When a person owes a creditor money and is unable to pay, that creditor will sometimes use wage garnishments to recover the funds. Canadian wage garnishment rules cover when garnishments can be used, what procedures must be followed and how owed money can be recovered. These laws must be followed by creditors who wish to recover their debts through garnishments.
The practice of garnishment, also known as "attachments of debts," usually involves three parties: the creditor, the debtor and the garnishee, who is typically the debtor's employer. Garnishments are always paid pursuant to a court order, and the funds are paid directly to the court, not the creditor.
In order to get a garnishment, a creditor must be able to confirm the exact amount of money owed. Garnishments may not attach in cases, for example, where a debt is owed but the final amount has yet to be determined. To levy a garnishment, a creditor must file suit in court and receive a judgment in her favor. Once that judgment is entered, she can further petition the court for an order to garnish or otherwise intersect the person's wages. If a creditor has a garnishment order, she can intercept the funds that would otherwise be paid as wages, provided the order is served upon the employer within a week of payday. Garnishing funds for more than a week requires renewal of the weekly order for as many weeks as are necessary to pay the debt.
In general, garnishments can only take 30 percent of the debtor's weekly wages. However, this amount may be different if the wages are being garnished to meet spousal or child support payments. In addition to this, those who experience financial hardship because of the garnishment can petition the court for an adjustment. If the garnishment orders create a significant or serious financial hardship for the debtor in his family, the court may allow for a garnishment plan whereby the debtor can pay on an installment basis.
Employers who receive garnishment orders must pay the funds to the court, and not the creditor or the employee. If they pay the employee instead of the court, they may have to pay twice, once to the employee and once to the court. Employers are also restricted from disciplining employees who receive a garnishment order; they can face harsh penalties if they do. Because garnishment orders are orders of the court, failure to pay them can result in more significant legal trouble.