Your Path to Debt Freedom
Arguably one of the most embarrassing things that one can endure is a wage garnishment. It is bad enough to have to walk around with a demanding debt looming over your head, but often no one else needs to know about that debt. Once a wage garnishment has been put in place, that level of privacy is gone and your employer is going to know about the debt. If a creditor is going to war on your wages, your situation has inevitably become far more serious.
When it comes to wage garnishments in Ontario, there are a few different types, some of which come with more warning than others. That being said, in most cases those suffering from wage garnishments know that enforcement action is coming as a result of defaulting on debts or refusing to pay a creditor.
Court-ordered garnishment: When a creditor sues you in civil court for unpaid debts, and successfully obtains a judgement against you, they can then proceed to serve a notice of garnishment to your employer to garnish your wages. In Ontario, upon receipt of such a notice, an employer is legally required to remit up to 20% of your earnings to the court to then be dispersed to your creditor. In this instance, the only ways to get the wage garnishment removed are to pay your creditor in full, make a motion and ask the court to remove or reduce it, or seek intervention from a Licensed Insolvency Trustee.
Canada Revenue Agency (CRA) garnishment: Unlike other creditors, CRA does not need a court order to have your wages garnished. The agent assigned to your case simply needs to send a requirement to pay notice to your employer requiring them to remit up to 50% of your employment income. In cases where your income is contract income or other income (such as a pension), you may be subject to a 100% garnishment. When CRA gets an enforcement plan in place, they can be that much more difficult to deal with. Note that the only ways to remove a garnishment from CRA are to get CRA to agree to remove (unlikely), go to tax court, or to receive assistance and intervention from a Licensed Insolvency Trustee.
If you have a garnishment in place or are concerned that you’re at risk of having one levied in the near future, and you know you have no ability to pay, then speaking to a Licensed Insolvency Trustee is critical.
A Licensed Insolvency Trustee is the only professional (other than your creditor, a judge or the government) that has the power to stop a wage garnishment in its tracks. Sitting down and discussing the various financial restructuring options available to you is a great place to start when a creditor is garnishing your wages.
Don’t wait. The longer you leave a wage garnishment in place, the more difficult your financial situation will become.
Call Spergel today at 310-4321.