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Category: Wage Garnishment

  • How Can a Business Have Their Wages Garnished?

    wage-garnished-smWage garnishments, in the credit collection world, are all too common an occurrence. As a form of collection action, garnishing a person’s wages is often an effective way to retrieve a debt owed, and many collectors view it as the best way to collect. Usually these come in the form of personal wages being garnished, so when businesses have their monies garnished they are often surprised and wondering how this has happened.

    Can a business have its monies garnished? Yes, and this can be very embarrassing, not to mention damaging to your professional reputation.

    If you, as a business, owe a creditor money, and they’ve gone through the appropriate channels to retrieve it with no luck, they may just turn to a collection agency to have your business’s monies garnished. This usually requires a court order which then gives the collection agency the legal ability to seize monies owing to your business, freeze money in your business bank account, or other money your business has, to repay its debt. If, however, you owe the Canada Revenue Agency, a court order is not required and the CRA can levy a wage garnishment whenever they feel like doing so – so be very careful with these tax debts.

    Once the court order is obtained, a notice of this garnishment is sent to your customers, and a portion of your receivables are to be directed to pay the debt, rather than going to your business. Not only does this take away from your business income, making it difficult to meet payroll obligations or pay your other accounts, it also reflects poorly on your business as your customers are made fully aware of the unpaid debt.

    There are only a few ways to get a garnishment lifted:

    1. Pay the debt in full
    2. Negotiate with the other side to reach a favourable settlement
    3. File a consumer proposal or bankruptcy

    Many people opt for a consumer proposal in these circumstances because a proposal:

    • Removes the wage garnishment
    • Stops interest
    • Often reduces the overall debt
    • Stops other collection action
    • Allows for a voluntary monthly payment that you can afford

    If you owe a debt and as a result your business’s wages are being garnished, ignoring the problem will not make it go away. The best thing that you can do is to resolve the issue and have the garnishment lifted as soon as possible.

    To find out more about your options and to get started, call DebtCare today. We can help: 1-888-890-0888.

     

  • The Only Ways to Stop a Wage Garnishment without Going to Court

    debtcare1A wage garnishment put in place to repay a creditor can be a terrible thing to deal with. The knowledge that a significant portion of your income is being taken from you before you even see it, money that would usually go towards paying for things you need, can be hard to swallow, and it can be tough to know where to turn for help.

    This blog deals with wage garnishments – those put in place to deal with civil debts such as credit cards, or loans, as well as tax debts. It does not apply to Family Responsibility debts and some unique types of debt. If you want to know more about how to get rid of a wage garnishment put in place to deal with the former, here is where you need to be.

    The easiest way to stop a wage garnishment, obviously, is to pay the debt. Sure, this may seem like a very simple solution, but if you can’t pay the debt, in full, it is a simple solution that really doesn’t help you. Don’t worry, all is not lost.

    Two additional ways that you can immediately stop a wage garnishment include a consumer proposal and bankruptcy.

    In a consumer proposal, you propose an amount that you are prepared to repay your creditor with a repayment term of usually 5 years. The moment the proposal is filed by a trustee, the garnishment stops. Once your creditors accept your proposal you begin repaying. A consumer proposal can be paid in full at any time. A consumer proposal also stops interest and can even reduce the amount of debt you owe.

    In a bankruptcy, a trustee, based on an income calculation, will determine if you have to pay into bankruptcy for 9 or 21 months. During this time you will make a monthly payment to the trustee for the term of the bankruptcy and that payment is based on your income. Generally higher income earners opt for consumer proposals because bankruptcy payments end up being higher. Once you complete your obligation to the trustee you become discharged from bankruptcy. The moment a bankruptcy is filed the wage garnishment stops, interest stops and your overall debt can even be reduced.

    It is important to note that, in either scenario, you will need the services of a licensed trustee in bankruptcy; but you do not want to go to the trustee directly because they represent your creditors and you may not get the best deal. A debt counsellor can help you prepare your information and structure relevant information so that the trustee makes an arrangement that is fair for both you and the creditors.

    Want to stop a wage garnishment or learn more about how a consumer proposal or bankruptcy can help you clear those debts?

    Call DebtCare Canada today at 1-888-890-0888.

     

  • Stopping a Wage Garnishment is Easier Than You Think – Even a CRA One

    deb2Situation: You wake up Friday morning, it is payday, and it is going to be a good day. You check your bank account, realize there is money missing (your paycheque was only a portion of what it should have been), so you do some research and find out your wages have been garnished. So long good day…

    If a creditor or the Canada Revenue Agency is trying to garnish your wages (or has already leveraged a garnishment) you can stop it. Here are some things you need to know.

