The Judgment Enforcement Act and Regulations Section 49 and Support Orders Enforcement Act of 2006 regulates wage garnishment laws in Newfoundland. These acts define a debtor’s financial liability to an amount owed in particular situations. The court will identify the garnished amount based on these laws.
The amount that can be deducted from debtors will depend on his or her financial capability and number of dependents. It can be higher for those with few or no dependents. Income over $1,019 can be deducted each month from a debtor who lives with a spouse or a partner.
Debtors who provide financial support to a spouse or partner and one dependent can face monthly garnishment for everything they make over $1,059. Those who support one or more dependents face garnishment on amounts over $963 every month plus $47 for every dependent.
Eligibility for Dependency
The law provides restrictions on the debtor’s dependents. It only allows people with particular relationships to the person to be considered a legal dependent.
– The debtor’s parent, grandparents or siblings
– Others who are unable to financially support themselves because of certain physical and mental disabilities
– Those who financially depend on the debtor and are under 16 years old
Wage Garnishment Procedure
Upon failure to pay a debt, the creditor can file for a court order. This will contain all the information regarding the amount owed and dates inclusive. The creditor will have to provide all necessary evidence to prove the debtor’s inability to pay. This can include signed agreements, notification letters that state one’s delinquency and other files.
The court will review and investigate the case. A judgement will then be passed containing the garnishment percentage. The employer and debtor will be notified regarding the garnishment.
The employer should check the garnishment order to make sure that it is given to the right company. The debtor can also file for an exemption immediately upon receiving the garnishment summons. This should be done as soon as possible as it can take a while for the court to provide a hearing date, and the garnishee is usually required to deduct the amount from the next pay check.
Wage Garnishment without Court Orders
– Back taxes owed to the Canada Revenue Agency
– Amounts owed to unions
Common Wage Garnishment Cases in Newfoundland
– Money Owed to the Government
One common reason for garnishment is when the debtor owes money to the government. This includes unpaid taxes to The Minister of Finance and the Canada Revenue Agency. It also includes debts owed to any Federal or Provincial Government. This type of garnishment does not require a court order, and it can deduct up to a 100 percent of the debtor’s salary.
– Private Lending Bodies
Private lending body garnishments are pursued by credit card companies, banks and other financial institutions. This also covers personal loans owed to lending companies. These garnishments only allow the creditor to take a percentage of the debtor’s income depending on the conditions that apply to the court’s judgment.
– Child Support
Child support is another common grounds for a wage garnishment. This is applicable to previous spouses who require the debtor to provide stable financial support for their child. This type of garnishment also requires a court order and may allow the debtor to remove it. However, it can be difficult to file for an exemption with this type of case.
How to Avoid Wage Garnishment
– Pay the Debt
The best way to avoid having deductions owed is to pay the debt. Those who are able to come up with the amount needed should communicate with the creditor in order to avoid garnishment summons and deductions. This can also be done by those who already have a summons. They can speak with the creditor directly or have lawyers from both parties decide on agreeable terms.
– Federal Government Programs
These are suitable for those who owe money to banks or credit card companies. Debtors can make use of these programs to remove wage garnishments and additional fees. They can even pay a fixed amount every month to cover the money owed. This is also applicable for those who are required to provide child support by wage garnishment.
– Consumer Proposal
This is a good bankruptcy alternative for debtors who are facing wage garnishment. A consumer proposal will provide the debtor enough time to repay the debt and avoid salary garnishments and summons. This is suitable for those who owe larger amounts from $5,000 and up. The claim also provides a number of advantages for the debtor.
a) A sufficient amount of time to pay the debt
b) Frozen interest from the filing date
c) Most creditors accept such claims
d) Some debtors are only required to pay back a percentage of the amount owed
e) Creditors can no longer pursue further legal action
f) Wage garnishments are removed
–Consumer Proposal Process
The debtor can first file for a consumer proposal claim with the bankruptcy trustee. His or her claim will then be thoroughly investigated and checked. This includes all conditions that can affect his or her financial status. The debtor’s monthly salary, number of dependents and other debts acquired will be considered during the process.
The bankruptcy trustee will then provide a proposal after the investigation. This will include the amount that should be paid, frequency and length of payment. This will discussed and agreed upon between both parties. All necessary paperwork should be provided.
The creditor will then have 45 days to review the debtor’s proposal and provide an approval. If the case involves more than one creditor, a majority vote will be considered in order to come up with an agreement. Most creditors prefer this kind of claim compared to personal bankruptcy as they can usually get higher payments.
4) Court Approval
Once the debtor and creditor have come to agreeable terms, the court will pass an approval. This will be legally binding for both parties. Any person involved who does not comply with the agreement will face fines from the court.
The debtor is then free from any wage garnishment once the approval is passed and signed. He or she also has an allowance to miss a maximum of two payments throughout the proposal period. These missed payments will be added to the amount owed. However, debtors who miss more than two payments will invalidate the proposal. The creditor can file for a wage garnishment again if this occurs. He or she is then allowed to include additional charges such as interest to the total debt. However, the court will continue to investigate the debtor’s financial status in order to identify if the claim is still applicable. Creditors who pursue a garnishment while the exemption is viable are required to pay a fine that the local court imposes.
PO Box 8700,
Newfoundland and Labrador A1B 4J6.
Toll Free: 1-877-968-2600