What you need to know about wage garnishment
While you want to keep up with payments on your loans, it can be a challenge when you are already trying to make ends meet. To add to your stress, you’ve received a wage garnishment from one of your creditors, allowing them to instruct your employer to directly send a portion of your paycheque to them to repay your debt.
We know just how difficult this situation can be for you. To ease your worries, we want to reassure you that you have options to stop the wage garnishment and deal with your debt at the same time. We’ve outlined important facts about wage garnishments and how a consumer proposal, or a bankruptcy in some situations, will allow you to have the wage garnishment stopped.
5 important facts about wage garnishment
- A wage garnishment is legal action taken to collect money on a debt. It lets a credit, through the use of a court order, take a part of your paycheque to put towards your debt with them.
- In order to garnishee your wages, a credit must file a lawsuit, obtain a judgment (the court's decision that you owe the money), and make a separate application to obtain a garnishee.
- A garnishment always requires that money is paid to the court and never paid directly to the creditor. The only exceptions are a credit union that you have given an assignment of wages, or Canada Revenue Agency (CRA), which can garnishee your wages without a court order.
- If you have signed a voluntary wage assignment with a payday loan lender, it can also garnishee your wages because you gave permission when you applied for the loan.
- Only a consumer proposal or filing for bankruptcy can stop a wage garnishment.
