What is garnishment?
Garnishment is a legal process often initiated when individuals default on their financial obligations. Garnishment orders allow creditors to seize assets – typically a person's wages – from third parties. These orders can also be used to access funds in a debtor's bank account. This financial recourse is usually pursued by creditors when they have exhausted other means of debt collection. In most cases, garnishment can only be sought after a creditor has obtained judgment against a debtor. However, in some instances, like with debts owed to the Canada Revenue Agency (CRA), garnishment can occur without the necessity of obtaining a court order.
Who can seek an order for wage garnishment?
Various types of creditors and institutions can obtain a garnishment order to recover the money owed to them. These entities encompass a wide range of financial institutions and government bodies, including credit card companies, collection agencies, government agencies (such as the Family Responsibility Office or CRA), entities responsible for collecting student loans, payday lenders, banks, and private lenders.
To what extent can wages be garnished?
The extent to which wages can be garnished varies based on the type of debt and the jurisdiction in which you reside. Generally, if someone owes debt in Ontario, the maximum percent of their wages that can be garnished is 20%. However, when it comes to the enforcement of an order for support or maintenance, a maximum of 50% of a person's wages can be garnished. Ultimately, a court has the ability to determine the amount to be garnished based on each individual's finances.
What cannot be garnished?
Not all types of income are subject to wage garnishment. The Ontario Works Act, provides that basic financial assistance is not subject to garnishment, attachment, execution, or seizure. This safeguard ensures that individuals who are already in vulnerable financial situations can maintain access to essential support. Similarly, government pension income, such as the Canada Pension Plan and Old Age Security, is shielded from garnishment from standard creditors. However, it should be noted that such income can be seized by the CRA.
Can you stop a garnishment?
The short answer is no. One of the only ways to stop a wage garnishment order is to pay off the debt. Otherwise, if your financial situation calls for it, you can make a consumer proposal or file for bankruptcy, both of which create an automatic stay of proceedings.
Conclusion
Garnishment is a legal process implemented to facilitate the repayment of debts when other avenues have been exhausted. It is a tool used by creditors and government agencies. The regulations governing it can vary by jurisdiction and the type of debt. Understanding the limits on garnishment and the protections in place for certain types of income can help individuals navigate the complexities of debt repayment and maintain their financial stability during challenging times.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
