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What Does a Garnishee Order Mean in Canada?

15 October 2018

Joshua Harris

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A garnishee order – or wage garnishment – in Canada is when you have stopped paying your creditors and they apply to the court to obtain a judgment order against you.

If they are successful, then either your employer or your bank is legally required to turn over a portion of your wages to pay your creditors directly.

But how does this affect you and your personal circumstances? Let’s take a look at the details.

Key Points

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How much of your wages can be garnished in Ontario?

In accordance with the Ontario Wages Act, the maximum that your creditors can garnish from your wages is 50%. Commercial debts such as credit cards and bank loans can only garnish a maximum of 20% of your wages. If you owe arrears to the Family Responsibility Office they can garnish up to 50% of your wages.

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Is a court order always needed to garnish wages?

There are two situations in which a court order is not required for a creditor to garnish your wages:

  • If you agreed to an assignment of your wages to a Credit Union for a loan you obtained from them
  • If you owe money to the Canada Revenue Agency

Additionally, the following types of income cannot be garnished:

  • Employment insurance
  • Social assistance
  • Pensions

Although these funds cannot be taken via garnishment, once they are deposited into a bank account, the account could be frozen and you could still be forced to use the funds to pay your debtors.

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How to stop your wages from being garnished

The only way to stop your wages from being garnished is to file a consumer proposal or personal bankruptcy with one of our Licensed Insolvency Trustee. This will stop any garnishee order dead in its tracks, regardless of whatever stage it’s at in the legal process. You will be free from this garnishment immediately thanks to a federal law called a Stay of Proceedings.

If you have creditors threatening you with legal action or if you have a garnishment on your wages which is making it hard to pay your other bills, contact us for professional help and advice to stop the garnishment immediately.

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How much of your wages can the Canada Revenue Agency (CRA) garnish?

The CRA is unlike a traditional person or company that you owe money to because they do not need to get a judgment to garnish your wages. Additionally, the CRA can garnish your wages without giving you advanced notice. This means you could literally receive a reduced paycheck one day without knowing why.

When you are on the payroll of a company, the CRA can garnish up to 50% of your wages at the source. If you are self-employed, a contract worker, a pensioner, or receive income from an alternate source, the CRA can garnish up to 100% of your income straight from the source.

To stop this from happening you need to file a consumer proposal or personal bankruptcy with us as soon as possible. The sooner you do this, the less money will be lost going forward and the quicker you can start to rebuild your credit score without the burden of crippling debts. 

Put a stop to your Garnishee Order today

If you’re struggling under the pressure of a garnishee order, get in touch with our professionals today. We know how stressful this situation can be, but with us at your side, you don’t have to deal with it alone.

Joshua Harris

Joshua Harris - BComm, MIB, CIRP, LIT

Partner, Licensed Insolvency Trustee at Harris & Partners Inc.

Joshua Harris is a Licensed Insolvency Trustee and Partner at Harris & Partners Inc. With a strong background in financial restructuring, Joshua has been instrumental...