If you’ve received a wage garnishment, you might be feeling scared and confused. You need to know how to stop it — and fast.

But that’s not always easy to do. There are different types of wage garnishments — and each one has different options to deal with it.

To stay protected and even stop wage garnishments, you need to know your rights and options.

What is a Wage Garnishment?

Collection agencies, the Canada Revenue Agency (CRA), and other government bodies use wage garnishments to collect money they claim a person owes. The garnishments come directly from your paycheque. If you own your own business, your clients might receive a requirement to pay notice instead.

The garnishment takes a percentage of your regular paycheque to pay the debt owed. If you’ve received a wage garnishment, you’ll be bringing home a lot less income.

Types of Wage Garnishments

There are different types of wage garnishments. The type you are issued depends on the agency involved.

The type of garnishment you receive can affect how much money comes off your paycheque, how you’re notified about the garnishment, what kinds of income are garnished, and more.

These are the most common types of garnishments:

1. Collection Agency/Creditor

If you owe a debt to a creditor, like a credit card provider, they can get a court order to have your wages garnished.

Under the Ontario Wages Act, a collection agency or credit can garnish up to 50% of a person’s wages. The exact amount depends on the situation and the organization collecting the debt.

In most cases, wage garnishments in Ontario take 20% of a person’s paycheque.

The good news about this type of wage garnishment is that you will see it coming. Because it involves a court order, the creditor will have to take you to court. This might still be overwhelming, but it gives you time to prepare and make a plan.

A typical creditor cannot garnish social assistance income.

2. Ontario Small Claims Court

If you have gone to the Ontario Small Claims Court for another legal matter and now owe money, a wage garnishment might be ordered to collect the payment. These conditions will look similar to a garnishment from a creditor or collection agency.

3. Canada Revenue Agency

Unlike creditors, the Canada Revenue Agency (CRA) does not need a court order to garnish your wages. In fact, they don’t even have to tell you they are doing so.

This can be a particularly difficult wage garnishment to deal with. CRA collections are swift, and in some cases, you might not even get a warning. They can simply send a letter to your employer, your bank, or the Income Security Program office.

They can also garnish more types of income, including Canada Pension Plan and Old Age Security funds. There is no limit to the amount they can take.

This is why you should always take owing money to the CRA seriously.

4. Family Responsibility Office (FRO)

The Family Responsibility Office (FRO) deals with child support and spousal support payments. If you owe support money, there will be swift consequences.

Not only can FRO garnish your paycheque, but they can also take other income, including sales commissions, Employment Insurance (EI), Workers’ Compensation, income tax refunds, severance pay, and pensions. Beyond that, they can take money from your bank account, register liens, and even suspend driver’s licenses and cancel passports.

FRO can deduct up to 50% of any income-type funds, including EI and CPP, and 100% of tax refunds and interest on Bank of Canada savings bonds. If you have a bank account in your name only, FRO can take 100% of the amount owing to pay arrears.

5. Canada Student Loans

If you miss payments on your Canada Student Loan for 270 days (nine months) or more, your loan goes into default and is sent to the CRA for collection. The CRA can then proceed with their usual collection action.

How to Stop Wage Garnishments

Stopping a wage garnishment depends on the agency and type of debt. In every case, paying off the debt owed will stop your wage garnishment immediately. If you can’t pay, there are other options.

• Consider debt consolidation to free up funds to pay what you owe.
• Negotiate a voluntary arrangement with a creditor if possible. This may be harder to do if they already have a court order for the payment in full.
• Go to court and petition to stop the collection action. This can be expensive and isn’t guaranteed, especially if it’s from a court order.
• Work with a debt counsellor to file for bankruptcy or a consumer proposal. This will immediately stop most collection action, but there are exceptions.

Exceptions

• You can’t stop FRO payments by filing for bankruptcy.
• You can’t include student loans in a consumer proposal or bankruptcy for the first seven years after finishing your studies.

While getting a wage garnishment is overwhelming, a good debt counsellor will cut through the confusion. They will assess your situation, type of garnishment, rights, and options to find the right solution for you.

If you’re dealing with a wage garnishment, contact DebtCare Canada today. Call 1-888-890-0888 or visit www.debtcare.ca.