4.9

READ OUR REVIEWS

How much can the government garnish your wages?

Posted on 29 November 2021

Written by Samantha Galea

When you owe money to a creditor – no matter how much – one of the most problematic forms of collection action is wage garnishment. Wage garnishment is a stressful situation for anyone. Having your wages deducted at source is not going to help when you already have overwhelming debts to pay off. When the debt is owed to the Canada Revenue Agency (CRA), things can become even more problematic. When debt is owed to a creditor, they need to apply to the court to obtain a judgment order against you in order to get a wage garnishment. If the CRA wants to order a wage garnishment for overdue tax debt, no court order is required and a notice is sent directly to your employer. If you are concerned that a CRA wage garnishment may be headed your way due to unpaid taxes, you may be wondering about the process. So, how much can the government garnish your wages in Canada and how can you stop a wage garnishment?

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.

blank

Samantha Galea

Samantha Galea is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) who started working with Spergel as a summer student in 2010. With her socio-political background, Samantha is committed to breaking the stigma associated with bankruptcy so that individuals and families can properly understand all of their options on their path to debt freedom. She is also our resident expert on student debt and collection agencies, as well as the manager of our Brampton office. Outside of work, Samantha is an avid reader of historical non-fiction and world traveler.

Schedule a Free Consultation with Samantha Galea (or your local Spergel LIT) by:

Phone 1-877-501-4321 (toll-free)

24/7 live chat (with a human) on our website

Facebook messenger

Email (hello@spergel.ca)

Online booking calendar

Be Debt Free. You Owe It to Yourself.

You may be interested in:

Helpful starting information:

What to Bring to an Appointment

To get the debt help that you need, please bring a list of who you owe and how much to each, a list of everything you own and your monthly household budget. Don’t have everything right away? Don’t worry – We will guide you through each step.

Download Form

Your Information

We’ll walk you through our application process. But, if you want to prepare for your debt free assessment consultation in advance, download our information form and fill in what you can.

Download Form

Calculate Your Debt Repayment Options

How can you compare your debt repayment options if you don’t know how much they will cost you? Your solution will become much clearer when you are able to compare costs.

Debt Calculator

Ready to Be Debt-Free?

If you’re ready to be debt free, it’s time to meet with one of our knowledgeable Licensed Insolvency Trustees at your convenience and get started

Meet with a trustee