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  • 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.

  • Avoiding a Wage Garnishment or Other Enforcement Action: Protecting Your Information

    If you find yourself drowning in debt, unable to meet your monthly financial obligations, you may soon find yourself facing a wage garnishment or other enforcement action if you don’t take the appropriate steps to deal with the problem. Being in debt isn’t a great feeling, but it doesn’t mean the situation is hopeless. To help avoid having a creditor garnish wages, it pays to be diligent in keeping your personal and financial information safe.

    A wage garnishment, frozen bank account or property lien on your home can happen easily if you are not careful about how you guard your personal and financial information. With very basic information about you and your assets, including any property you own, your creditors can easily take action to collect.

    Creditors often investigate public documents regarding property ownership and income to find out if you have the means to pay. If they have reason to believe you have sufficient income or assets, they will come after you. Some innocent sounding questions from your creditor when discussing repayment plans can lead to serious enforcement action down the road. Working with a creditor, you may be asked where you bank. Now they know which account to freeze. Maybe they ask where you live, and now they know where to look to place a property lien. Questions about employment and clients can easily lead to wage garnishment, which can be a substantial cut.

    Simply by protecting your information you can buy yourself some time to get your debt straightened out.

    If you’re concerned about a potential wage garnishment, whether a creditor has contacted you for the above information or not, the best thing you can do is pay the outstanding debt in full. This will eliminate the need for your creditor to seek you out. However, if you’re worried that your current financial situation won’t allow for payment in full (as is likely the case, otherwise you wouldn’t be in the situation), you need to think about other ways to remedy the situation.

    One of the best things that you can do if you know that you owe a creditor, and want to avoid a wage garnishment because you don’t have the means to pay in full, is to consult a financial professional. Whatever you do, don’t panic. And DO NOT answer any financial/personal questions from creditors without first consulting a professional.

    At DebtCare, we can help you explore your options. Call us today at 1 (888) 890-0888.

     

  • The Difference Between a Wage Garnishment from the Government and a Creditor

    A wage garnishment is a very popular (or unpopular, depending on your experience) form of collection action. When money is owed to a creditor, obtaining a judgment for enforcement action and implementing a wage garnishment is a common method for retrieval of funds. The Canada Revenue Agency (CRA) is also well known for imposing wage garnishments when money is owed. The process, however, is different for each. So, what’s the difference between a wage garnishment from the government and one from a creditor? We’ll explain.

    Firstly, what is a wage garnishment? When you owe a creditor or the CRA, but have failed to make the necessary payments, that organization has the ability to pursue a garnishment of your wages. Once this happens, your employer will receive a notice of garnishment, which lists the debt amount and the name of the creditor. Your employer is then required by law to pay a portion of your wages. The amount can differ depending on a variety of factors, as well as the organization seeking the garnishment.

    When a creditor garnishes your wages, you will have some warning. Not only will you receive a letter informing you of their intention, the creditor is also required to obtain a judgment against you in court, meaning they must sue you in an action which you can defend. If you fail to defend or don’t receive the letter and judgment is obtained, a notice is sent, as mentioned, to your employer and your employer must then submit the specified portion of your wages to pay your outstanding debt.

    The major difference when the CRA garnishes your wages is that they are not required to obtain a court order. When you owe the CRA and they choose to garnish your wages, they simply send a notice to your employer directly. You may not receive any warning, only finding out about the garnishment on payday. As with a creditor, once this garnishment notice is received by your employer, they are required by law to submit a portion of your paycheque.

    What can you do if your wages are being garnished? Wage garnishments can be devastating financially, so it is important to address the issue as soon as you are made aware of it. Once it is in place, your options are few. To have a garnishment removed you can try negotiating with your creditor to settle the debt, pay the debt in full, or file a consumer proposal or bankruptcy. These options are the same whether you are being garnished by a creditor or the CRA.

    It is a very common practice for both creditors and the CRA to garnish wages. Wage garnishments are typically very effective as they allow the creditor to intercept money before it gets to you.

    At DebtCare, we deal with wage garnishments every day.

    If you’re struggling as a result of one, get in touch with us today to discuss your options for having it removed. 1 (888) 890-0888.

     

  • Don’t Help the Canada Revenue Agency Take Collection Action

    If you owe money to the Canada Revenue Agency (CRA), you can be sure that the next few months will find you dealing with various attempts to collect. The CRA is quite aggressive when it comes to collecting a tax debt, and waiting for you to pay up just isn’t the name of their game. Don’t make it any easier for them to begin collection action.

    If you receive a legitimate communication from the CRA asking for financial information, you may think that providing such would be harmless or may prove favourable when attempting to negotiate a payment plan. For example, if an agent calls and asks where you bank, or who your clients are (if you’re self-employed), you may feel like this is a reasonable request and provide the information.

    The same goes for forms they may ask you to fill out. While you might think that completing these forms will result in a fair payment arrangement – they may even allude to such – it typically won’t.

    Think those questions are risk-free or safe? Beware. This information will be used for collection action.

    What questions lead to enforcement action?

