What are my options if my wages are garnisheed?
August 15th, 2014 by Mark Silverthorn
It is payday and you notice that your pay cheque is for significantly less than usual. You speak to the person in charge of payroll at your firm and you are informed that your employer has received a garnishment notice from the court with respect to your wages. You are upset, confused and not sure what to do next!
If your wages are garnisheed you have a number of options including the following:
- Negotiate a voluntary repayment plan with your creditor
- Go to court and try to get the amount of monies taken from your wages reduced on the grounds of financial hardship
- Quit your job which effectively terminates the wage garnishment
- Move to New Brunswick where wage garnishments are not permitted
- Relocate outside Canada which will dramatically reduce the odds that your wages will be subject to garnishment
- Move to a different province where provincial exemptions from wage garnishments may be more favourable
- Speak to a Licensed Insolvency Trustee about filing for personal bankruptcy or making a consumer proposal
You can try negotiating a voluntary settlement with your creditor
If your wages are being garnisheed there is a possibility that you can negotiate some kind of voluntary arrangement with your judgment creditor that would effectively satisfy the creditor’s judgment. This might involve a one-time lump sum payment or a series of post-dated cheques. If you can persuade your judgment creditor to do so then you can ask them to “lift the garnishment of your wages”. A creditor can often be persuaded to accept a settlement offer if it means getting its money faster, even if it means that the creditor receives less money than it would by waiting to receive its monies under an existing wage garnishment. It is important that when you negotiate a settlement offer that you get a written document from your judgment creditor, or its agent, confirming the details of your settlement.
One option is the lump sum settlement. An example will help illustrate how this might work. Let’s say your creditor has obtained a $11,000 judgment against you. You might be in a position where you could offer to make a lump sum payment of $9,000 as full and final settlement of this judgment and you could find the money by selling an asset such as a boat or camper, or cashing in part of your RRSP. If your creditor accepts this arrangement and you can come up with the $9,000 then you will be able to satisfy the judgment and get the garnishment notice lifted.
Let’s take our same example where your creditor has a $11,000 judgment against you. Your first paycheque was $300 less than usual and you get paid every second Friday, or approximately $2,400 deducted from your wages every four months. You could make an offer to your judgment creditor to pay it $700 within 10 days, and to provide a series of post-dated cheques dated January 1st, April 1st, July 1st, and October 1st for $2,500 each. Should your creditor accept this proposal it will receive the $11,000 owing to it faster than if it were to proceed by means of the existing wage garnishment but it will forego a few hundred dollars in interest accruing on your judgment.
Go to court and try getting the amount of your wages being garnisheed reduced
If your wages are being garnisheed it is possible for you to go to court and ask a judge to have the amount of monies being deducted under a wage garnishment reduced on the basis of financial hardship. This involves the preparation of some court documents and scheduling a court hearing. If you would like to investigate this option you might want to speak with a lawyer or a paralegal.
Quit your job and end the garnishment of your wages
You can put an end to the garnishment of your wages at your current employer by simply quitting your job. This may sound drastic but for some people, particularly those who can find a new employer relatively easily, this can be a very effective strategy. If you work in retail, the hospitality industry, or you are a dental hygienist, you might be able to find a new job relatively easily. If you change employers to stop a wage garnishment you run the risk of your judgment creditor initiating a wage garnishment at your new employer if they can learn the identity of your new employer. Some individuals, however, are able to effectively avoid paying an outstanding judgment by simply changing employers if their wages are being garnisheed. At some point in the future, your judgment creditor might simply stop trying to initiate wage garnishments against you.
Move to New Brunswick where wage garnishments are not permitted
The province of New Brunswick does not permit wage garnishments. I can recall a senior civil servant responsible for regulating collection agencies in New Brunswick referring to his province as a “debtor’s haven”. At one point I had a client experiencing financial difficulties living in Kanata, Ontario. Based upon my advice he put his house up for sale and he arranged to move to Moncton, New Brunswick, where he rented an apartment and obtained employment with a local employer. Despite the fact that he owed more than $100,000 to his creditors, he was able to avoid paying any monies to these creditors.
