Why are there exemptions from garnishment in Canada?

Exemptions from garnishment exist for one simple reason – to protect individuals from being left with nothing when facing financial difficulties. Although these outstanding debts must be addressed, it is crucial that individuals are safeguarded, and that they can still access their basic needs. This includes maintaining their livelihood, and protecting their health and wellbeing.

What is exempt from garnishment in Canada?

The garnishment exemptions in Canada do vary slightly depending on your province or territory of residence. See, for instance, Ontario exemptions. Generally speaking, there are several common types of protected assets in Canada, which include the following:

• Your primary residence. In most provinces, your primary residence is exempt from garnishment. This means you have a secure place to live, even while facing financial challenges.
• Your personal belongings. Any essential personal belongings, like clothing, furniture, and appliances, are usually exempt. This enables you to maintain a basic standard of living.
• Tools used for work. If you have tools, equipment, or materials that you require for work, these are often exempt. This helps individuals to carry on earning a living and to support themselves financially.
• Pensions and retirement savings. Any pensions, registered retirement savings plans (RRSPs), and retirement savings are typically protected from garnishment. This means that individuals do not need to be worried about having their post-retirement savings deducted.
• Social assistance. If you receive payments from social assistance programs – like disability benefits or welfare – these are typically exempt. This protects vulnerable Canadians who rely on social assistance payments for their wellbeing.
• Life insurance proceeds. Any proceeds from life insurance policies are often exempt. This means that beneficiaries receive the financial support they were always intended to receive.
• Child support and alimony. These payments are usually protected from garnishment. This is because these payments are often crucial for supporting dependents, who should not necessarily be affected by your financial difficulties.

Are there limits to these protected assets?

Absolutely – it is important to note that there are limits and variations to the exemptions from garnishment. If, for instance, your primary residence is exempt, there might be a maximum equity threshold following which your residence is no longer protected. This prevents you owning an excessively expensive home while avoiding paying your debts. Some provinces have unique regulations regarding the types of assets that are exempt.

Speak to a Licensed Insolvency Trustee

In Canada, Licensed Insolvency Trustees are the only professionals in the country legally able to file all forms of debt relief. This means they are well placed to review your financial circumstances and recommend an appropriate pathway to either substantially reduce or eliminate your debt completely. If you are facing a wage garnishment, or feel you have more debt that you can reasonably manage, it is a good idea to book a free consultation with a Licensed Insolvency Trustee. At Spergel, we can help you to understand the specific exemptions that apply in your jurisdiction. We will also guide you through the process of debt relief, while helping to protect your essential assets. Unlike other bankruptcy firms, at Spergel, you are assigned your very own Licensed Insolvency Trustee from the beginning to walk you through your entire debt relief journey, instead of passing you from person to person.

Understanding what is exempt from garnishment in Canada is important in ensuring any individuals facing financial difficulty have appropriate assets to essential assets. The exemptions in place offer a balance between debt recovery and safeguarding the wellbeing of individual and their families. Book a free consultation with Spergel to better understand your rights and protected assets when it comes to filing debt relief.

What to read next

• Exempt vs non exempt assets in bankruptcy
• What happens if I owe the CRA a lot of money?
• How do you know if you are insolvent?
• Hiding assets in bankruptcy – what happens?
• Filing for bankruptcy with no assets – what happens?

What is a wage garnishment in Ontario?

