Can a Company Garnish Your Wages Without Notice?

Debt collectors have several ways to collect money you owe, and one of these methods is called wage garnishment. This means a portion of your paycheque can be used to pay off your debt. You might be asking, “Can a creditor garnish your wages without notice?” “Will I be notified if my wages are garnished?” and “How can I stop wage garnishment?” Understanding how the process works can help you avoid or stop wage garnishments from creditors.

Wage Garnishment

Wage garnishment happens when you have unpaid debts that are overdue. Usually, your employer gets a court order to withhold a certain percentage of your earnings and send it to your creditor to repay what you owe. However, not all debt collectors need a court order to do this. There are some exceptions, such as :

• The Canada Revenue Agency: The CRA doesn’t need a court order to garnish your wages.
• Credit unions and payday lenders: These lenders often have you sign a voluntary assignment of wages, allowing them to garnish your wages without going to court.
• Family support agencies: These include BCFMA in British Columbia and the Family Responsibility Office in Ontario.

The amount of money your employer can take from your pay depends on where you live in Canada. The calculation is based on your take-home pay, which is what you earn after taxes and other deductions, such as the Canada Pension Plan and Employment Insurance.

Your employer will keep taking money from your wages until your debt is paid off or you’ve filed a Consumer Proposal or Bankruptcy.

Can a company garnish your wages without notice?

The Canada Revenue Agency and debt collectors use legal methods to collect the money you owe. However, they follow different rules. Both will reach out to you by phone or by mail. Many people who owe money tend to avoid checking their mail or answering calls. If you’re asking, “Can a company garnish your wages without notice?”, the answer is that they often do notify you, but you may have missed the information.

How long before the CRA garnishes wages?

The CRA (Canada Revenue Agency) lets you make installment payments to pay off your debt. If you don’t set up a payment plan or if you skip payments, the CRA will first call you to give you a legal verbal warning and also send a legal written notice.

This warning has a period of 180 days. During this time, the CRA can take legal action against you. If the warning ends without action, they can renew it with just one notice.

The Canada Revenue Agency wage garnishment is one way they collect what you owe.

Can a debt collector garnish my wages?

While debt collectors can definitely garnish your wages, it will depend on the circumstances. There are several reasons why they may not pursue garnishing your wages, including:

● The debt is too small.
● The expense doesn’t justify the reward.
● It’s too time-consuming.
● The debt is too old.

Debt collectors need a court order to take money from your paycheque. Getting that court order takes a lot of time and can be expensive. Some collectors might not bother trying to garnish your wages if the debt isn’t big enough to make it worthwhile

Can a collection agency garnish your wages?

Collection agencies can also garnish your wages, and often do. They must follow the same process as debt collectors to do so. They will pursue legal action if the debt is large enough to justify the time and expense required to get a court order.

How long before a debt collector can garnish wages in Canada?

Creditors, collection agencies and debt collectors typically try to collect payment from you for 3-6 months. If they cannot recover what you owe, they may begin the process to garnish your wages.

Your creditors can legally pursue you for unpaid debts that fall within the Statute of Limitations. Each province and territory sets its own Statute of Limitations, which ranges from 2 to 6 years. Debt collectors can still attempt to collect on debt that has passed the expiry period, but they can’t take legal action against you.

The wage garnishment process

If you owe money, debt collectors will take legal action if your debt is significant. Typically, they are less likely to sue if your debt is less than $3,000, but they will still try to collect what you owe.

Here are the steps that creditors, debt collectors and collection agencies must take:

1. They will call you and notify you in writing, advising you that your debt is in collection.
2. They will try to collect the debt or reach a settlement without going to court.
3. If those efforts fail, they may file a lawsuit and send you a Statement of Claim.
4. If you do not respond to the Statement of Claim within the required time frame, the court can issue a default judgment against you.
5. After getting a court judgment, the collector can apply for a garnishment order to take money from your paycheque.

Debt collectors will keep you updated about what they are doing with your debt. Usually, a company can’t take money from your paycheque without letting you know first. This process can take weeks or even months, and you’ll get information about your case during that time.

You might not know what a debt collector is doing if you’ve moved, changed your phone number or email, or if you’ve stopped taking calls.

If you are worried about your wages being garnished, understanding your legal choices, like Consumer Proposals or Bankruptcy, can help you feel better and more in control of your debt.

How to stop wage garnishment

If creditors are threatening to garnish your wages, it’s wise to find out how to stop a wage garnishment before it starts.. If it hasn’t, you may be able to avoid it by:

• Preparing a budget: Review your income and expenses. Decide what you can reasonably afford to put towards repaying your debt.
• Acknowledging your creditors: Hiding from your creditors won’t help the situation. Contacting them to discuss your debt and financial situation may help you work out an acceptable payment plan. Some may accept a lump-sum payment for a reduced amount.
• Credit counselling: A Licensed Insolvency Trustee (LIT) can help you with debt counselling and advise you on how to prepare a plan to repay your creditors.
  If that won’t work for your financial situation or your wages are already being garnished, a LIT can file a Consumer Proposal or Bankruptcy.

Consumer proposals, bankruptcy and wage garnishment

If your wage garnishment is making life financially too stressful, a Licensed Insolvency Trustee can help.

A LIT can file a Consumer Proposal or Bankruptcy on our behalf. Both are legally binding debt solutions that stop all interest, fees, collection calls, legal action, and wage garnishments. Once your creditors receive the notice of filing – Wage garnishment should stop.

Consumer Proposals can reduce your debt by up to 80%. You’ll have up to 5 years to repay the remaining balance. One advantage of a Consumer Proposal is that you keep your assets.

If your debt situation is severe, Bankruptcy could be the best solution. Completing the terms of your bankruptcy will eliminate your debt.

Where to Get Help With a Wage Garnishment?

Having your wages garnished will make a difficult financial situation worse. Our Licensed Insolvency Trustees at Allan Marshall and Associates can help debtors with programs to stop wage garnishments. Book a free consultation with us online or by calling 1-888-371-8900. Let’s work together to stop your wage garnishment, eliminate your debt and start fresh.