    Whether you owe a creditor or the CRA, your wages can be garnished. The only major difference between creditor garnishments and CRA garnishments is that a creditor needs to get a court order to garnish your wages and the CRA does not. (The creditor will have to sue you and win his case to get that order.) At that point, the process is fairly simple; once a court order is obtained, a letter is sent to your employer (or your clients if you are self-employed), and they are required by law to take a portion, sometimes up to 50%, and send it to the court.

    When a creditor garnishes you, your options are to pay your debt, make a motion to the court asking to set aside the garnishment and make monthly payments, get your creditor to agree to a voluntary monthly arrangement or deploy a federal government program to stop your creditor.

    When the CRA garnishes you, your options are to pay your debt, get the CRA to agree to a monthly payment arrangement or deploy a federal government program to stop your creditor.

    What is a federal government program?

    • There is a law called the Bankruptcy and Insolvency Act which offers various protections to people with serious financial problems.
    • Not all protections in the Act involve bankruptcy – there is also a consumer proposal option which is similar to a debt consolidation.

    Protection under this Act may mean that:

    • Your creditor or the CRA has to remove the garnishment
    • Interest will stop
    • The debt may be reduced
    • You will have a single monthly payment

    How do you begin the process of applying for protection under this Act? These are formal processes that need to be carried out correctly the very first time. Your best approach is to speak with a financial consultant to discuss the various options available to you, one with the knowledge and experience leveraging these programs to help individuals deal with wage garnishments.

    Stopping a wage garnishment once it has been put in place may seem impossible – but trust us, it is not. Call DebtCare today at 1-888-890-0888.

     

     

  • Unexpected Wage Garnishment During the Holidays – What You Can Do Now

    debtcare2When 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.

     

  • Can a Collection Agency Issue a Wage Garnishment?

    deb1It is a very common scenario: you’re aware of the existence of a bad debt, but with no means to pay the debt, you instead choose to ignore the calls and notices and hope that you can eventually amass the funds to pay it in full – or just hope that it will eventually go away. Then payday rolls around, and with the intention of taking even just a little bit aside to pay the debt, you find that the creditors have already taken matters into their own hands and issued a wage garnishment – and the amount on your paycheque is far lower than expected.

    If this is the position in which you’ve found yourself, you might be wondering how it even came about. Can a collection agency even issue a wage garnishment – how do they have this power? The ugly truth is that yes, although a collection agency is a third party, it does have the power to secure a wage garnishment when going through the proper channels.

    When you have a debt that you can’t pay, and a creditor assigns the account to a collection agency, that agency may just choose to pursue the matter in court – in order for a garnishment to be leveraged against you, obtaining a judgement in court is first required.

    Does this mean you are being sued? No, the only people who can sue in Ontario courts are lawyers, paralegals, and people representing themselves – meaning, if a creditor has the time and resources, they could choose to sue you. Many don’t, but will pass the matter along to a collection agency, one who will then seek a judgement.

    A collection agency can apply on a creditor’s behalf to court to seek a “garnishment” against you. If granted, this legally allows them to seize your salary, money in your bank account, or other money you own to repay your debt.

    Often when collection agencies threaten to sue on behalf of the creditor, it is to scare you into paying – but there are many instances where it is not an empty threat and a wage garnishment may be imminent.

    If collectors are calling and delivering these threats, a wage garnishment may be headed your way. It is best to deal with the debt before a garnishment is issued, thereby mitigating further damage to your already bruised credit.

    These are your options:

    • Pay the debt in full – although if this really was an option we hope most would have already done it.
    • Make a settlement with the collection agency – sometimes this works, other times it is easier said than done.
    • Look at other options to settle the debt and stop collection action, such as filing a consumer proposal.

    Once a debt goes to collections it won’t just go away – your creditor will just keep assigning it to different agencies and using different tactics to force you to pay.

    If you are standing on a ledge with seemingly no resources at your disposal, don’t despair. DebtCare Canada can help you find a solution to your financial problem and get a wage garnishment lifted before it does more damage. Call us today at 1-888-890-0888.

     

  • You Can Stop a Wage Garnishment in Ontario – Here Are Your Options!

    wage garnishment in OntarioWage garnishments impact thousands of people every day – and can come as a most unpleasant surprise for those individuals.

