Bankruptcy and unsecured debt

Wage garnishment

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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5.  Only a consumer proposal or filing for bankruptcy can stop a wage garnishment.

Explore your debt relief options

What can I do to stop my wages from being garnisheed?

You can have a Licensed Insolvency Trustee file a consumer proposal on your behalf, which is a court approved debt repayment plan that stops wage garnishments. The consumer proposal not only allows you to avoid filing for bankruptcy, it helps you create a repayment plan unique to your financial situation to pay off your debts. Visit our Consumer Proposals page to learn more.

Customer proposals

Can bankruptcy also stop a wage garnishment?

Yes. Filing for bankruptcy will immediately stop a wage garnishment, and put an end to demanding phone calls from creditors. Any actions taken by lawyers against you will be halted. While bankruptcy is always looked at as a last option, after solutions like the consumer proposal, there are some situations where it is actually the best strategy given a person’s circumstances. You can find out more about how bankruptcy protects you from legal action by visiting our Bankruptcy page.


Who can I speak to about stopping a wage garnishment?

A BDO Licensed Insolvency Trustee will explain the differences between filing for bankruptcy and a consumer proposal and answer any of your questions, including which types of income cannot be garnisheed. Schedule a free consultation  – we are ready to help.

Get started now