KNOW YOUR RIGHTS WHEN FACED WITH WAGE GARNISHMENT IN ALBERTA
If you owe a debt and are not able to repay it, the court may allow the creditor to take the money owed from your paycheck. This process is known as “wage garnishment,” and there are specific rules and procedures that must be followed in Alberta if a creditor is seeking to garnish your wages to satisfy a debt. If you are struggling to pay a debt, garnishment of your wages can make a tough situation worse. It is crucial that you know your rights, and you should consider debt counselling to learn about ways to avoid being subject to a wage garnishment order.
In this blog, our licensed insolvency trustee will discuss your rights concerning wage garnishment in the province of Alberta. If you need additional information, want to talk about your options for getting out of debt, or have questions about how the garnishment rules and procedure apply in your unique financial situation, call us today to schedule your free initial consultation.
HOW IS GARNISHMENT DEFINED?
Garnishment is a legal procedure that a creditor can take after the court grants a judgment against you. The creditor must first go to court and establish that the debt is owed; if that is done, the creditor gets a judgment against you as the debtor, and the court then issues a summons. The summons allows the creditor to take your assets to satisfy the debt. Each province has specific rules on which assets a creditor can seize to satisfy a debt. The creditor can take your assets (if not exempt) and can request a garnishment from the court to permit them to take the money owed (“garnishee”) from many sources. These include your paycheck, your bank account, or money owed to you by others (for example, your accounts receivable if you are self-employed).
WHAT IS WAGE GARNISHMENT?
If your employer is served with a garnishee summons, your employer is legally obligated to pay a portion of your wages to the court, which in turn is paid to the creditor until your debt is fully paid. Here are some crucial points to be aware of:
- There is a limit on how much of your wages can be taken (see the next section for discussion of the minimum and maximum exemptions).
- Your employer is not allowed to dismiss you because your wages are being garnished.
Note that a creditor cannot garnish your wages without a court order unless the creditor is a credit union or the Canada Revenue Agency (“CRA”). In addition to there being no requirement for a court order for garnishment to pay taxes owed to the CRA, a garnishee summons is not required if your wages are being garnished for student loans or child support (though a child support order is necessary for the provincial maintenance enforcement program to be able to garnish your wages).
HOW MUCH OF YOUR WAGES CAN BE GARNISHED?
The minimum exemption is $800 per month, and the maximum exemption is $2,400, net of taxes. So, if you have no dependents, Alberta law says that you are permitted to keep the first $800 of your monthly net income, then creditors can garnish half of your monthly net income between $800 and $2,400 and all of your net income over $2,400. If you do have dependents, the minimum and the maximum exemptions are increased by $200 for each dependent.
CAN YOU AVOID GARNISHMENT OR STOP GARNISHMENT FROM HAPPENING?
If you are struggling to pay your debt and are worried about a wage garnishment order, talk to a Licensed Insolvency Trustee for debt counselling and to discuss your options. Depending on the type of debt (e.g., secured vs. unsecured), it may be possible to negotiate with creditors before the garnishment proceedings begin or to renegotiate the terms of the garnishment order if the court has already issued it. Alternatively, depending on your financial situation, a consumer proposal or personal bankruptcy may be the best course of action to get you out from under the debt. A significant benefit of both consumer proposals and personal bankruptcy is that both immediately stop wage garnishment. The money will no longer be taken out of your wages, and harassing phone calls from creditors will cease.
SCHEDULE YOUR FREE DEBT COUNSELLING CONSULTATION IN EDMONTON
If you are in debt or facing wage garnishment, get in touch with our compassionate and expert team of debt counsellors. Fox-Miles & Associates Inc. offers professional debt counselling in Edmonton from certified credit counsellors. Our trustees make recommendations based on your financial circumstances and their experience in the field. We’re here to show you the way out of debt. For debt counselling in Edmonton, call our offices today at 780-444-3939. Your first consultation is free.