    Beyond the financial implications, a wage garnishment in Ontario can have serious consequences in other areas of your life. For example, if you work for someone else, once that individual receives a Notice of Garnishment regarding the wage garnishment, they will be fully aware of your financial problem and thus may view you in a different light. Responsibility and reliability may be questioned, and any company that required a credit check upon hiring may take this new information into consideration.

    If you work for yourself, especially with a small company, your reputation is important, but if your clients are receiving letters telling them to submit payment directly to the court, this could tarnish that reputation. The hassle may cause those clients to look elsewhere in the future.

    Once a garnishment is in place, is paying it off the only option? Perhaps not.  A wage garnishment in Ontario can often be stopped but this largely depends on who issued it.

    Here are a few of the most common types of wage garnishments in Ontario:

    1. Issued through the court – someone sued you, got a judgement and is enforcing it. Generally this can mean a loss of up to 20% of your earnings, and can only be stopped by paying the debt or making an arrangement with a creditor, by court motion, or by arranging a bankruptcy or consumer proposal with a debt counsellor.
    2. Issued by the CRA – the CRA does not need a court order, and can garnish up to 50% of your wages. If you are self-employed or on a pension this could be up to 100%. A CRA wage garnishment can only be stopped by: CRA’s consent or an arrangement, by arranging a bankruptcy or consumer proposal with a debt counsellor, or by taking CRA to tax court (the most expensive route). A CRA wage garnishment is particularly nasty….
    3. Issued by Family Responsibility – the only way to deal with one of these is to pay it in full or go back to court – there is no other option.
    4. Issued because of EI overpayment or by government after receiving money under false pretense – this can be complicated and these are instances where it is difficult to get protection. Like the CRA, this does not require a court order and if fraud is involved it can get tricky.

    When you are facing a garnishment of your wages, no matter the source, your best bet is to speak with a debt counsellor. The solution to your financial problem will largely depend on your personal circumstances, but ignoring the garnishment should never be an option.

    Avoid the embarrassment and financial hardship of a wage garnishment in Ontario by calling DebtCare Canada today at 1-888-890-0888.

  • Can a Collection Agency Garnish my Wages?

    Can a Collection Agency Garnish my Wages?

    collection agency, garnish my wagesNo one wants to be unable to pay their bills. For most it is devastating to reach a point where you simply can’t afford your obligations to a creditor, causing you to default and forcing your creditor to assign your account to third party collections.

    When the collectors start calling they mean business. They have one goal and one goal only, and that is to collect money on behalf of your creditor. Some may even threaten to garnish your wages, leading you to wonder, “can a collection agency garnish my wages?”

    Answering this question means taking a closer look at collection agencies, their powers and the regulations governing them.

    In Ontario, collection agencies are regulated by the Ontario Government and have to adhere to guidelines in terms of what they can and cannot do when collecting a debt.

    Here are some examples of things collection agencies can’t do:

    • Contact you on a Sunday, except between 1 p.m. and 5 p.m.
    • Contact you on any other day of the week between 9 p.m. and 7 a.m.
    • Contact you on a holiday
    • Use threatening, profane, intimidating or coercive language
    • Use undue, excessive or unreasonable pressure or harass you
    • Charge you any fees

    If a collection agency crosses the line you can file a complaint against them here: https://www.ontario.ca/home-and-community/collection-agency-your-rights.

    Getting back to collection agencies and wage garnishments: in order for your creditors to be able to garnish your wages in Ontario, they must first sue you in small claims court, obtain a judgement against you and then gain permission from the court to garnish your wages.

    In small claims court your creditor can represent itself or hire a third party agent as its representative. A paid agent must be a paralegal licensed by the LSUC.

    The only way that a collection agency can garnish your wages on behalf of a client is if they have a division that includes licensed paralegals who may administer small claims court documents and filings and if:

    • The company has been engaged to represent the creditor to sue you in small claims court.
    • The file was assigned after the creditor already had a judgement and it simply hasn’t been enforced.
    • They are representing an arm of the government that doesn’t require a court order to garnish – but in this instance it is more likely that the government would directly garnish your wages.

    If a collection agency threatens to garnish your wages:

    • Ask them to put their threat in writing.
    • Ask for written evidence that they have been engaged by the client to take legal action or enforce a judgement against you.
    • Contact the small claims court to confirm if there has been a judgement filed against you.

    While you have some leverage as far as asking for transparency and standing up to the collection agencies, eventually you are going to have to look at ways to address the root cause of your challenges -which is the debt that you can’t pay. The cycle will only continue because, after a certain amount of time, the creditor may assign your account to another collection agency and then another. Some collection agencies do have legal departments and paralegals on staff, so while most won’t garnish your wages on behalf of a creditor and may merely threaten, others do have the power to do so.

