What Are My Options If My Wages Are Garnished?
August 15th, 2014 by A Licensed Insolvency Trustee
It’s payday, and you notice that your paycheque is significantly smaller than usual. You speak to the person in charge of payroll at your firm and find out 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!
Note: some resources use the verb “garnish,” and some use “garnishee.” They are both correct, and they mean the same thing – to seize money owed to the debtor by someone else (in this case, wages owed by their employer), for the benefit of a creditor. In legal documents, “garnishee” may also mean the person from whom the garnished monies are taken.
If your employer has received a garnishment order, that means your creditor has gone to court and obtained a judgment against you for a specified amount of money. Garnisheed monies are paid directly to the court, and eventually make their way to the creditor.
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
- Of course, we recommend the simplest, most complete insolvency solutions. Consider speaking to a Licensed Insolvency Trustee about filing for personal bankruptcy or making a consumer proposal. Your first appointment is free and entirely confidential.
You can try negotiating a voluntary settlement with your creditor
If your wages are being garnished, you may be able to negotiate a 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 creditor that you are willing and able to pay, 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 their money faster, even if it also means receiving less money than under an existing wage garnishment. It is important that when you negotiate a settlement offer, you get a written document from your judgment creditor, or their agent, confirming the details of your settlement.
One option is the lump sum settlement. Here is an example. Let’s say your creditor has obtained a $11,000 judgment against you. You might be in a position in which 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.
Go to court and try to have the garnishment amount 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 garnisheed 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 will need 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, it can be an 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. However, 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. It may be possible to move to New Brunswick and find work there, thus avoiding wage garnishment altogether.
Relocate outside of Canada
Moving outside Canada is another means to avoid a wage garnishment. Creditors and their collection agents are very ineffective at collecting monies from debtors who live outside the country. It is simply too expensive and complicated for them to pursue.
Move to a different province where the exemption on wage garnishments is more favourable
If your wages are being garnished, then only a portion of your wages are being deducted from your paycheque to be paid to your judgment creditor. The amount that must be left for your use is calculated using a formula – the provincial exemption for wage garnishments in the province where you live. The following table sets out the formulas for the monthly exemption for wage garnishments in each province of Canada.
Monthly Exemption From Wage Garnishments in Favour of Creditors
By Province (net wages)
|Province||Monthly Exemption from Wage Garnishment|
|Alberta||Percentage exempt is 50% of wages above the minimum exemption of $800 (maximum $3,200) plus $200 for each dependent.|
|British Columbia||70% of 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% of 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% of gross wages are exempt|
|Ontario||80% of wages are exempt, unless otherwise ordered by a judge|
|PEI||Exemption determined by the court based on employee’s financial needs and number of dependents.|
|Quebec||Over the minimum exemption of $180 per week plus $30 per week for each dependent, 70% of wages are exempt|
|Saskatchewan||Over the minimum exemption threshold of $1500 per month plus $300 per month for each dependent, the exemption is 70% of wages|
|Northwest Territories||70% of an employee’s net wages exempt, over the minimum exemption threshold of $1,000 per month, plus $250 per dependent|
|Nunavut||Over the minimum exemption threshold income of $1500 per month plus $300 per dependent, exemption is 70% of the debtor’s net pay per month to a maximum of $3500/mo plus $300/mo per dependent.|
|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|
Best and worst exemptions from wage garnishments for high income earners
If you are a high income earner, the provinces with the most favourable exemptions from wage garnishments are as follows:
- Nova Scotia (85 percent of net wages exempt from wage garnishment)
- Ontario (80 percent of net wages exempt from wage garnishment)
- Quebec, British Columbia and Manitoba (70 percent of your wages exempt from wage garnishment)
If you are a high income earner, the least favourable exemptions from wage garnishments are in Newfoundland, and then Alberta. 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 that may be as low as $800, plus $200 per dependent, but above those limits, 50% of your wages can be garnished.
Exemptions from wage garnishments for low income earners
If you are a low income earner, the provinces with the most favourable exemptions from wage garnishments are as follows:
- Most advantageous: Saskatchewan
- Second most advantageous: Alberta
- Third most advantageous: the three Territories
- Fourth most advantageous: Nova Scotia, and Newfoundland & Labrador
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 wages are 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 garnishment in Canada, as follows.
1. Percentage of net wages exempt from wage garnishments
Wage garnishment in Ontario 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; therefore, 20 percent of take-home pay is available to fund wage garnishments. Unlike other provinces, Ontario does not have a minimum dollar amount which is exempt from wage garnishments, 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 from availability to judgment creditors under a wage garnishment. This can be referred to 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, 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 & Labrador.
While the wage garnishment low-income shield protects low income earners in these provinces, it provides no relief 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.
In contrast to this, several provinces have exemptions from wage garnishments that are a hybrid of these two types of exemptions. Garnishments are calculated on the basis of a percentage of wages, after taking into consideration the province’s wage garnishment low-income shield. “Hybrid” provinces with these policies include Manitoba, Nova Scotia, and Quebec.
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?
If, for personal reasons, you cannot consider either settling with your creditor or pursuing consumer proposal or bankruptcy, 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 Saskatchewan, where each month $1,500, plus $300 per dependent, are exempt from wage garnishments – or to New Brunswick, where garnishments of wages are prohibited.
Similarly, if you are a high income earner living in Newfoundland, which does not exempt a portion of a person’s wages, or Alberta, where only 50% is exempt above a certain threshold, you might be better off living in a province such as Ontario, Quebec, 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. Wage garnishments are immediately stopped once you file for bankruptcy or a consumer proposal. Your first appointment with a Trustee is free!
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