Consumer Debt Victoria - PDSC Trustee Site

2015-05-21 21:22:59

Wage Garnishment - Affect on Consumers

Problems associated with debts: Wage garnishment. – Possible affects on Consumers and What you can do about it?

What does it mean to have your wages garnished?

When you don’t pay your debts, your creditors can obtain a court judgment to garnish your wages. To “garnish” means to attach (as money due or property belonging to a debtor) by way of garnishment. A judgment is merely an agreement from a judge in a court of law that you owe a debt to your creditor who has made the application to court. With this piece of piece of paper, called a judgment, you creditors can get approval from the court to force your employer to send a portion of your pay directly to your creditor/s. This amount can range from 30-50% of your wages to pay debts you owe. Individuals refer to this term as “garnished” but to be legally correct it is a garnishee or garnishment.
In some cases, when the Canada Revenue Agency is particularly frustrated with a debtor, they have been known to seek and receive garnishment orders of 100% against individual debtors. Yikes!
How it Works
In British Columbia, your creditors can garnish your wages if they take you to court and sue you to receive a garnishment order. This order must indicate that you owe the debt and that required to pay it. It can also include fees or costs your debtor had to incur to make the appearance in court to get the order.
There are some exceptions to this procedure where an actual court order is not required. For instance, debts owed to the CRA (Canada Revenue Agency) can have their own internal procedures and can garnish your wages, or seize your bank account without a “court order. Further, a payday loan contract or credit union or others to which you have voluntarily assigned your wages do not need a court order to have the agreed to amounts (plus fees) scooped from your bank.
Rights
In British Columbia, the maximum that can be deducted from your paycheck is 50%. (except for CRA) You can reduce the amount of garnishment of wages by applying to court and demonstrating this garnishment will create a serious hardship for you.
Also, be aware that it is illegal for an employee to be fired or demoted because of a garnishment to their wages.
The ways to stop a wage garnishment is pay off the debt or the creditor agrees to halt the garnishment. Though if the creditor has gone through the effort of garnishing your wages, it would be unlikely for them to halt the garnishment because they believe they will not receive payment.
Options
Before your wages get garnished by your employer, you should consider the following options:
• Negotiating with your creditors to try and come to agreement. Call your creditor to see if you can come up with a settlement.
• A consumer proposal can stop garnishments that have been obtained by most institutions but cannot stop garnishment of child or spousal support but WILL stop CRA garnishments
• Personal bankruptcy. Will not stop garnishment of child or spousal support but will stop all other wage garnishments including all action by CRA.
If you are being affected by a wage garnishment, it is best to speak with a bankruptcy trustee to consider your options. You can always consider a free initial appointment with C.E Craig and Associates to talk about your options if your wages are being garnished.