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clients across Canada since 1987

Oct 05, 2017

Understanding wage garnishment and how to avoid it

When an individual finds him or herself in financial difficulty and creditors are trying to collect, the situation can be overwhelming. Whether it's due to mounting medical expenses, credit card debt, a sudden, unforeseen event such as a serious accident or some other reason, scores of individuals in Ontario encounter serious financial difficulties. Demanding creditors may eventually draw on wage garnishment as a means to collect on outstanding debt.

A creditor can sue a debtor in order to collect monies owed. Typically, they do so when there is little chance of collecting otherwise. Before a creditor can arrange to have an individual's wages garnished, the creditor must obtain a court order. In the event that one's wages are paid into a credit union, or if the CRA is seeking back taxes, wages can be garnished without a court order.

If the suit is successful, and the creditor obtains the order, the creditor contacts the debtor's employer. The employer is then legally bound to pay the creditor 50 percent of the employee's gross monthly wages. This garnishment continues until the debt clears or the debtor is able to stop the garnishment.

There are several methods for preventing or stopping garnishment action in Ontario. The most obvious is to pay the debt. Unfortunately, in many situations, debtors, through no fault of their own, do not have this ability. Under such circumstances, two other options exist: filing for bankruptcy or for a consumer proposal or similar alternative to renegotiate debt.

No matter how dire one's financial circumstances may seem, options exist, even when a creditor threatens to pursue wage garnishment. Finding the best route to manage one's personal financial load may require consultation with experienced professionals. A lawyer who focuses on defending insolvent clients can provide analysis and legal advice to determine the best possible solution.