Your Path to Debt Freedom
When your wages are being garnished, whether by a creditor, the Canada Revenue Agency or the Family Responsibility Office, combating the garnishment may seem impossible. Fortunately, that isn’t the case – there are several options. This week we’ll work through them to help you regain control of your income.
A wage garnishment is a legal process whereby a creditor requires a third party (your employer or clients) to turn over to the creditor a portion of your wages or income. There are several types of wage garnishments.
- If a creditor sues you and is successful in obtaining a judgement against you, they can have the court issue a Notice of Garnishment which forces your employer to garnish a portion of your wages and remit the money to the court to be dispersed to your creditor.
- When the Canada Revenue Agency (CRA) garnishes your wages due to amounts owing, they do not need a court order to do so – they will simply send a letter to your employer and then your employer has to start garnishing you. In the case of CRA, your employment income can be garnished, as well as other income, such as pensions.
- The Family Responsibility Office can garnish your wages for unpaid child support. Family Responsibility wage garnishments are the most difficult to combat because you will have to have a family lawyer go to court and get the court to agree to reduce or remove the garnishment.
Combatting the first two types of wage garnishments – ones imposed by creditors through the court and those imposed by CRA – can be dealt with in various ways.
Of course, one option is to head to court. This option is expensive and time consuming. You may have to pay a paralegal or lawyer to represent you, not to mention administrative fees. Additionally, there is no guarantee that you will be successful.
The easiest option, by far, is to pay the debt. First, evaluate if you can actually pay the debt. Of course, in a perfect world, if you could have paid off the debt in full you wouldn’t be in this situation.
If the debt is just too big and you can’t realistically pay it, you will need to look at the various options available to help you out of this situation. A Licensed Insolvency Trustee can offer two types of debt solutions that can stop a garnishment, consumer proposals and bankruptcy.
Each option is different and the right solution depends on your income, household composition, assets and other factors. Keep in mind that a consumer proposal or bankruptcy won’t stop a Family Responsibility Office garnishment – but both will halt wage garnishments issued through the courts by creditors and by the CRA. In fact, as soon as your creditors, the court and/or CRA receives notice that you have filed a consumer proposal or a bankruptcy, they must stop the wage garnishment immediately!
If you’re concerned about a Notice of Garnishment, speaking with a trustee about your financial options is the first step to take to get the situation sorted out. At Spergel, we have the experience and knowledge to help you regain control of your wages.
Find out more by visiting www.spergel.ca today or call 310-4321.