Relocate outside of Canada
You might be able to avoid a wage garnishment by moving outside of Canada. Based upon my 12 years experience, between 1994 and 2006, as a collection lawyer and collection industry insider I know that creditors and their collection agents are very ineffective at collecting monies from debtors who live outside the country.
Move to a different province where the exemption on wage garnishments is more favourable
If your wages are being garnisheed then only a portion of your wages are being deducted from your paycheque to be paid to your judgment creditor. The amount of money that is deducted from your wages is calculated using a formula, the provincial exemption for wage garnishments, in the province where you live. The following table sets out the formula for the monthly exemption for wage garnishments in each province in Canada.
Monthly Exemption From Wage Garnishments in Favour of Creditors
By Province (net wages)
|Province||Monthly Exemption from Wage Garnishment|
|Alberta||Between $800 and $2,400 for those with no dependents, the size of the exemption increasing on a sliding scale as the size of the enforcement debtor’s monthly income increases. Furthermore, this amount increases by $200 for each dependent a person has.|
|British Columbia||70 percent of a person’s wages are exempt, except that the exempt amount cannot be less than (i) $100 for a single employee with no dependents and (ii) $200 for a person with one or more dependents|
|Manitoba||70 percent of a person’s wages are exempt, except that the exempt amount cannot be less than (i) $250 for an employee with no dependents, and (ii) $350 for an employee with dependents|
|New Brunswick||Wage garnishments are not permitted in the province|
|Nfld. & Labrador||-Employees with no spouse, no co-habiting partner, and no dependents: $649-Employees supporting one or more dependents, $963, plus $47 for each additional dependent-Employees supporting a spouse or co-habiting partner: $1,019-Employees supporting a spouse or co-habiting partner and one dependent: $1,059, plus $47 for each additional dependent|
|Nova Scotia||85 percent of gross wages are exempt, except that the net wage employee receives cannot be less than $450 per week for employees supporting a family and $330 per week for other employees|
|Ontario||80 percent of a person’s wages are exempt|
|PEI||Exemption determined by the court based on employee’s financial needs and number of dependents.|
|Quebec||70 percent of wages in excess of $180 per week, plus $30 for each dependent in excess of two, for employees who are supporting a spouse, have a dependent child or are the main support of a relative. In all other cases, 70 percent of wages exceeding $120/week are exempt|
|Saskatchewan||$500, plus $100 for each dependent|
|Northwest Territories||70 percent of an employee’s net wages exempt, except that the amount exempt must be a minimum of $1,000, plus $250 for each dependent|
|Nunavut||Exemption is (i) $1,500, plus $300 month per dependent, or (ii) 70 percent of an employee’s net pay, up to $3,500/month, plus $300 per month for each dependent, whichever is higher|
|Yukon||70% of net wages are exempt, except that the amount exempted shall be not less than $600 per month for a single employee. For employee supporting one to three dependents, monthly exemption must not be less than $1,000. If employee is supporting at least four dependents, minimum monthly exemption is to increase by $150/month for fourth and each additional dependent|
Depending upon your income – and in some instances the number of your dependents – the amount of monies deducted from your pay cheque under a wage garnishment will vary depending upon which province you live.
Exemptions from wage garnishments for high income earners
If you are a high income earner then the provinces with the most favourable exemptions from wage garnishments are as follows:
- Nova Scotia (85 percent of take-home pay exempt from wage garnishment)
- Quebec (70 percent of your gross wages exempt from wage garnishment)
- Ontario (80 percent of take-home pay exempt from wage garnishment)
- British Columbia and Manitoba (70 percent of take-home pay exempt from wage garnishment)
Furthermore, if you are a high income earner then the least favourable exemptions from wage garnishments are Saskatchewan followed by Newfoundland, and then Alberta. In Saskatchewan only $500 a month in income, plus $100 per dependent is exempt from wage garnishments. In Newfoundland $649 per month in wages is exempt from wage garnishment, plus additional amounts if you have dependents. Alberta residents are entitled to an exemption from wage garnishments between $800 and $2,400, plus $200 per dependent.