    • Where do you bank = frozen bank account
    • What is your address = property lien
    • Where do your work = wage garnishment
    • Who are your clients = garnishment to clients, up to 100%

    Aren’t these things the CRA already knows, or can find out on their own? Sometimes yes, sometimes no, but even in the case of things they can find out, why do the legwork for them, thereby making it easier for them to hurt you?

    When you can’t pay, but you’ve answered the questions and filled out the forms, the CRA now has all of the information they need to come after you. The CRA isn’t interested in long-term payment plans and they won’t reduce the amount that you owe! Any arrangement will disallow payments to other creditors (loans and credit cards), thereby decimating your credit, as well as other expenses. If money is owed, the CRA wants it, right now.

    If the CRA is asking questions and you know that you owe but can’t pay in full, it is time to get professional representation. We strongly recommend that you DO NOT complete these forms or answer any financial/personal questions without first speaking with a financial professional.

    At DebtCare, we can help you navigate the dangerous CRA waters.

    Get in touch today by calling 1 (888) 890-0888.

     

  • How to Stop a CRA Wage Garnishment

    With the tax season behind us, those sitting with tax debts may be concerned about payment plans and what actions the Canada Revenue Agency might take to obtain money owed. A CRA wage garnishment is a very common form of enforcement action. If you’re concerned about a possible garnishment, or are currently trying to have one removed, read on.

    The CRA does not need a court order to obtain a wage garnishment. They do not even need to warn you when one is being initiated. They can garnish up to 50% of employment income and 100% of other income, such as contracts and pension income, simply by sending a letter to your employer or clients (if you are self-employed).

    Once a CRA wage garnishment is in place, it becomes even harder to negotiate with the CRA. Often the only way they will agree to remove it is by receiving payment in full.

    If this is not feasible, don’t worry, you have other options.

    To get a garnishment lifted, you may want to consider bankruptcy or a consumer proposal. Once either is filed, the garnishment will be stopped immediately.

    In the case of a consumer proposal, your creditors must accept it to move forward, so if the proposal is not accepted, the garnishment can be re-initiated. However, a strong, well-positioned proposal will most often be accepted.

    In a bankruptcy, a wage garnishment will be stopped, period. There is no need for creditors to accept anything. Once the paperwork has been filed, all enforcement action must cease.

    Knowing which option is best for you depends on your personal circumstances – your income, assets, family composition, debts and more. Discussing your situation with an experienced financial consultant is the most effective way to determine which option will serve you best, both in the short-term and over time.

    Tax debts can’t be ignored – they won’t just disappear on their own, and the CRA can be incredibly aggressive when it comes to collecting. The most important thing that you can do when you have a tax debt is look for a solution as soon as possible. Waiting may just find you struggling to make ends meet. A wage garnishment can be embarrassing and can seriously impact your ability to continue meeting your monthly financial obligations.

    If you are stressed about a current or probable CRA wage garnishment, DebtCare can help. We have years of experience helping Canadians with such problems.

    Call us today for a free consultation: 1 (888) 890-0888.

     

  • Will a Creditor Actually Sue You When You Default on a Debt?

    We often have clients call us, when debt becomes unmanageable, asking if a creditor will actually sue if you default on a debt. While it may seem unlikely, it is, unfortunately, very common.

    A creditor may sue you themselves, hire a paralegal to cover it, or assign your account to collections, whereby the collection agency may sue you. If a judgement is secured against you, they can then take enforcement action to obtain the funds owed.

    Enforcement action may include a wage garnishment, a property lien or a frozen bank account.

    All of these are embarrassing and could have other consequences.

    A wage garnishment not only reduces your income (as the money is taken from the source to pay the debt), it also lets your employer know that you have a financial problem. This is particularly problematic for those in jobs where you have to be financially responsible. If you’re self-employed, the notice of garnishment is sent to your clients and intercepts their payments to you, letting them know that you’re financially in trouble. This can damage your reputation.

    A lien on property will effectively mean that you can’t refinance the asset and could mean additional fees and financial consequences to get the lien discharged when it is paid. It will also make the creditor a secured creditor, thus reducing financial options should you decide to file a consumer proposal or a bankruptcy.

    Not only will a frozen bank account result in an inability to access funds, it can damage your relationship with your bank. This may result in them choosing to suspend other credit products, make changes to your account (i.e. removing an overdraft), or deciding not to extend credit to you in the future.

    If a creditor is threatening to sue you, you need to take action now. Waiting will often just result in one of the above.

    If you find yourself worrying about such things, the first question to ask is why you are in this situation to begin with. Do you have financial challenges making it hard to pay your debt? Perhaps you just need a fresh start.

    A consumer proposal is a great way to consolidate debt and:

    • Stop collection action – even a lawsuit or enforcement action from a judgement (as long as it’s not a lien)
    • Stop interest
    • Reduce debt in most cases
    • Consolidate everything into a single monthly payment

    If you owe and your creditor is threatening to take you to court, don’t assume that this is an empty threat. Once legal action is initiated, you may find yourself in much deeper financial waters.

    At DebtCare, we can help you deal with your debt before it gets to this point, or, if it has already reached this point, help you stop that enforcement action.

    Call us today 1 (888) 890-0888.

     

  • 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.