or receive another form of income, creditors can garnish up to 100% of your income. A judge can increase or decrease the garnishment amount under certain circumstances.
Under federal legislation, the CRA can garnish wages without a court order and take money from your paycheque or bank account without notifying you beforehand.
Can creditors garnish wages without a court order?
Some creditors can garnish your wages without a court order.
The Canada Revenue Agency (CRA) doesn’t need a court order to garnish your wages, and they don’t need to notify you about it.
If you signed a credit union wage assignment, a credit union can collect money owed without going to court.
If you have signed a voluntary wage assignment with a payday loan company, they can also skip court and garnish your wages. However, you can withdraw your consent anytime to stop deductions from your pay.
Employment Insurance (EI) benefits, Old Age Security (OAS), pensions, social assistance and disability benefits cannot be garnished directly, but these funds could be frozen once the money is in your bank.
How to stop a wage garnishment immediately
There are two ways to stop wage garnishments. You can repay the balance or arrange a payment plan which will remove the garnishee order.
Creditors and debt collectors are prohibited from calling you, and all legal action stops.
A consumer proposal lets you consolidate your unsecured debt into an affordable monthly payment, while bankruptcy might be the best option if you have no income or assets to protect.
Stop a garnishee order now
If you have a question about a garnishee order or your wages are being garnished, consult a Licensed Insolvency Trustee who can stop a wage garnishment within hours.
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