Wage Garnishment In Ontario
What It Is, How It Works, and How to Stop It
If money is being taken from your paycheque or you’ve been warned it’s about to happen you’re not alone. Wage garnishment in Ontario is a legal way certain creditors can collect money, but there are also legal steps that may stop it or reduce the impact.
This page explains wage garnishment, how it starts, how much can be taken, what income may be protected, and the practical options people use to deal with it.
How to Stop Wage Garnishment Legally in Canada
Licensed Insolvency Trustee Olga Chtcherbakova explains how filing a Consumer Proposal or Bankruptcy can immediately stop wage garnishments under federal law. Once you sign the necessary documents, we notify your creditors, and they must legally comply.
Are wage garnishments straining your budget and causing you stress?
If you fail to repay your lender, they can get a hold of your money through a legal action called wage garnishment. In Ontario, commercial lenders can obtain a court order to take funds straight from your paycheque – you’ll never see this money hit your bank account. They’ll usually begin garnishing your wages if you’ve defaulted on your loans or haven’t made payments despite constant reminders.
Having your wages seized can be a profoundly unsettling and frustrating experience. You work hard each day to bring home a paycheque, only to suddenly find a portion of it whisked away to your creditor’s bank account.
Now, you find with less money each payday, which will only put further stress on your household’s budget. This is especially true in Ontario, where living costs seem to go nowhere but up.
Stop your creditors from garnishing your wages in Ontario
When creditors begin raiding your paycheque, the financial stress on your household can be severe. However, with the right debt relief program, you can take steps to stop wage garnishment no matter where you live in Ontario.
At David Sklar & Associates, we understand how losing part of your income can leave you feeling helpless and defeated. And more importantly, we’ve helped countless Ontario residents halt court-ordered wage garnishments and achieve financial freedom from debt.
Our knowledgeable and personable team of Licensed Insolvency Trustees can review your situation and recommend the best action to stop creditors from taking your money. Not only that, but they can help you restructure your debt and provide you with sound advice to get your financial house in order. If you’re ready to explore your options, contact us for a free, confidential consultation.
How does wage garnishment work in Ontario?
If you fail to repay your debt, your creditor can ask the court for a judgment allowing them to seize your wages. A wage garnishment order requires your employer to send a portion of your paycheque directly to your creditor. The process continues until your creditor receives all the money you owe them.
Who can garnish your wages in Ontario?
In Ontario, several types of creditors can legally garnish your wages once a court judgment has been obtained, including:
- Credit Card Companies
- Banks
- Private Lenders
- Government Agencies
- Collection Agencies
- Payday Loan Lenders
- Canada Revenue Agency (CRA)
How creditors gain the right to seize your money
Before a creditor can garnish your wages, they must first file a Statement of Claim with the court to begin legal action. If the court rules in the creditor’s favour, they can obtain a judgment and then apply for a Wage Garnishment Order.
As the debtor, you generally have 21 days to respond to the claim, dispute the amount owed, or notify the creditor of any errors on your account. If you don’t file a Statement of Defence within that time, the court may issue a Garnishment Order, allowing a portion of your wages to be sent directly to your creditor until the debt is repaid.
How much of your wages can be garnished in Ontario?
In Ontario, the maximum amount a commercial creditor can garnish from your paycheque is 20% of your gross income. However, the court will consider your budget, income, expenses, and other financial obligations to determine how much your creditor can collect.
What’s exempt from wage garnishment in Ontario?
Luckily, your creditor isn’t free to seize every source of income you earn. The following income streams are exempt from wage garnishment orders:
- Employment Insurance (EI)
- Canada Pension Plan (CPP)
- Old Age Security (OAS) payments
- Guaranteed Income Supplement (GIS)
- Social Assistance (Ontario Works)
- Ontario Disability Support Program (ODSP)
- Workers’ Compensation benefits (WSIB)
- Child support or spousal support payments
- GST/HST credits and other federal tax benefits
However, unlike other commercial creditors, the CRA does have the right to seize certain government benefits, like CPP and OAS payments. Essentially, they’ll issue a set-off order, meaning any payments the federal government owes you will go directly toward settling your CRA debt.
How to stop wage garnishment in Ontario
If you’re looking to put a stop to wage garnishment, you have four options:
Repay your debt
Not surprisingly, repaying your creditor the money you owe them will make a wage garnishment vanish.
A quick way to get a hold of the money you need is to obtain another loan and use the proceeds to settle your balance. Doing so will prompt your creditor to cancel the wage garnishment.
However, taking on more debt to pay off your existing debt is only a temporary solution to the problem. You’re now stuck with a new loan – and a new creditor who can also sue you and go after your wages.
Negotiate with your creditors
Some lenders may be willing to negotiate a new payment schedule with you, reduce your interest charges, waive late fees, etc. It doesn’t hurt to contact them to see if they can accommodate your request.
However, if your wages are already being garnished, it’s likely already too late to strike a deal. Your lender probably has lost faith in your promise to repay your debt. Even if you come to some agreement, the terms aren’t legally binding, so your creditor can still seize your wages if they choose to do so.
