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.
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.
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 monies to the Canada Revenue Agency
Additionally, the following types of income cannot be garnished:
– Employment insurance
– Social assistance
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.
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.
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 an employee working for a company and on the payroll, 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.
Should you have any questions about wage garnishment, feel free to reach out to our expert trustees in any of our 12 locations in Ontario by calling toll-free on 1-800-268-8093. We also have offices in locations across Canada, so get in touch if you are being adversely affected by Garnishee Orders in Canada.