In Canada, a wage garnishment is a legal order from a creditor to have your wages deducted at source from your employer to go towards repaying your debt. This happens when you are overdue on debt repayments, whether it is credit card debt, tax debt, payday loans, or other consumer debt. A wage garnishment is a legal enforcement for your employer to send up to 50% of your paycheque to your creditors until the debt is repaid in full, or you stop the wage garnishment. If you do not have an employer, and are perhaps self-employed instead, a similar action can be arranged directly from your bank account instead. Before your wages are deducted, creditors must legally share a legal garnishment order with you to give you notice of their intention, unless the creditor is the Canada Revenue Agency. At this stage, you can dispute the claim or repay the debt in full if you can – for a wage garnishment in Ontario, you have three weeks to do so. At Spergel, we understand how stressful and frustrating it can be to undergo a wage garnishment. After all, having your wages deducted is not going to help you when you are already overwhelmed with debt. The good news is that it is possible to stop a wage garnishment in Ontario. As soon as you receive a legal garnishment order, you should reach out to Spergel. We will help you to stop a wage garnishment, and ensure your full income is restored.

Who can request a wage garnishment in Ontario?

Any creditor you owe debt to can request a wage garnishment in Ontario. This can be for any unpaid debt including credit card debt, tax debt, student loan debt, outstanding bills, and so on. These creditors can request a court order against you for a wage garnishment in order to regain the payments they are owed. If granted, this court order means your employer is obligated to send up to 20% of your wages to your creditors, or 50% for overdue child support payments. As well as the inconvenience of having your wages deducted, it can also affect your relationship with your employer. For some types of debt, there are exceptions on creditors who do not need to go to court to request a wage garnishment:

• The Canada Revenue Agency – they can begin a wage garnishment without a court order in place
• A Credit Union – if you have given an assignment of wages, they can share a copy of your assignment directly with your employer
• A payday loan company – if you have signed a voluntary wage assignment, they can notify your employer without gaining a court order beforehand

What specific rules are there for a wage garnishment in Ontario?

The rules surrounding a wage garnishment can vary slightly from province to province in Canada. There are some specific rules that apply for Ontario, which you should be aware of when it comes to wage garnishment in Ontario. In line with the Ontario Wages Act, a creditor can only garnish up to 20% of your wages, or up to 50% for child support. The court will ultimately make this decision based on your unique financial circumstances. Your employer legally cannot end your employment or demote you if they receive a wage garnishment order for you. As well as creditors, collection agencies can also request a wage garnishment in Ontario, provided they file a lawsuit for a judgement order beforehand. Finally, while payday loan companies can request a wage garnishment, most payday loan lenders prefer to have a voluntary payroll deduction in place as it is less hassle for them. This is often added into the contract when you initially borrow a payday loan from a lender. There are some differences between a voluntary wage assignment and a wage garnishment in Ontario, however. With a voluntary wage assignment, you can revoke your permission at any time to stop your wages being deducted. This is not the case with a wage garnishment.

How can I stop a wage garnishment in Ontario?

There are a few ways you can stop a wage garnishment. First of all, you can attempt to repay the debt in full. If this is not possible, perhaps you can work to negotiate with your creditor to see if they will stop it, although this is unlikely. Even if your wages are already being deducted, there are still ways to stop a wage garnishment in Ontario. First of all, you must speak to a Licensed Insolvency Trustee. They are the only professionals in Canada legally able to file the forms of debt relief that will end a wage garnishment, a consumer proposal or bankruptcy. The sooner you speak to a trustee, the sooner the problem will be resolved. As well as addressing any debt you have by reducing or clearing it, both forms of debt relief will stop a wage garnishment. Filing either a consumer proposal or bankruptcy triggers a stay of proceedings, offering protection from your creditors and immediately stopping a wage garnishment. This even applies to the Canada Revenue Agency. At Spergel, unlike other bankruptcy firms, you will be assigned your very own Licensed Insolvency Trustee to walk you through the process of stopping a wage garnishment. This is instead of being passed from person to person. Often, we can send a court order to your employee to stop wage garnishment in a number of hours.

The sooner you address your wage garnishment in Ontario, the less money you will lose. Book a free consultation with a Licensed Insolvency Trustee at Spergel today – we have offices across Ontario. We will review your financial situation and to discuss your options, working quickly to stop a wage garnishment. Get in touch today to begin clearing your debt – you owe it to yourself.

