What is a garnishment?

If you’re facing financial struggles or have unpaid debts, you may have heard the term “garnishment”. But what exactly does it mean? In simple terms, garnishment refers to a legal process that allows creditors to collect what you owe them by taking money directly from your income or bank account.

This process can seem complicated, but it’s important to understand how garnishment works and what your rights are. In this blog, we’ll break down the definition of garnishment, the different types of garnishments in Canada, and what you can do if you’re facing one.

Jump to:

What is the definition of garnishment?
What are the different types of garnishment in Canada?
What is exempt from garnishment in Canada?
What are your rights when facing garnishment?
What to do if you’re facing garnishment in Canada

What is the definition of garnishment?

Garnishment is a legal action that allows a creditor (someone you owe money to) to collect unpaid debts by seizing a portion of your wages, salary, or even funds from your bank account. Essentially, it’s the government-approved way of forcing you to pay off a debt by deducting money directly from your earnings or assets.

In Canada, garnishment is typically ordered by a court after a creditor has taken legal steps to get a judgment against you. Once the garnishment order (Writ of Garnishment) is in place, the creditor can take money directly from your income or bank account until the debt is paid off. It’s a method used when other forms of debt collection, like phone calls or letters, have been unsuccessful.

What are the different types of garnishment in Canada?

When garnishing a bank account, it is essential to identify the specific branch where the debtor holds the account. This information enables you to serve the garnishment order directly at that branch. Unlike wage garnishment, there is no predetermined limit on the amount that can be garnished from a bank account. However, it is important to note that only the debtor’s funds within the account can be garnished, excluding any funds held in a joint account with another individual. As well as any government funds received like pension or old age security.

In Canada, there are a few different types of garnishments. These typically include:

Wage garnishment

This is the most common form of garnishment. A percentage of your wages is deducted directly from your paycheck by your employer and sent to the creditor. The amount deducted depends on how much you owe and your province’s garnishment rules.

Bank account garnishment

If you have disposable income in a bank account, the creditor may apply to have your bank account garnished. This means that the bank will freeze your account and send money directly to the creditor.

Garnishment of other income

Other income sources, like pension benefits, disability payments, or certain government assistance, may also be garnished. However, these sources of income may be protected by law, depending on your situation.

Child support garnishment

Child support garnishment is an essential part of family law in Canada. If you owe child support, the government can garnish your wages, tax refunds, or bank account to ensure you meet your child support obligations. Child support garnishments take priority over other debts and cannot be easily stopped or reduced unless the circumstances change.

What is exempt from garnishment in Canada?

Not all of your income or property can be garnished. There are protections in place to make sure you can still meet your basic needs. In Canada, the following are generally exempt from garnishment:

Your primary residence
Your personal belongings
Tools used for work
Pensions and retirement savings
Social assistance
Life insurance proceeds
Child support and alimony

The amount that can be garnished from your wages or bank account is typically limited by provincial laws and regulations.

Can a landlord garnish wages for unpaid rent?

Yes, wage garnishments can happen if you fall behind on rent, but there are limits. If you fail to pay rent, your landlord can take legal action to recover the money owed, which may include garnishment of your wages or bank account. However, before this happens, your landlord must first get a court order, or a garnishee order.

What are your rights when facing garnishment?

If you’re facing garnishment, it’s really important to know your rights. While garnishment is a legal process, you still have protections under the law. For example:

Garnishment limits: There are limits on how much of your wages or income can be garnished. Depending on what province you live in, around 30% to 50% of your wages can be garnished.
Exemptions: As mentioned earlier, certain types of income and property are exempt from garnishment.
Challenge the garnishment: If you believe the garnishment is unjust or excessive, you can apply to have it modified or stopped.

If you’re unsure of your rights or how to proceed, it’s always a good idea to consult a lawyer or seek advice from a Licensed Insolvency Trustee.

What to do if you’re facing garnishment in Canada

If you find yourself facing garnishment, there are several things you can do to handle the situation:

Understand the garnishment order: Make sure you fully understand what the garnishment is for and how much will be deducted.
Talk to your creditor: In some cases, creditors are willing to work out a payment plan to avoid garnishment. If you’re able to pay off your debt in smaller amounts over time, this could stop the garnishment.
Seek professional help: If you’re overwhelmed, reach out to a Licensed Insolvency Trustee. They will work with you and your creditors to help you find a debt solution that works for everyone.

Speak to a Licensed Insolvency Trustee today

Dealing with garnishment and debt can be stressful, but it’s important to remember that you don’t have to face it alone. Whether it’s wages, bank accounts, or child support being garnished, understanding your options and knowing where to turn is the first step in regaining control of your finances.

If you’re feeling stuck or unsure of what to do next, speaking to a Licensed Insolvency Trustee can give you the clarity and guidance you need. Our team is here to help you explore the right debt solutions for your situation and work with you to find a path forward that fits your needs.

Don’t let debt hold you back. Reach out to our team today for a free, no-pressure consultation, and let’s find the best way to move forward together.

Garnishment FAQs

Can a joint bank account be garnished?

Yes, a joint bank account can be garnished in Canada. If one account holder owes a debt, the creditor can seize money from the joint account. However, the other account holder may be able to prove that their funds in the account are exempt from garnishment.

How can I stop my bank account from being garnished?

To stop a bank account from being garnished, you can either negotiate with the creditor for a payment arrangement or challenge the garnishment in court. Additionally, if the garnishment is causing undue hardship, you may be able to apply for relief or reduce the garnishment amount through the courts.

How does garnishment affect your finances?

Facing garnishment can have a big impact on your finances. A portion of your paycheck will be withheld, which will lower your disposable earnings and could make it harder to cover your daily living expenses. Garnishment also affects your credit score, as it is typically linked to an unpaid debt. This can make it harder for you to get credit or loans in the future, and it may affect other financial decisions down the road.

How long before a creditor can garnish wages in Canada?

In Canada, a creditor can begin garnishing your wages after they’ve obtained a court judgment against you. This means the creditor must first take legal action and get a judgment that confirms you owe the debt. Once the judgment is in place, the creditor can request a garnishment order to deduct a portion of your wages.