Tuesday, 30 December 2014

Backed into a Corner: Stopping a Wage Garnishment

You’ve just received your bi-weekly paycheque, but the money deposited in your account is far lower than what is stated on your paycheque. After inquiries to your payroll department, you realize that this is not a mistake to be remedied by your company, but rather the result of some unpaid bills. A wage garnishment can be a financially devastating thing, one that is actually incredibly common, so what can you do to stop it?

Firstly, what is a wage garnishment? Well, when you owe money to a creditor that you have not paid, they may opt to head to court and obtain an order to have those debts garnished from your paycheque, unless you owe money to the Canada Revenue Agency and then a court order isn’t even necessary. Once this order is obtained, a requirement to pay letter is sent to your employer, who is then legally required to submit a portion of your wages – to the tune of up to 50% - directly to the court.

Wait – can’t your employer just say no? Not unless they want to deal with the repercussions! When it comes to these court orders, besides paying your debts, there are only 3 other ways to stop a wage garnishment:

  1. Making a deal with your creditor. Start here, but we suggest not getting your hopes up. If your creditor has taken the steps to obtain a court order against you, they likely have already attempted to contact you on numerous occasions and would therefore be unlikely to accept a negotiated repayment plan.

  1. Consumer proposal. Once a consumer proposal has been filed, all wage garnishments stop! And the bonus here is that not only are you stopping your wages from being taken, you also stop all interest and merge all of your debt payments into one convenient monthly payment that you can afford. The downside – your credit can be negatively impacted (although that has likely already occurred).

  1. Bankruptcy. Like a consumer proposal, declaring bankruptcy stops all wage garnishments and eliminates many of your current debts. In exchange for this, you are required to adhere to certain regulations including attending credit counselling sessions and declaring surplus income. And like a consumer proposal, your credit can be negatively impacted.

If you believe a wage garnishment may be forthcoming, or if one has already been leveraged against you, don’t worry – we can help. For more about stopping the garnishment of your wages please contact DebtCare Canada today by calling 1-888-890-0888.

1 comment:

  1. Hello,
    Wage garnishments do not incorporate voluntary wage garnishments. Some debtor's could voluntarily consort with their employers to turn more than a specified amount of their earnings to a creditor to absolve the debt voluntarily, with no the use of a court order.New Jersey Lawyer