What is a wage garnishment?

In Canada, wage garnishment is a legal court order requested by a creditor to have your wages deducted at source by your employer, or even from your bank account. This is in order to reclaim money you owe for debt repayment. Wage garnishments usually take place when you are overdue on debt payments, including credit card debt, tax debt, or maintenance payments. In this scenario, your creditor is legally able to request a court order for a wage garnishment against you. If granted, your employer must comply legally in deducting your paycheque to ensure money goes to your creditor.

Is a court order needed to garnish wages?

One thing to note is that for wage garnishments ordered by the CRA for tax debt, no court order is required. Instead, a notice will be sent to your employer to notify them that there is a wage garnishment against you. For this reason, many Canadians are not even aware that the CRA has ordered a wage garnishment until they notice their pay has been reduced. For all other creditors, they will need to obtain a legal court order beforehand, which you are able to dispute should you wish. At Spergel, we understand how stressful experiencing a wage garnishment is and are here to work with you to stop a wage garnishment. We see if it is possible for you to repay your debt, or help to clear your debt to enable you to live a life free from the burdens of a wage garnishment.

How much can the government garnish your wages in Canada?

If you are an employee working for a company and on the payroll, the CRA is able to garnish up to 50% of your wages at source. The money will be taken off your paycheque and put towards the debt you owe. If you are self-employed, a contractor, or receive a pension or income from another source, the CRA can garnish up to 100% of your income from source. A CRA wage garnishment, therefore, must be tackled as soon as possible in order to have it stopped. Commercial debts owed to other creditors like banks and lenders are only able to garnish a maximum of 20% of your wages.

How can you stop a wage garnishment from the CRA?

There are a couple of ways to stop a wage garnishment from the CRA, and it is important to act fast here. As soon as you receive notification of a wage garnishment from the CRA, you should reach out to a reputable Licensed Insolvency Trustee. If repayment of your debt is not possible, you still have options. A Licensed Insolvency Trustee will review your financial circumstances and can suggest a form of debt relief to help you. It is important to note that any money garnished before filing for debt relief will be lost, so the sooner you file, the less money you will lose overall. Two of the most effective forms of debt relief to stop a wage garnishment include filing a consumer proposal or a bankruptcy. A consumer proposal reduces your debt by up to 80% and allows you to keep your assets while putting a stop to a wage garnishment. Bankruptcy offers you a fresh financial start, free from other debts that may be causing you problems. Both forms of debt relief will stop a wage garnishment through a stay of proceedings that is generated as soon as you file.

Still wondering how much the government can garnish your wages in Canada? We understand how devastating a wage garnishment can be. If you are worried, book a free consultation with Spergel – we have been helping Canadians stop wage garnishments for over thirty years and we will help you too. Unlike other bankruptcy firms, you will be assigned your very own Licensed Insolvency Trustee to help you gain debt relief.

What is a wage garnishment in Canada?

A wage garnishment is a legal proceeding requested by a creditor to deduct your salary to pay back debts like credit card debt, tax debt, or child support. If you find yourself falling behind on debt repayments, your creditor has the right to go to the court in Canada and request garnishment against you. If granted, your employer must then send up to half of your wages to your creditors in line with provincial law, like the Ontario Wages Act. This goes towards any overdue debts you have. Before a wage garnishment can go ahead, your creditor must inform you by sharing a garnishment order with you first. Once you receive this, you can dispute or repay the full amount of your debt. The time period for which you can do so varies by province, although in Ontario you have three weeks.

Who can file a wage garnishment?

Any creditor that is owed unpaid debts can gain a wage garnishment in Canada. This is inclusive of private lenders, payday loan lenders, credit card companies, the Court, collection agencies, and the Canada Revenue Agency (CRA). Most creditors will need to go to court to get a judgment and a Garnishment Order, although certain creditors like the CRA can gain one without. A wage garnishment may not just be for your employer. Creditors or collection agencies can also serve a wage garnishment to your bank to seize money directly from your account at source.