    Know your rights about what collection agencies can and cannot do – but don’t ever ignore a debt that has gone to collections. Call DebtCare Canada today – we will help you get the relief you need: 1-888-890-0888.

  • Fighting a Wage Garnishment that Wasn’t Issued by the Court

    wage garnishmentThe only type of wage garnishment that is not issued by the court is one that relates to government debt, like debt to CRA, or other less common debts, like debts related to EI overpayments.

    Where CRA garnishments are concerned, if you owe money, CRA can issue a wage garnishment without notice to you and without a court order. The wage garnishment could be up to 50% of your earnings. Once your employer is served with a wage garnishment from CRA they have to honour it or they too could get stuck with responsibility for your tax debt.

    Wage garnishments are very embarrassing and often CRA finds out where you work and where to serve them because you gave them this information. Oh yes….remember that nice CRA agent who phoned and said that if you filled out some financial forms including where you work that you could make a payment plan for 3 months. Only the payment plan you agreed to was more than you could afford and Bam! Wage garnishment.

    Once a wage garnishment is put in place by CRA you have 4 options:

    1. Pay the tax debt – beg, borrow, steal to get the money (we were kidding on the steal option – the other 2 are viable). Perhaps you can refinance your mortgage or borrow the money from your family. This still leaves a debt outstanding but at least your creditor is not the government.

    2. Ask CRA to reduce or remove the wage garnishment – we wish you good luck with this option. Likely this option will lead to you divulging more information to CRA for them to use against you. In all seriousness, CRA agents are very skilled at what they do – if you plan to try to negotiate directly with CRA, it is best to do so through a seasoned financial professional who is experienced at dealing with them!

    3. Go to tax court – if you can’t pay the debt in full it is highly unlikely, especially with your shiny new wage garnishment, that you can afford to go out and get a lawyer. Tax court is not like what you may remember from Peoples’ Court – it is not a good idea to go to tax court without a lawyer. You will be going up against a trained CRA lawyer who works in the tax court daily and knows the law intimately.

    4. Consumer proposal or bankruptcy – either option would immediately stop a CRA wage garnishment. Whether or not this is an option will depend on other financial circumstances.

    The options are clear. However, where the less common government debts that arose as a result of fraud are concerned, EI overpayments being a good example, option number 4 will not work because debts that arise from fraud are not protected in a consumer proposal or bankruptcy.

    If you owe CRA a debt, don’t ignore it. Seek out professional financial assistance and get that debt dealt with. DebtCare can help. Call us today at 1-888-890-0888.

  • So You Have Filed Your Income Taxes and You Owe – Now What?

    wage garnishmentSo you’ve made it through income tax time but you know you are going to owe – now what?

    Your first step is going to be to take a good hard look at your budget. CRA will want to be paid in full so that should be your first goal. If this goal is unattainable, that means that some negotiation with CRA is going to be involved. This can be very tricky because when speaking with them, the first thing they will try to do is get you to share personal information with them that they can then use against you later when trying to collect the tax debt.

    Here are some examples:

    • Where do you work? = wage garnishment
    • Where do you bank? = frozen bank account
    • Where do you live? = property lien

    In fact, the most dangerous CRA agents are actually the nice ones! Through one casual conversation, during which you are just trying to be friendly and compliant, these agents can extract enough information from you to do some serious damage. Then, after you’ve made your disclosure, they will turn around and demand a monthly payment in excess of what you can afford to pay monthly or they suggest that you start liquidating assets to pay them.

    This is why negotiating with CRA directly is never recommended.

    Aside from trying to charm information out of you on the phone, agents will often appear to entertain the idea of a payment plan IF you complete their financial disclosure statement. This statement basically discloses every asset, investment and income/income source you have. This is, by far, one of the most dangerous CRA forms.

    If you have a tax debt that you know you can’t pay in full, your best bet is to obtain some professional guidance. Perhaps there is some way you can pay the debt and therefore negotiate, but perhaps there is not and you will require additional protection against the powerful CRA.

    Most action that CRA can take can be taken without warning you, nor do they need a court order. From the point when your return is assessed to the point when your account is assigned to a collection officer is only about 3-6 months, so time is of the essence. Waiting until you are on CRA’s radar to formulate a plan is not recommended.

    Get a jump start on finding a solution for your tax debt and see the light at the end of the tunnel sooner rather than later. DebtCare can help you negotiate with, and protect yourself from, CRA. Call us today at 1-888-890-0888.