How to Stop Wage Garnishment in Ontario

wage garnishment

If your creditor doesn’t receive the money they are owed, they can turn to wage garnishment as a court-mandated way to directly take funds from your income. When you have ignored payments (or have been unable to meet them), your creditors can take up to 20 percent of your gross wages to go towards what you owe. 

Creditors often start garnishing wages if you’ve defaulted on your loans or haven’t made payments on your debts despite consistent reminders. That said, you do have options to stop this process.

At David Sklar & Associates, our Licensed Insolvency Trustees in Toronto can help you weigh your options and identify your rights to prevent or stop wage garnishment in Ontario.

What Is Wage Garnishment?

A wage garnishment (often called a garnishee) is a legal proceeding in Ontario from the Courts where money owed to a creditor is taken from the debtor by a third party (i.e., Bank or Employer) and given to the creditor. The money is usually taken from a debtor’s bank account or a debtor’s wages.

How Does A Wage Garnishment Work?

Any creditor that is owed money by a debtor can file a wage garnishment. This includes credit card companies, payday loan lenders, collection agencies, and the Canada Revenue Agency.

To garnish wages, a creditor will need to file a Statement of Claim and bring the motion to the court to obtain a judgement and wage garnishment order. As a debtor, you will have 21 days to respond to the Statement of Claim to either dispute the debt or notify the creditor of an error. If there is no response, the court will assume you agree to the debt, and the creditor gets their Garnishment Order.

It’s important to note that the CRA does not need to wait for a judgment to be passed to apply garnishment to a debtor. 

According to the Canadian Government, if an individual owes a sum of money to the CRA and cannot or refuses to pay it, the CRA can garnishee their wages. In the event of a wage garnishment, the CRA will provide a debtor’s employer with a requirement to pay notice instead of presenting it to the debtor. 

Upon receiving the notice, an employer will need to remit all amounts specified and be responsible for any necessary amounts that are not remitted. The collection officer’s name will be indicated on the notice of requirement so that the employer can request further information if required.

Who Can Garnish Wages In Ontario?

  • Credit card company
  • A collection agency
  • Payday loan lenders
  • The Canada Revenue Agency (CRA

How Do I Stop Wage Garnishment In Ontario?

When one’s wages are garnished, the garnishment will only stop when the owed debt is paid in full The other option is to get protection via Bankruptcy or a Consumer Proposal.

These options can help protect you and help you to get your financial situation back on track.

How to Stop Wage Garnishment with A Consumer Proposal

One way to stop wage garnishment in Ontario once the order is in action is to file a consumer proposal. If you’re unsure how a consumer proposal works or how it affects your mortgage options, a trustee at David Sklar & Associates can walk you through the process.

Depending on your situation, you may not have to file bankruptcy to get a garnishment lifted. For many debtors, this avenue of debt relief is an ideal way to settle debts without some of the severity of filing for bankruptcy.

If you qualify, filing a Consumer Proposal will enable you to:

  • Stop garnishments
  • Stop collection calls
  • Keep your assets
  • Pay off all your debts at a fraction of the total owing in five or less years.

Your Trustee will advise you on whether or not you are eligible for wage garnishment protection by filing a proposal or bankruptcy.

Team Up With A Licensed Insolvency Trustee

Licensed Insolvency Trustees (formerly known as bankruptcy trustees) are licensed by the Office of the Superintendent of Bankruptcy (OSB). They administer forms of debt relief like bankruptcy and can also help you learn about other options to consider, like a consumer proposal.

There are a few steps that you need to take before your creditors approve your proposal. Only a bankruptcy trustee can officially file the proposal for you, so it’s essential to work with someone empathetic and knowledgeable when you are ready to initiate a consumer proposal in Ontario.

Paying Off Your Consumer Proposal

The amount of time you have to pay your creditors through your consumer proposal depends on your agreement’s terms, but the process can take up to five years.

One of the attractive qualities of a consumer proposal vs bankruptcy is that, while a bankruptcy affects your credit score for up to seven years after completion, a consumer proposal only stays on your credit history for three years after completion.

If you take out a loan to pay off your proposal, you’ll pay more money in the long run. Be smart and conscientious about your repayment strategy. It’s better to be financially responsible than to try to make the problem disappear quickly with long-term consequences.

Even if you have five years to pay off your consumer proposal, the promise of having the record wiped from your credit history means you might want to pay off your proposal as fast as possible. If you are thinking about taking out loans while in a consumer proposal to speed up the process, consider that while consumer proposals do not collect interest in the period that you pay them off, your loan will.

How to Stop Wage Garnishment with A Division 1 Proposal

If your total debts exceed $250,000 (not including your mortgage), you will not qualify for a consumer proposal — but that doesn’t mean that you need to file for bankruptcy. In this case, you can still be eligible for a Division 1 Proposal. Division 1 Proposals can also be filed by businesses looking for debt relief.