Consumer proposal
A consumer proposal is a federally regulated insolvency program for borrowers struggling with debt payments. Under the guidance of a Licensed Insolvency Trustee, you’ll have the opportunity to negotiate with your creditors a new repayment plan. You may be eligible to reduce up to 80% of your unsecured debt, leaving you with a more manageable balance to repay.
In addition, filing a consumer proposal will provide you with certain legal protections, one of which is stopping wage garnishments. Once you begin the program, creditors can no longer garnish your wages.
Bankruptcy
Bankruptcy is another federally regulated insolvency program. It differs from a consumer proposal in that it allows you to eliminate up to 100% of your unsecured debt, giving you a fresh start to rebuild your finances. Filing for bankruptcy will also legally stop all wage garnishments, just like a consumer proposal.
However, these benefits come at a price: you’ll need to surrender a considerable portion of your assets to creditors.
A Consumer Proposal Can Stop Wage Garnishment in Ontario
If you qualify, filing a consumer proposal will:
- Can stop most unsecured wage garnishments (legal stay)
- Can prevent new garnishments on included debts.
- Federally regulated, formal process (filed by an LIT).
- More predictable monthly payment plan.
- David Sklar & Associates can file and notify creditors/payroll.
While bankruptcy is also a viable option, there’s a good chance that a consumer proposal will provide the debt relief you need to get back on track financially. As a result, you can avoid the harsher consequences of bankruptcy.
Ready to stop that wage garnishment order? Then contact us today for a free, no-obligation consultation. We can review your situation and advise whether filing a consumer proposal or bankruptcy is the best option for you.
What are the biggest advantages of a Consumer Proposal
Take a moment to learn about the benefits of a Consumer Proposal. Our team of Licensed Insolvency Trustees will help you every step of the way.
Advantages of a Consumer Proposal in Ontario
- You can avoid filing for bankruptcy
- Your debt may be reduced by up to 70-80%
- Make just one affordable monthly payment
- Interest charges stop as soon as you file
- Keep belongings, including car & home equity
- Collection calls & lawsuits are stopped
- Wage garnishments are stopped
- Agreement is legally binding for all creditors
Frequently Asked Questions About Wage Garnishment in Ontario
What is wage garnishment?
Wage garnishment is a legal process where a creditor (or government agency) requires your employer to send part of your pay directly to them to repay a debt. In many cases, a creditor must first sue you and obtain a court judgment before a garnishment can start. (Some government collections work differently—see CRA question below.)
How much of my pay can be garnished in Ontario?
For most non-support debts, Ontario’s Wages Act generally protects 80% of wages from garnishment (meaning up to 20% may be garnished).
For support (child/spousal) enforcement, the protected amount is different (see next FAQ).
Can more be taken for child support or spousal support?
Yes. Under Ontario’s Wages Act, where an order for support or maintenance is being enforced, 50% of wages are exempt, meaning up to 50% may be garnished.
Can the CRA garnish my wages without a court order?
In some situations, yes. The CRA can issue a Requirement to Pay (RTP) or related notice to an employer (a third party), requiring amounts that would normally be paid to you to be sent to the CRA instead.
Can a consumer proposal stop a wage garnishment?
It can, depending on the type of debt. Filing a consumer proposal through a Licensed Insolvency Trustee (LIT) triggers a legal “stay of proceedings” for unsecured debts included in the filing, which generally stops collection actions like wage garnishments for those debts. Only a Licensed Insolvency Trustee can file a consumer proposal.
Will bankruptcy stop a wage garnishment too?
Bankruptcy also creates a legal stay that generally stops collection actions for unsecured debts included in the bankruptcy. Whether bankruptcy is appropriate depends on your overall situation (income, assets, and debts). Only a Licensed Insolvency Trustee can administer a bankruptcy.
Will my employer find out about the garnishment?
If your wages are being garnished, your employer is typically involved because they receive the garnishment notice/order and must process deductions from your pay. If you file a consumer proposal or bankruptcy, your employer may also receive instructions to stop deductions for the affected garnishment(s).
Are EI, CPP, OAS, ODSP, or Ontario Works protected from garnishment?
Some benefits may be protected (and some have exceptions). For example, Ontario’s ODSP policy states income support is generally not subject to garnishment, with limited exceptions.
Because exemptions can depend on the source of income and the type of debt (including government debts), it’s worth getting advice specific to your situation.
What if my wages are not being garnished yet, but I’ve been threatened?
A creditor often needs to take legal steps first (such as starting a court claim) before wage garnishment can begin. If you’ve received legal papers or collection notices, getting advice early may help you understand your options before it escalates.
What should I do if a garnishment is already in place?
Start by confirming who is garnishing, for what debt, and whether it’s court-ordered or CRA-related, because the options can differ. If the garnishment involves unsecured debts and you’re considering formal debt relief, a Licensed Insolvency Trustee can explain whether a consumer proposal or bankruptcy may help, and what alternatives may be available.
Advice on Wage Garnishment
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