The wage garnishment, also known as salary withholding or wage attachment, is a legal process that allows a creditor to recover a debt by seizing a portion of an employee’s salary. This process can be used when all other methods of debt collection have failed.
In this article, we will examine in detail what wage garnishment is and how the process works in Canada.
Definition of Wage Garnishment
Wage garnishment is a legal procedure by which a creditor can withhold a portion of an employee’s salary to repay an unpaid debt. This procedure is governed by law, and there are strict rules determining how much can be garnished from an individual’s salary.
Wage garnishment can be used to recover various types of debts, including unpaid child support, defaulted student loans, tax arrears, fines, or court-ordered judgments.
In the case of wage garnishment, a creditor must first obtain a judgment against the debtor through a legal action. For example, let’s say a person has accrued arrears in child support payments to their ex-spouse. The ex-spouse creditor can take the matter to court and obtain a judgment confirming the debt. Once the judgment is rendered in favor of the creditor, they can request a wage garnishment order.
How It Works in Canada
The procedure may vary depending on the region in which you reside. However, here are some important points regarding the process in Canada. In all cases, it is essential to seek professional advice to avoid mistakes and resolve the situation legally.
Obtaining a Judgment and Requesting an Order
Before initiating the wage garnishment process, the creditor must obtain a judgment against the debtor. This involves filing an application with a competent court and providing evidence of the unpaid debt. Once the judgment is rendered in favor of the creditor, they can request a wage garnishment order.
For example, once the ex-spouse creditor has obtained the judgment confirming the child support arrears, they can submit an application for a wage garnishment order to the court. This application must include detailed information about the debt, the amount to be garnished from the debtor’s salary, and the debtor’s employer’s contact information.
Serving the Wage Garnishment Order to the Employer
Once the wage garnishment order is obtained, the creditor delivers it to the debtor’s employer. The employer is then legally obligated to withhold the specified amount from the employee’s salary in accordance with the instructions in the order. The garnishment amount is determined by the rules established by law and can vary based on the employee’s income and other legal obligations.
The debtor’s employer, who may be the company they work for, receives the wage garnishment order from the ex-spouse creditor. The employer is required to take the necessary steps to withhold the specified amount from the employee’s salary and remit it directly to the ex-spouse creditor.
Payment to the Creditor
Once the employer has withheld the specified amount from the employee’s salary, they are obligated to remit these funds directly to the creditor. This can be done through a bank transfer or any other appropriate means of payment. The creditor can be a government agency, a private company, or an individual.
The employer will make regular payments to the ex-spouse creditor until the entire child support arrears are repaid. Once the debt is fully settled, the employer ceases the wage garnishment and informs the ex-spouse creditor of the end of the garnishment.
Employee Protections
Although wage garnishment is a legal tool to recover unpaid debts, there are protections in place for employees to prevent excessive garnishments that could place them in a precarious financial situation.
Canadian laws set limits on the amount that can be garnished from an individual’s salary, based on a percentage of their income and considering certain essential expenses.
Additionally, there are types of income that cannot be garnished, such as employment insurance benefits, retirement benefits, and family allowances. These incomes are considered protected by law and cannot be used to repay debts through wage garnishment.
Conclusion
Wage garnishment is a legal process used to recover unpaid debts by withholding a portion of an employee’s salary. In Canada, this process is regulated by law and requires obtaining a judgment and a wage garnishment order. Employers are obligated to withhold the specified amount from the employee’s salary and remit it directly to the creditor.
However, there are protections in place to prevent excessive garnishments that could compromise an employee’s financial situation. It is essential to understand the rights and limitations related to wage garnishment in Canada. Seek professional advice to navigate this process and ensure compliance with the relevant laws and regulations.