This proposal signifies a compromise agreed upon between debtors and their unsecured creditors. The proposal helps lower the total amount of debts owed to make it easier for the debtor to repay their creditors.

How to Stop Wage Garnishment with Bankruptcy

Dealing with wage garnishment can be very frustrating both financially and emotionally. If you are dealing with garnished wages, needless to say, you are in financial trouble.

Bankruptcy is the last resort when dealing with wage garnishments, but it is nevertheless an option that you can use if needed. We will help you through every stage of the process. 

When you file bankruptcy to stop wage garnishment, any garnishees on your wages and or bank accounts will stop — and so will the collection calls. Your employer will need to be informed by the Trustee to stop the garnishment of your wages.

One important side note is that a consumer proposal or bankruptcy will not stop alimony or child support payments.

Can Creditors Garnish Wages in Ontario?

Creditors can garnish wages in Ontario. That said, when a creditor pursues garnishment against a debtor, they have specific rules and regulations to abide by. For example, if a creditor wants to get a garnishing order against a bank account, the creditor must first file a Statement of Claim and obtain a garnishing order. 

After a debtor receives this claim, they will then have 21 days to respond either by identifying any errors to the creditor or by filing a Statement of Defense to dispute the debt, 

As per the Ontario Wages Act, a creditor can garnish a maximum of 20% of your gross wages for debt. This limit varies in different provinces.

Creditors may only contact your employer once to get your employment information unless your employer has guaranteed your debt or the call is about legal action (i.e., garnishee, court order, etc.). Before telling a creditor and beginning legal action, your employer must notify you in writing.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

Share This!

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on pinterest

Ready to live debt free?

I’m very happy with the services I received for Jackie Stanley who helped me get my finances in order. It was a quick and easy process & all of my questions were answered.
Amanda Frappier
01:18 19 Nov 21
I have had the privilege of being supported by Jackie at David Sklar Associate. She was very helpful, very professional and very friendly. She gave me the help I need. Thank you Jackie for your help.
Alex Taylor
22:03 17 Nov 21
I filed a proposal with another group, which came in as a referral from one of my brokers. My experience went from ok to bad to worse, due to lack of communication and education on the process I was to embark on. I worked with Cori Naron in the past, and I came to her now for help on literally doing the work that the other group should have done. Cori stepped in, educated me, advised on rights, responsibilities, how the process works and what potential outcomes may happen. I do not have enough words of recognition and gratitude for what she did - she alleviated stress, anxiety, dead-end thoughts and she made me live again. Congrats to DSklar for hiring her and retaining such talent.
Giani Kokolakis
18:45 25 Oct 21
Very professional service. Before contacting David Sklar & Associates i contacted bunch of other firms they seemed fishy. After I spoke with Jason Sklar at Hamilton Office I discovered professionalism with hope. I was explained every step of my situation with solution professionally. Thank you David Sklar & Associates.
Wajay Awan
07:29 12 Oct 21
I met David a few months ago and i am glad I did. He has helped me all the way through my bankruptcy with good advice and explained every step of the process. David is a very down to earth and very professional. Anytime I've had a question I was able to reach out to David by phone or email and he always got back to me. If your struggling with your bills and need a way to get help, I strongly recommend David Sklar &Associates to help you. My experience with them on 1-5scale would be a 5;; My life is so much better now, thanks to David Sklar.
Bruce Locke
16:13 08 Oct 21
I have had the privilege of being supported by Jackie S, at David Sklar n Associate.She was helpful, professional and friendly. I was able to get the help I needed at a difficult time in my life. I would recommend anyone who needs support with working out their debts to ask for Jackie, she will be waiting to assist however she can to help you through your debts. She works with a team who is always ready and responsive.Thank you Jackie and your team:)
Denise Simpson
15:17 09 Sep 21
My experience with Ashley Carter at David Sklar and Associates was very pleasant and professional. The process was made easy by Ashley with her help in answering my questions and concerns.
Alex Lamparter
13:07 03 Sep 21
Ashley she was extremely helpful,super friendly and understanding my situation. I am very please for the service I received and I will recommend this Company to anyone in need of consolidating. Thanks so so much.
Nicole Minister
17:43 02 Sep 21
I finally pulled the trigger and seek help from this team. I tried to pay my debt in the way it should be until the pandemic made it even worst and couldn't keep up with my payments anymore. Jackie is an amazing person, I told her the problem, she gave me the solution and gave me a variety of options and walked me through the process. That simple. Thank you so much.
rr 28
12:44 21 Aug 21
Dealing with Jackie made the process so much more comfortable. From my first phone call with her I never felt like I was being looked down on. Jackie made this as easy as being in this situation could be.
Vi Smith
18:09 13 Aug 21
js_loader