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.
- If you owe a debt to the Canada Revenue Agency, they may garnish your wages on a less favourable scale.
- These exemption rules do not apply if you owe alimony or child support.
- 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.