When can a wage garnishment be obtained?

A creditor or collection agency will not obtain a wage garnishment as soon as you miss one payment. Instead, they will likely go through the process of obtaining a wage garnishment after a period of missing payments. They may also have demanded payment via written notice and tried to discuss a repayment plan with you on the phone. If they are still not receiving any payment or an attempt by you to repay your debts, they are well within their rights to go to the court. First of all, they may be granted a summons to see if you have any assets for seizure. If you do not, the creditor may then try to obtain a wage garnishment against you.

How much can your wages be garnished?

if you are employed, there is a limit on the amount that can be deducted as part of a wage garnishment. This varies depending on your province of residence. In certain provinces, like British Columbia for example, the rules of wage garnishment are simple – a creditor can deduct a maximum of 30% from your wages. In other provinces like Alberta, you are able to keep the first $800 of your monthly net income. Creditors may then garnish up to 50% of your income between $800 and $2,400, and then 100% of any monthly net income over $2,400. These rules are different if you owe the Canada Revenue Agency, if you are self-employed, or if you owe child support or alimony under a court order.

How to stop a wage garnishment

Generally speaking, there are three key ways to stop wage garnishment in Canada. No matter how much you are being hassled by creditors or collection agencies, there is always a way to stop a wage garnishment. This can be at any stage of the wage garnishment process. You should first speak to a reputable Licensed Insolvency Trustee for support throughout the process.

Negotiate with your creditor

This may not be possible in all cases and depends on the circumstances for your debt. If you can, as soon as you receive notice of a garnishment order, you should contact your creditor. They may allow you to negotiate repayment terms, potentially removing the wage garnishment if you can repay your debt. This could work well for both parties if you are able to avoid further action. Your creditor may expect interest payments on top of the debt owed. An important point to note about this method is that there is no guarantee your creditor will want to negotiate. If you do come to an arrangement, it is important to capture the agreement in writing for both parties to refer back to. As it is not a legal, formal agreement, you do need to be wary.

File a consumer proposal

One way to know how to stop wage garnishment in Canada is with a consumer proposal. A consumer proposal is a legal form of debt relief in Canada and a bankruptcy alternative that reduces your debt by up to 80%. Filed by a Licensed Insolvency Trustee, it is the process of agreeing an affordable monthly payment with your creditors. Once they agree, the remaining amount of debt is cleared. There are a number of advantages of a consumer proposal, including being able to keep your assets, and a stay of proceedings. A stay of proceedings is automatically generated when you file a consumer proposal, and means that creditors and collection agencies are legally no longer able to contact you or pursue legal action against you. It will therefore stop a wage garnishment. At Spergel, unlike other debt relief firms, you will be assigned your own Licensed Insolvency Trustee to walk you through the process of filing a consumer proposal, instead of being passed from person to person.

File bankruptcy

Bankruptcy offers many Canadians a fresh financial future and is also a way to stop wage garnishment. Bankruptcy is the legal process of clearing any overwhelming debts by assigning any non-exempt assets to a Licensed Insolvency Trustee. This is in exchange for complete clearance of any unsecured debt you have. A stay of proceedings will also be triggered, putting an immediately stop to wage garnishment and preventing creditors from contacting you and permanently ending collection calls. There are a number of advantages of bankruptcy that can help you to move on with your life. Each Canadian province has its own rules on which assets you may or may not keep. At Spergel, our trustees will be with you to walk you through each step of the bankruptcy process. The sooner you file bankruptcy, the sooner you can stop wage garnishment.

If you need more information on how to stop wage garnishment in Canada, book a free consultation with Spergel. Our reputable Licensed Insolvency Trustees have dealt with wage garnishment for years, and we can advise you on the best form of debt relief for you. We can help you to begin a fresh financial future, free from the anxiety of debt or having your wages deducted.