Exemptions from wage garnishments for low income earners
If you are a low-income earner then the provinces with the most favourable exemptions from wage garnishments are as follows:
- Most advantageous: Alberta
- Second most advantageous: Three territories
- Third most advantageous: Nova Scotia and Newfoundland & Labrador
- Fourth most advantageous: Manitoba and Quebec
If you are a low income earner the provinces with the least favourable exemptions from wage garnishments are as follows:
- British Columbia (30 percent of your take home pay is available for wage garnishments, except that the exempt amount cannot be less than $100/month for a single person and $200/month with one or more dependents)
- Ontario (20 percent of your take home pay is available for wage garnishments)
There are four categories of provincial exemptions from wage exemptions in Canada, as follows.
1. Percentage of net wages exempt from wage garnishments
Ontario is the only province in which the exemption from wage garnishment is based solely upon a percentage of the judgment debtor’s net wages. Eighty percent of an Ontario resident’s net wages are exempt from wage garnishments and therefore 20 percent of an Ontario resident’s take-home pay is available to fund wage garnishments. Unlike other provinces, Ontario do not have a minimum dollar amount which is exempt from wage garnishments, a measure to protect low income earners.
2. Provinces which only protect low income earners from wage garnishments
In contrast, some provinces protect low-income earners from wage garnishments by shielding a minimum dollar amount of wages available to judgment creditors under a wage garnishment. I will refer to this as a wage garnishment low-income shield. If you support yourself on a low-income and you live in provinces with a wage garnishment low-income shield then you might not have to pay a penny if a creditor were to obtain a wage garnishment against you or the wage garnishment might be a nominal amount. Provinces with a wage garnishment low-income shield include Alberta , Saskatchewan, and Newfoundland. While the wage garnishment low-income shield protects low-income earners in Alberta, Saskatchewan, and Newfoundland it provides virtually no relief whatsoever to middle and high income earners in these three provinces.
The exemption from wage garnishments in Ontario is calculated solely as a percentage of the debtor’s wages. The exemption from wage garnishments in Alberta, Saskatchewan, and Newfoundland is based solely on a specific dollar amount or the wage garnishment low-income shield. Several provinces have exemptions from wage garnishments that are a hybrid of these two types of exemptions—judgment creditors pay a percentage of their wages under a wage garnishment after taking into consideration the province’s wage garnishment low-income shield. These hybrid provinces include Manitoba, Nova Scotia, and Quebec. These provinces make a percentage of a judgment debtor’s wages available for judgment creditors, however, they also shield a minimum dollar amount of a judgment debtor’s income from being deducted under a wage garnishment.
4. Prince Edward Island
In Prince Edward Island where a judgment creditor seeks to obtain a wage garnishment against a judgment debtor a court official determines the amount of the wage garnishment following an interview with the judgment debtor.
Does it make sense for me to move to avoid or lessen the impact of a wage garnishment?
Depending upon a number of factors it might make sense for you to move to another province to avoid the financial consequences of a wage garnishment. If you are a low-income earner, particularly one living in Ontario or British Columbia, you might be much better off living in a province like Alberta where each month $2,400, plus $200 per dependent of a person’s wages, are exempt from wage garnishments. Similarly, if you are a high income earner living in Alberta , Saskatchewan or Newfoundland, provinces which do not exempt a percentage of a person’s wages from wage garnishments, you might be much better off living in a province like Nova Scotia, Quebec, Ontario, Manitoba, or British Columbia, which exempt a significant percentage of a person’s wages from wage garnishments.
Speak to a Licensed Insolvency Trustee about filing for personal bankruptcy or making a consumer proposal
You might want to learn more about stopping a wage garnishment by speaking with a Licensed Insolvency Trustee. If you file for personal bankruptcy or make a consumer proposal then any wage garnishments against you will end.