What is wage garnishment?
When a creditor has no other means to collect on a debt, the company will petition to have the wages of the person who owes the debt garnished. This process happens through the court. Wages are considered to be any money including hourly pay, salary or commission that an employer pays its employee. These are the wages that can be garnished when someone owes a debt to a creditor.
Not only does this take the choice away from the debtor, it is an embarrassment when the court sends paperwork to an employer. There is a shift away from professional, business atmosphere when the employer knows about a financial hardship or a refusal to pay a debt. This is not something most people want their employer to know.
Who is allowed to garnish wages
A creditor that is entitled to money owed them will petition the court to garnish a debtor’s wages if they feel there is no other way to receive their payments. This may include a small claim that was taken to court, it could be child support payments or a student loan payment. There must be a court order in all cases of debt collection except if the person owes taxes to the Canada Revenue Agency. The government does not need to petition the court system to receive what it is owed.
When wages are garnished, the debtor will have their wages confiscated and given to the court. The court then pays the creditor directly. The court is a middleman in the process. The debtor’s employer, also known as the garnishee, it a middleman as well. Both are steps the connect the debtor to the creditor. Basically, the creditor has proven to the court that the debtor is an irresponsible person who refuses to pay his or her debts. The court must find the debtor guilty of owing the money, and will then begin the process of garnishing the debtor’s wages. Paperwork concerning the amount of the employee’s wages to be withheld is sent to the employer.
Once the employer receives the amount, the employer will start withholding that amount from the employee, the debtor. That weekly amount will be sent to the court for debt payment. From there, the court will pay the creditor. This will continue until the debt is paid, or the garnishment is discontinued.
The garnishment has some limitations so that the debtor is not working to pay off the garnishment alone without being able to pay other debts like rent and food. There are monetary limits on how much can be taken from the employee’s check. As part of the court process, the debtor will have to provide the court with his or her financial records including how much income they earn. The garnishment can be up to 30% of the debtor’s income. The amount taken by the courts further depends on whether the debtor has dependants or not.
Rules for employers
Employers are required to withhold the exact amount required by the court. Failure to withhold the amount required will bring consequences to the employer. The employer cannot continue to pay the employee his or her whole paycheck when there is a wage garnishment order against them. The employer can face serious fines and even jail time for disregarding an order from the court.
The only time an employer can stop garnishing the employee’s wages after receiving an order is if the employee no longer works for the company or the company receives a notice from the court to stop withholding. In the case of the employee no longer working for the company, the employer must inform the court in writing that the debtor no longer works for them. After a year of payments to the court, the creditor must apply for another garnishment order. The employer can stop withholding money under the previous garnishment ruling until a new one is entered.
The employer cannot fire or release a debtor from employment because of an outstanding debt or a wage garnishment unless there has been repeated wage garnishments over a long period of time from many sources.
How to stop a wage garnishment
Wage garnishments will happen every week or bi-weekly depending on the payment cycle of the business until the debt is paid in full, or the debtor petitions the court for relief from the debt. There are times when the debtor cannot make payments or the payments required create a financial hardship. The employee cannot petition his or her own employer for relief; the debtor needs to petition the court. The only way the garnishment will be dropped is if the debt is paid in full, the debtor submits a consumer proposal, stops working, files for bankruptcy or the court discontinues the garnishment order.
If the debtor has the means to pay the debt in full, he or she should do that. Any extra payments that can be made in the course of the repayment will allow the debt to be paid sooner. That lifts the strain of the garnishment off the debtor’s shoulders.
When the debtor stops working, he or she is only delaying the inevitable. The debt still exists and will pick up where it was left off after the last job. It is best to pay the debt as soon as possible instead of having it loom over the person’s head indefinitely.
A consumer proposal is when the debtor contacts the creditor directly through an intermediary and offers to pay a portion of the debt up front. This partial repayment becomes a legally binding agreement and the creditor will not pursue the full payment amount. Often, this needs to be done before the creditor seeks a garnishment through the courts.
InfoAviator Publishing is a organization determined to help Canadian consumers understand wage garnishment laws that are currently residing in the cities of (but not limited to) Flin Flon, Morden, Dauphin, Selkirk, Winkler, Thompson, Portage la Prairie, Steinbach, Brandon, and Winnipeg in Canada.