Category: Dealing with Collection Agencies

Wage Garnishment 101 – Know Your Rights and Options
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.
1. 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.
1. 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.
1. 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.
1. 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.
December 4, 2019
CRA Collections are More Aggressive Than Ever – How to Stop CRA Enforcement Action
You might have heard the phrase “the bark is worse than the bite.” But when it comes to Canada Revenue Agency (CRA) collections, the bite is definitely scarier.

The CRA has many options available for collecting on unpaid tax debts – far more than other creditors, and often with less red tape involved.

CRA enforcement action might include:
- Wage garnishment.
- Requirement to pay from your clients, if you are self-employed.
- Frozen bank account.
- Liens against your assets, like your home.
- Criminal charges.
Unlike other creditors, the CRA is not required to give you any advance notice before freezing your bank account or garnishing your wages.

At best, this is inconvenient and embarrassing. At worst, it could result in losing a home, a car, or even in jail time.

In a recent CRA court case, a Surrey, B.C. man was sentenced to a 22-month conditional sentence, including eight months of house arrest. He was also fined $418,865.66 after pleading guilty to one count of tax evasion under the Income Tax Act. The CRA found that he had failed to report $1,284,254.81 of taxable income for the 2005, 2006, 2007, and 2008 tax years.

In another case, an Ottawa man was sentenced to a nine-month conditional sentence, including six months of house arrest, and a fine of $68,000, plus the full tax amount owing, after failing to report net business and rental income totaling $410,148 for the years 2009 to 2013.

Recent news releases shared that the CRA is becoming even more aggressive and cracking down on misuse of TFSAs, RRSPs, RRIFs, RESPs, and RDSPs. Federal Auditor General Michael Ferguson also found the CRA goes after average people aggressively for small amounts of tax owing, while offering amnesty and anonymity for those involved in sophisticated schemes.

In short, it’s better to avoid CRA collections at all costs if you can – but that is often difficult to do if you don’t have the money available to pay what is owing.

When you owe a tax debt you can’t pay, or have back taxes piling up, you need to take action. That is the only way to stop CRA enforcement.

This might look like:
- Securing a debt consolidation loan and using the money to pay the CRA, then paying back the loan over a fixed schedule.
- Accessing home equity and using the money to pay off the tax debt.
- Applying for CRA debt forgiveness programs. It’s worth noting that often these only deal with accumulated interest and penalties, but you still have to pay the principal tax debt.
- Filing for insolvency – either for a consumer proposal or for bankruptcy. This stops all CRA collection action.
You should never try to deal with the CRA on your own. While they may offer to negotiate, they could turn around and use the opportunity to gather your financial information to start enforcement instead. It’s better to work with a financial advisor who can be an intermediary.

At DebtCare Canada, we offer one of the only programs that can resolve a CRA back tax problem. When you work with us:
- Often your principal tax debt can be reduced.
- Interest and penalties immediately stop.
- Frozen bank accounts are unfrozen.
- Wage garnishments are lifted.
- Garnishments to customers are lifted.
- You are able to make a single monthly payment.
Don’t wait until CRA collections start. Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.
March 20, 2019
Is the Big Bad Wolf Calling?

April 19, 2013
Dealing with Collection Agencies: Harassment and The Collection Agencies Act
In Canada, if you have a debt that goes into default, your creditor can assign your debt to a collection agency to be collected. The collection agency will then attempt to collect the debt from you. They will do this by calling you, sending you letters, and some creditors will even grant collection agencies the authority to sue you.

Dealing with collection agencies is no fun! When a collection agency is after you they can be ruthless and even harass you. Some people find themselves feeling powerless when dealing with collection agencies.

Dealing with collection agencies used to be even worse than it is now, but as a result of public outcry, the government decided to begin regulating them. Collection agencies are regulated provincially and all provinces have legislation that regulates the activities and conduct of collection agencies and their collections. In Ontario, for example, this legislation is referred to as the Collection Agencies Act and is administered by the Ministry of Consumer Services.

Although all provinces regulate collection agencies, with regulations varying from province to province, here are some things that, across the board, collection agencies can’t do.
- Ask you for payment without first having notified you in writing that they have been retained by your creditor to collect the debt.
- Make phone calls to you with a frequency that would be considered harassment.
- Make phone calls to you outside of the days and hours the legislation in your province mandates.
- Ask you to pay a debt without having provided you with the name of the creditor and the total amount owed.
- Provide personal information to third parties, such as other people in the household, or leave it on your voicemail.
- Contact your employer (unless there is a court order), neighbours or friends to obtain an address or telephone number for you.
Sometimes life throws us a curve ball and no one wants to end up with a debt in collections. Having a debt in collections is an indication of an underlying financial problem. While you may be able to count on things like the Collection Agencies Act to control the behaviour of your creditor’s collection agencies, you won’t be able to stop dealing with collection agencies until you have a plan to deal with your debt.

So many people get stressed out when dealing with collection agencies that, instead of facing the debt head on, they alter their lifestyle. They stop opening mail or answering the phone. Don’t do this!

There are financial solutions to deal with debt that is in collections and companies that specialize in these types of problems. Some financial solutions can even reduce the size of your debt or freeze the interest on your debt, and all financial solutions will stop collection action!

Just imagine your life without the phone ringing off the hook every moment. Imagine being able to rebuild your credit. Imagine having control over your debt. All is possible – it’s up to you to take the first step.

For more information about dealing with collection agencies or if you need help with a financial problem please contact DebtCare Canada at 1-888-890-0888 or visit www.debtcare.ca.
February 4, 2013