When you owe a creditor, but are behind with payments, or not making payments at all, you may be facing harassing collection calls, or worse, collection action, which may come in the form of an unexpected wage garnishment. This time of year, the last thing someone wants before the holidays is a wage garnishment.

Any creditor can begin garnishment proceedings against someone for unpaid debts. Collection agencies, the Canada Revenue Agency, credit card companies, payday loan lenders, or any creditor can enforce collection through a wage garnishment – although these proceedings may differ depending on the creditor.

There are 2 common types of garnishments – those that require a court order, and those that do not.

Court imposed garnishments are generally issued when a creditor sues you and is awarded judgement. This happens when you default on a loan, and after several attempts to obtain what is owed, your creditor will head to court. Family responsibility payments are also an example of court imposed wage garnishments.

Non court-imposed garnishments are generally issued by the Canada Revenue Agency or other government bodies when a debt is owed – and for these organizations, no court approval is necessary.

What happens when wages are garnished? Once your employer receives notice of the order, they are required by law to withhold a certain amount (sometimes up to 50%) and submit it to be used to pay your creditor.

What can you do if your wages are already being garnished? There are only 3 ways to stop any garnishment:

• Negotiate an arrangement with the person who placed the garnishment – this may include paying the debt in full
• Go to court and ask a judge to remove or reduce the garnishment
• File a consumer proposal or bankruptcy

Let’s look at each one.

Negotiate an arrangement with the person who placed the garnishment – this one is dangerous because your creditor may request further financial disclosure in exchange for temporary voluntary payment arrangements. This information may be used against you later or the creditor may demand an arrangementthat they know you can’t meet so they can go after other things and prove that they showed ‘good faith’ negotiating with you. Be very careful.

Go to court and ask a judge to remove or reduce the garnishment – you will have to prove why you deserve to have the garnishment removed, and you may need legal representation. This can be an expensive option and there are no guarantees.

File a consumer proposal or bankruptcy – this could have some temporary impacts to your credit, but will immediately stop a garnishment, interest, and penalties, as well as provide for a single monthly payment and sometimes a debt reduction.

Often the path of least resistance is the cheapest and the least stressful.

If you are facing an unexpected wage garnishment as a late holiday gift, call DebtCare Canada today. We can help get it lifted. 1-888-890-0888.