Wage Garnishment Rules in Alberta

If you have large debts that you fail to repay, your creditors may take action to recover their money. This process could include sending your account to a debt collection agency or commencing legal action through the courts. If a creditor wins their case, they can get a court order to take any of the following actions:

  • Seize non-exempt property
  • Freeze your bank accounts
  • File a lien on your property
  • Garnish your wages

What Is Wage Garnishment?

Wage garnishment is when a creditor takes money directly from your monthly paycheck to recover an unpaid debt. This garnishing of your wages will continue until your debt has been repaid or until you and your creditor make an alternate arrangement to repay the debt.

Do All Creditors Garnish Wages?

A creditor will typically try to reach an agreement with you to pay your outstanding debt. However, when this does not work, or you fail to make payments for an extended period, the garnishment process may be their best option for recovering money owed.

Filing a lawsuit to recover a debt is an expensive and time-consuming process, so most creditors only pursue legal action if the outstanding debt is high. While creditors are unlikely to take legal action over a few unpaid utility bills, you could end up in court and have your wages garnished if your debt to a creditor exceeds $10,000.

How Much of My Salary Can My Creditor Garnish?

There are laws in place that define the amount of money that creditors can garnish from your monthly paycheck. These laws vary by province, but for wage garnishment in Alberta, the law is as follows:

  • The first $800 of your monthly salary is exempt from garnishment
  • For monthly salary amounts above $800 and up to $2400, a creditor can take 50%
  • For salary amounts over $2400, a creditor can take 100% of the balance with no maximum garnishment amount

If you have children or other dependents, your exemption is increased by $200 for each child. Therefore, if you have two children, you would keep an extra $400, so the total exemption amount is $1200 each month.

Are There Any Exceptions to These Garnishment Laws?

If the court has ruled in favour of the creditor, your wages will be garnished as set out by the provincial laws outlined above. However, there are cases when these exemptions may not apply.

  1. If you owe a debt to the Canada Revenue Agency, they may garnish your wages on a less favourable scale.
  2. These exemption rules do not apply if you owe alimony or child support.
  3. If you are self-employed, the distinction between personal and business assets is less defined and as a result, no exemptions apply. Therefore, your entire paycheck would be open to garnishment unless you come to an agreement with the creditor.

How Can I Prevent My Wages From Being Garnished?

If you have significant debt, the best thing you can do is put a plan into place before you accidentally end up in court.

Talk To Your Creditors

We always recommend talking to your creditors to see what terms they can offer to make repaying your debt more manageable. Most creditors don’t want to go to court and will always try to work with you to reach a suitable agreement.

Consider A Consumer Proposal

You might want to consider a consumer proposal when you have significant debt you cannot repay. This is a process through which you negotiate a settlement with your creditor to reduce the amount of debt you have to pay back. These negotiations can potentially reduce your debt by as much as 80%, making it much easier to repay.

File For Bankruptcy

If you file for bankruptcy, you are immediately released from the burden of your unsecured debt. In addition, you will receive a ‘stay of proceedings’ upon filing for bankruptcy. This means that collection agencies must stop pursuing you, and any wage garnishment will also stop. While bankruptcy does provide relief, you should only pursue it after you’ve considered all other options.

Contact a Licensed Insolvency Trustee

At Fox-Miles & Associates, we understand the impact that reduced income as a result of wage garnishment can have on a family. We offer credit counselling to help you navigate your debt. We will work through your finances and look for a solution to pay your debt before wage garnishment happens. Book a free consultation today.