Nothing is worse than getting your wages garnished, and
it seems as though this is happening with increased frequency - many Canadian
individuals are facing wage garnishments in Ontario as a result of debts in
collections, CRA tax debts, or Family Responsibility.
No matter how you slice it, wage garnishments are brutal,
and carry with them various personal and professional consequences. For
example, not only will this type of collection action cause personal financial
hardship, making bill payments incredibly difficult, it can also impact your
professional life. Since wage garnishments are sent to employers, once your
employer learns of your financial troubles, your reputation will be impacted,
and this could have important and costly ramifications. Additionally, if you
own your own business, it will be your clients that receive notice to garnish
receivables, thereby impacting your reputation.
Facts about wage garnishments in Ontario:
- If you don’t pay your debts, your creditors can
take you to court and obtain a court order to have your wages garnished.
However, some creditors, the CRA as the most common one, don’t need a court
order and can simply send out a Requirement To Pay notice and the deed is done.
- Under the Ontario Wages Act, a creditor can
garnish up to 50% of your gross wages, depending on the organization owed. The
actual amount is determined by the court, but typically garnishments in Ontario
are around 20%. That being said, if you are self-employed, and owe money to the
CRA, a garnishment can get as high as 100% of your receivables.
- Wage garnishments can be stopped. Some people
assume that once a garnishment is in place, it will remain in place until a
debt is paid in full. While this is one way to remove a garnishment, it is not
the only one.
o Negotiating
a voluntary arrangement with a creditor is an option, although once a creditor
has gone through the trouble of garnishing you they are not going to easily let
go and may still demand payment in full.
o Going
to court is another option. Keep in mind that this can get expensive,
especially if it is tax court. This is because in small claims court you may
represent yourself, whereas in tax court you usually need a lawyer.
o A
third option is working with a debt counsellor on a consumer proposal. For many
Canadians, this is the option that makes the most sense, often because it will
not only stop a wage garnishment in its tracks, it will also freeze interest,
consolidate all unsecured debts into one monthly payment, and will often result
in a much smaller balance to be paid off.
Wage garnishments in Ontario can quickly turn a financial
issue into a financial nightmare. Once a creditor has leveraged this form of
collection action, removal may be difficult, but it is not impossible. You have options.
For more about having a wage garnishment lifted, please
contact DebtCare Canada today by calling 1-888-890-0888.
