You are likely reading this blog because you have been subjected to wage garnishment and are investigating what options are available to get it reduced or removed. The first step is determining the type of wage garnishment you have.
The most common forms of wage garnishments are:
- Court-ordered wage garnishments associated with a debt with a creditor.
- Wage garnishments issued by Canada Revenue Agency related to tax debts, penalties and interest.
- Wage garnishments issued by Canada Revenue Agency that are associated with other debts.
- Wage garnishments issued to the courts as it relates to child support.
Wage garnishments issued by the CRA, whether they’re related to tax debts, penalties and interest, or because of other debt owed to the Federal Government, can be 50% of employment earnings and up to 100% of other earnings such as a contract or self-employed income.
Wage garnishments associated with past due family maintenance can be up to 50% of employment income.
How Can You Stop a Wage Garnishment Relating to Creditor Debt?
There are 4 ways to stop this type of wage garnishment:
- Pay the debt.
- Make a satisfactory arrangement with your creditor so that they voluntarily lift it.
- File a motion to ask the court to reduce or remove the garnishment.
- File a consumer proposal or bankruptcy.
How to Stop a Wage Garnishment Issued by the CRA?
The CRA does not need a court order to garnish you. The only ways to remove a CRA issued wage garnishment relating to tax debt, penalties, and/or interest removed are:
- Paying the debt;
- Making a satisfactory arrangement with CRA so that they voluntarily lift it;
- Or filing a consumer proposal or bankruptcy.
Family maintenance garnishments cannot be included in a bankruptcy or proposal filing. They can only be resolved through a court intervention or a voluntary arrangement with the recipient.
If you can’t pay the creditor debt or the CRA tax debt associated with a court-imposed wage garnishment and can’t achieve a direct arrangement to reduce or remove it, a consumer proposal or bankruptcy might be the best option for you.
When you file a consumer proposal or bankruptcy, the creditor or the CRA must immediately stop any wage garnishments in place. In addition, interest stops and depending on your income, you may be able to reduce the amount of overall debt.
A Licensed Insolvency Trustee such as Douglas Loiselle and Associates can help you with your consumer proposal or bankruptcy filing. If you are considering either of these options, you can reach out to us to get the best solution.