If a creditor has already gone to court and obtained a judgement allowing them to garnish your wages, there are three ways to deal with this:
Scenario One:
Allow your wages to be garnished at 20% of your earnings until the debt has been paid in full.
Scenario Two:
Consider a Consumer Proposal or Personal Bankruptcy. In most cases, the wage garnishment will stop. However, the damage of a consumer proposal or bankruptcy can outweigh the benefit of stopping a wage garnish. Firstly, you will be required to include all debts with all creditors on your repayment program, without the option to prioritize. Secondly, if you miss any payments (even one) with a Formal Consumer Proposal or Bankruptcy, the agreement becomes null and void. Your debts are put back on the table for creditors to come after you for and collection agencies to harass you with. Thirdly, you will not be able to obtain credit again for up to seven years with a Bankruptcy. Not very flexible, but it’s an option.
Scenario Three:
File a Garnishment Hearing or a Motion to have a Terms of Payment Hearing with the court. You will require paralegal services to do this (very few licensed debt relief firms offer this service).
- At a Garnishment Hearing, the court judge has the ability to reduce the percentage of wage being garnished.
- At a Terms of Payment Hearing, the court judge has the opportunity to look at the financial situation of the person being garnished, to determine an adequate garnish amount, based on what the person can afford; or the garnishment can be put on hold while a new payment plan is in effect.
Both types of Hearings can be filed at any time after a person has received a garnishment order. This applies to a person who’s wages have already been garnished for some time, as well as a person who just received the garnishment order but has not yet been garnished. You can proceed with “scenario three” at any time.
Note – all of the above does not apply to any wage garnishment by:
- Credit unions (allowed to garnish up to 20% of your wage without a court order judgement); or
- The Canadian government; for example, alimony or child support payments ordered by the Family Responsibility Office. The government can garnish up to 50% of your wage.
For more information about what options you have, or for a free financial assessment, give OCCA Consumer Debt Relief a call toll free 1-866-USE-OCCA or visit www.occa.ca.
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