Garnishee Wages: How to Protect Your Income
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By Bromwich+Smith Staff | 1405 words | Reading Time:7 minutes | Date: 2023/11/22
Sometimes when collectors call, they threaten to “garnish” your wages, and it can sound scary and stressful. In this article we will remove some of the mystery, and hopefully some of the fear, from this process.
Garnishment occurs when a court order allows creditors to collect a portion of your income to pay for outstanding debts. This is called a garnishee order, and while this process can bring on shame and fear, you do have rights and options. Below, we will outline what garnishment is , the reason it could happen, and most importantly, how to protect your income from this financial burden.
Understanding Wage Garnishment in Canada
Wage garnishment, is a legal process in which a creditor is granted permission by a court to collect a portion of your income directly from your paycheck. This typically happens after you have failed to meet financial obligations, such as paying off a loan, credit card debt, or child support.
Each province has their own regulations, so it is important to speak to a professional in your province to understand what can be garnished.
Ontario | In Ontario, creditors are allowed to garnish up to 50% of your wages with some exceptions. |
British Columbia | In British Columbia, the limit is 30% of wages. |
Alberta | In Alberta, you keep the first $800 of your monthly net income. Creditors are then able to garnish a maximum of 50% of your monthly net income up to $2400, and then they can receive 100% of anything above that. |
Saskatchewan | In Saskatchewan, the creditor can garnish 100% of your income, so long as you’re left with $1,500 a month. If you have a dependant, you are able to keep an additional $300 per month per dependant. |
Reasons for Garnishing Wages
There are several reasons why garnishment might occur, and understanding these can help you take preventive measures. Here are some common scenarios where it might be implemented:
Unpaid Debt: Perhaps the most common reason for wage garnishment is long-standing unpaid debts.
Child Support: When an individual fails to make required child support payments, courts may order wage garnishment to ensure the financial support of the child.
Alimony: Spousal support or alimony may also be subject to wage garnishment if the paying spouse fails to meet their financial obligations.
Defaulted Student Loans: In the case of federal student loans, the government has the authority to garnish wages if the borrower defaults on their loan payments.
Unpaid Taxes: If you owe back taxes, the Canada Revenue Agency can use wage garnishment as a method of collection.
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How Wage Garnishment Could Affect You
The impact of wage garnishment is not to be underestimated. When your wages are garnished, your employer is legally obligated to withhold a portion of your earnings and send them directly to the creditor or authority demanding payment. This can result in a significant reduction in your take-home pay, making it challenging to cover your basic living expenses. In addition, your employer has now become aware of your financial situation which may cause more emotional strain for you.
Additionally, wage garnishment can harm your credit score and make it more difficult to secure loans or credit in the future. Therefore, it is crucial to take steps to protect your income from garnishment.
Protecting Your Income from Garnishment
While dealing with wage garnishment can be a difficult situation, there are several steps you can take to protect your income and minimize the impact on your financial well-being.
Negotiate with Creditors: In some cases, you may be able to negotiate with your creditors to establish a more manageable payment plan or even settle the debt for a lump sum amount. Many creditors are willing to work with you directly to avoid the hassle of wage garnishment.
Seek Legal Advice: Consulting with an attorney who specializes in debt and bankruptcy issues can provide valuable insights into your legal rights and options.
Know Your Exemptions: Depending on your province, certain types of income may be exempt from garnishment. Additionally, only a set amount can be garnished regardless of your income level.
File a Consumer Proposal: A consumer proposal is a renegotiation of what you owe to your creditors, handled by a Licensed Insolvency Trustee on your behalf. You pay what you can afford, instead of what your creditors were demanding.
File for Bankruptcy: While it should be considered a last resort, filing for bankruptcy may be an option to discharge certain types of debts and halt wage garnishment. Bankruptcy can be a strong resource, and can only be filed with a Licensed Insolvency Trustee. Speak to an LIT to learn more about what can be included in a bankruptcy and how it can help you end wage garnishment and collection phone calls.
While it may be uncomfortable, another important step is to communicate with your employer. Open and honest communication is crucial as they need to be informed about the court order and the amount to be deducted from your wages. This can help ensure that the garnishment process is carried out correctly and without errors.
Wage garnishment can have a significant impact on your financial situation as well as your mental health. It's essential to remember that there are steps you can take to protect your income and navigate through this trying time. Whether it involves negotiating with creditors or seeking financial advice, understanding your rights and options is the key to minimizing the financial burden of garnishment.
Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1-855-884-9243, Live Chat or you can request a call back at contact us page. We want to see you flourish!
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FAQ Related to Wage Garnishment
1. What is wage garnishment in Canada?
Garnishee wages, also known as wage garnishment is a legal process that allows creditors to collect a portion of your income directly from your paycheck when you fail to meet financial obligations like loan payments, credit card debt, or child support.
2.How much of my wages can be Garnished in Alberta?
In Alberta, you keep the first $800 of your monthly net income. Creditors are then able to garnish a maximum of 50% of your monthly net income up to $2400, and then they can receive 100% of anything above that.
3. How much of my wages can be garnished in Ontario?
In Ontario, creditors can garnish your wages up to 50%, with some exceptions.
4. What is the wage garnishment limit in British Columbia?
In British Columbia, the limit for wage garnishment is 30% of your wages.
5. Can creditors garnish 100% of my income in Saskatchewan?
In Saskatchewan, creditors can garnish 100% of your income, as long as you're left with a minimum of $1,500 a month. If you have dependents, you can keep an additional $300 per month per dependent.
6. How can I protect my income from wage garnishment?
To protect your income from wage garnishment, consider negotiating with creditors, seeking legal advice, understanding exemptions, exploring bankruptcy as a last resort, and communicating openly with your employer to ensure the process is carried out correctly.
7. What are common reasons for wage garnishment in Canada?
Common reasons for wage garnishment in Canada include unpaid debts, failure to meet child support obligations, unpaid alimony or spousal support, defaulted federal student loans, and owing back taxes.
8. How does wage garnishment affect my financial situation?
Wage garnishment can significantly impact your finances by reducing your take-home pay, making it challenging to cover basic living expenses, potentially harming your credit score, and making it more difficult to secure loans or credit in the future.
9. Is filing for bankruptcy an option to stop wage garnishment?
Yes, filing for bankruptcy can be an option to discharge certain types of debts and halt wage garnishment. It should be considered a last resort and can only be filed with a Licensed Insolvency Trustee.
10. What percentage of my income is exempt from garnishment?
The percentage of income exempt from garnishment depends on your province, but certain types of income may be exempt, and there's typically a limit on the amount that can be garnished regardless of your income level.