Garnishment of Wages and Bank Accounts

Garnishment is a legal process whereby the court or government organization orders an employer to take part of a person's wages and return that portion to the court, a creditor, or government agency. Creditors, courts and government agencies usually use this as a last resort. Trustees in bankruptcy may also use the same procedure when individuals refuse to voluntarily give excess income to the trustee for distribution to creditors.

Eighty percent of wages, after statutory deductions, are exempt from garnishment, except in the case of a support order where usually fifty percent is exempt and in the case of some federal government agencies where there is no exemption.

Normally, creditors must obtain judgement through a court before the court will direct seizure of wages. Some government services such as Revenue Canada, or the Unemployment Insurance Commission, do not have to take court action but can issue a "Demand On Third Parties" directly to employers; they usually limit their seizure to 30% of take home pay, but do not have to do so.

Some income such as welfare benefits may be exempt from garnishment. However, bank accounts can be seized up to the limit of the total amount owed. Therefore, a welfare recipient's payment that has been automatically deposited in a bank account could be totally seized by a creditor.

Any garnishment procedure is an indication of a serious financial problem. If this happens to you, call your nearest Credit Counselling Service for an appointment. The counsellor can help you to negotiate other arrangements with creditors and provide you with a variety of solutions for your difficulties. Since laws and regulations change from time-to-time the counsellor will be sure to help you to find out what the law currently allows and how you can eliminate garnishment and get back in good standing with your creditors.