Wage Garnishment in Canada

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You may have received a notice that you need to garnish an employee’s wages. So, what does this mean, and how does it work?

In simple words, a wage garnishment allows a creditor to seize payment directly from the paycheque of someone who refuses to pay a debt. However, the rules are different from province to province, like New Brunswick does not allow it. But in most of Canada, it is an allowed and fairly easy process to understand.

However, a creditor cannot start garnishing your wages as is. There is a process that needs to be followed. It goes like this:

1. A creditor needs to get a judgment from the court; it works as a claim against the debtor
2. A seizure summons is necessary for the creditor
3. The seizure summons grants a creditor the ability to look for assets to seize
4. In the absence of no physical assets, the creditor will serve your employer with a writ of seizure and start garnishing your wages
5. Your wages will be garnished until your debt has been paid off

You will see wage garnishment in the cases when there are no assets or equity to be seized to cover the costs of their debts.

Wage Garnishment in Canada

• The categories of assets that can be taken and the percentage of income that can be garnished are governed by both provincial and federal regulations.
• With the exception of British Columbia and New Brunswick, rules are generally identical across Canada.
• Household furnishings and appliances cannot be seized by a creditor in British Columbia.
• Creditors are not allowed to garnish wages in New Brunswick.
• Creditors are unable to seize a line of credit since there is no money to seize.
• They can, however, take money directly from your bank account.
• In several areas, debtors are not allowed to garnish more than 30% of your paycheque. Other provinces, on the other hand, have far more convoluted rules.

Is a Court Order Always Required for Wage Garnishments?

A court order is not required for wage garnishment in two scenarios. When a person borrows money from a credit union, they usually sign an agreement called an “assignment of wages.”

This means they agree to have the debt deducted from their wages. This is without the credit union having to obtain a court order to begin the garnishment procedure. Similarly, the Canada Revenue Agency can garnish your wages without a court judgment if you owe unpaid taxes.

Do You Have to Obey a Wage Garnishment Order?

If you receive an official notice that you need to garnish an employee’s salary, you must legally comply with the letter’s requests. You can be held personally accountable for tax debt if you do not remit the required amounts.

Furthermore, you are unable to fire an employee for pay garnishment, restrict their hours, or penalize them in any other way.

How to Prevent Wage Garnishment by a Creditor

It doesn’t matter if your creditor is threatening to garnish your wages, has scheduled court date, or has served a garnishment order on your employer. There are still options available to you.

You can stop a garnishee in a variety of ways:

• If there is no income to garnish, quit your job.
• Negotiate repayment terms with your creditor in exchange for the garnishee being lifted.
• Obtain a loan to completely pay off the garnisheeing creditor.
• Keep track of your debt payments in a neat and orderly manner (where available).
• Submit a proposal to the consumer.
• Make a personal bankruptcy filing.

How Does Wage Garnishment Work for Self-Employed?

Those who are self-employed, however, may face garnishment of up to 100% of their earnings. Most wage garnishment laws only apply to wages, and you don’t receive pay if you’re self-employed.

Don’t get too worked up just yet; while a creditor can garnish 100% of your salary, most won’t. If a creditor takes a more “fair” share of your salary, you’ll be less motivated to change employment to reduce the amount of money they can take.

Finally, a creditor must serve one of their clients in order to garnish a self-employed person’s salary. Because garnishee orders are often only valid for a certain length of time, a creditor must be extremely organized in order to collect what they are owed.

When do my creditors have the right to garnish my wages?

Unfortunately, there is no definitive solution to this question because creditors do not always garnish salaries, even when their debtors have ceased paying. Garnishing your earnings usually takes a long time and a lot of effort on the part of the creditor. This means that a creditor is unlikely to garnish a debtor’s wages if they have just been in arrears for a brief time.

It can be confusing when you receive a wage garnishment demand for the first time, but the process is very simple. If any information on the garnishment demand is missing, utilize the contact information provided to inquire. Also, keep in mind that your employee may be humiliated by the circumstance, so maintain as much discretion as possible to protect them.

You should inform your employee about the garnishment ahead of time so that they aren’t surprised by a smaller-than-expected check, but you should also avoid making them feel uncomfortable or at risk of penalty.

The Bottom Line

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