Wage garnishments impact thousands of people every day - and
can come as a most unpleasant surprise for those individuals.
No matter where you work - whether you are an employee in a
large corporation or you own your own business, creditors, through the court,
can still place a wage garnishment on your wages or your receivables. If you
are an employee, your employer is served with a Notice of Garnishment and must
comply. If you are self-employed, your clients are served and must submit any
payments directly to the court.
Beyond the financial implications, a wage garnishment in
Ontario can have serious consequences in other areas of your life. For example,
if you work for someone else, once that individual receives a Notice of
Garnishment regarding the wage garnishment, they will be fully aware of your
financial problem and thus may view you in a different light. Responsibility
and reliability may be questioned, and any company that required a credit check
upon hiring may take this new information into consideration.
If you work for yourself, especially with a small company,
your reputation is important, but if your clients are receiving letters telling
them to submit payment directly to the court, this could tarnish that
reputation. The hassle may cause those clients to look elsewhere in the future.
Once a garnishment is in place, is paying it off the only
option? Perhaps not. A wage garnishment
in Ontario can often be stopped but this largely depends on who issued it.
Here are a few of the most common types of wage garnishments
in Ontario:
1. Issued through the court – someone sued you, got
a judgement and is enforcing it. Generally this can mean a loss of up to 20% of
your earnings, and can only be stopped by paying the debt or making an
arrangement with a creditor, by court motion, or by arranging a bankruptcy or
consumer proposal with a debt counsellor.
2. Issued by the CRA - the CRA does not need a
court order, and can garnish up to 50% of your wages. If you are self-employed
or on a pension this could be up to 100%. A CRA wage garnishment can only be
stopped by: CRA’s consent or an arrangement, by arranging a bankruptcy or
consumer proposal with a debt counsellor, or by taking CRA to tax court (the
most expensive route). A CRA wage garnishment is particularly nasty….
3. Issued by Family Responsibility – the only way
to deal with one of these is to pay it in full or go back to court - there is
no other option.
4. Issued because of EI overpayment or by
government after receiving money under false pretense – this can be complicated
and these are instances where it is difficult to get protection. Like the CRA,
this does not require a court order and if fraud is involved it can get tricky.
When you are facing a garnishment of your wages, no matter
the source, your best bet is to speak with a debt counsellor. The solution to
your financial problem will largely depend on your personal circumstances, but
ignoring the garnishment should never be an option.
Avoid the embarrassment and financial hardship of a wage
garnishment in Ontario by calling DebtCare Canada today at 1-888-890-0888.
