When a Creditor Wants to Take Money From Your Wages or Bank Account

This script discusses a legal proceeding called “garnishment,” used to collect money on a judgment or debt.

What is garnishment?

Garnishment is a drastic way to collect a debt, under Part 1 of The Court Order Enforcement Act. It lets a creditor attach (intercept and take) money owed to a debtor by others, before that money is paid to the debtor.

For example, say you (the debtor) owe someone (a creditor) money. The creditor) sues you and gets a court judgment against you. You must pay the creditor back. Now, if someone else owes you money, the creditor can intercept the money owed to you by requiring the money be paid into court, instead of to you.

Often the money garnished (or intercepted) is money in the debtor’s bank account (money the bank owes the debtor) or wages an employer owes to the debtor. In either case, a garnishing order can require the bank or employer to pay the money into court.

Bank accounts and wages are the most common targets for garnishments, but other things like RRSPs, estate proceeds (inheritances), and insurance settlements can also be targets.

Money owing from a family court order for child or spousal support can also be garnished under the Family Maintenance Enforcement Program (FMEP)—but garnishment under this program is handled differently from other kinds of debts (explained later in this script). Another case with different rules of garnishment involves the Canada Revenue Agency (CRA).

Who is involved in garnishment?

Garnishment involves three parties:

• A creditor who seeks payment of a debt
• A debtor who owes money to the creditor
• A third party (the garnishee) who owes money to the debtor

A garnishment action is taken by the creditor against the debtor, who is the defendant, and the third party, who is the garnishee. The garnishee is often the debtor’s employer (when wages are garnished) or a bank where the debtor keeps their money.

Two forms of garnishment—pre-judgment and post-judgement (this section does not apply to garnishments related to child or spousal support payments or taxes owing)

Pre-judgment garnishment

Pre-judgment garnishment can occur even before a creditor gets a judgment against a debtor. But the creditor does not get the money right away—it is paid into court. The creditor cannot get the money until they prove their case in court and get a judgment against the debtor (it can be more or less than the garnished amount).

The purpose of pre-judgment garnishment is to preserve the money during the legal proceedings until the creditor gets judgment. A creditor needs a court order to get pre-judgment garnishment. And there are restrictions on what kind of debts can be garnished before judgment. It can be expensive for a creditor to obtain a pre-judgment garnishment order, and there is no guarantee that the debtor has any funds available to garnish. For these reasons, pre-judgment garnishment is not very common.

To get a pre-judgment garnishment order, a creditor must prove that they a claim for a fixed value—a specific amount of money owed. For example, if a creditor has a claim against you for damages for personal injury or negligence, they cannot obtain a pre-judgment garnishment order, because the amount of the damages hasn’t yet been decided.

Getting an order for pre-judgment garnishment is very technical. You should see a lawyer if you want this.

Post-judgment garnishment

Once a creditor obtains a judgment against a debtor, they can take steps to force the debtor to pay the judgment. Post-judgment garnishment is one way to do this. Bank accounts and wages are the most common things that creditors garnish, although they can also garnish other things.

Part of a debtor’s wages are protected and cannot be garnished. Generally, 70% of wages are protected. But if a creditor’s claim is for spousal or child support payments, only 50% of wages are protected.

There is no limit on how much can be garnished from a bank account. All the money in an account (up to the value of the judgment) can be garnished.

With a post-judgment garnishment, the money is first paid into court. Then the creditor can apply to court to have the money paid out to them to satisfy the judgment.

Important facts about garnishment

• Garnishment is done only by court order.
• A garnishing order always requires money be paid to court. It’s never paid directly to the creditor. The money (or some of it) is paid from the court to the creditor only after the creditor has a court order for the money to be paid to them.
• The money owing to the debtor by the garnishee must be owed at the time the garnishing order is delivered to the garnishee. Some garnishing orders don’t attach—collect any money at all—because at that moment, no money is owed to the debtor.
• FMEP and CRA have special and more powerful rules of garnishment to collect family support and taxes owing. The usual garnishment rules do not apply to them. FMEP is explained more below.

What happens if there’s a garnishing order to intercept your wages?

If you’re employed, the creditor can garnish your wages only after obtaining a court judgment against you. While a judgment in a lawsuit can be obtained after a trial, judgment can also be obtained by default if you, the debtor, don’t defend the lawsuit.

A garnishing order to intercept wages must be given to your employer within a week of your payday, or it won’t attach any money. Also, to garnish wages, a new garnishing order must be issued and given to your employer every pay period. The need to get a new court order for each pay period can make garnishment a slow and expensive process for creditors.

But garnishment orders for child and spousal support do not need to be renewed each pay period. They last until you have paid all the support you owe. And if CRA issues a Requirement to Pay to your bank or your employer, it can last for up to 90 days without having to be re-issued.

What if garnishing your wages creates serious financial hardship for you or your family?

The law generally restricts garnishing orders to only 30% of wages (up to 50% for child or spousal support, depending on the debtor’s income and the number of dependents). But that can still create serious financial hardship for you and your family. If it does, you can ask a registrar of the court that issues the garnishing order to reduce the percentage of your wages that can be garnished, or to release the funds held in court back to you, or to let you pay the judgment by installments. Ask the court registry where the order was issued for a hearing appointment with the registrar. This is called a payment hearing in small claims court and it may be before a judge.

But at the same time, the creditor can ask the court to increase the percentage of wages that can be garnished.

If you ask to pay the judgment by installments, and the court agrees, it will set a monthly payment that you can manage. There is no cost for this procedure. The creditor can ask questions about your financial situation, and so can the court. If you’re in serious financial trouble, the court can order that you don’t need to pay anything for a certain time.

An employer cannot dismiss or demote an employee simply because the employer is given a garnishing order for the employee’s wages.

What if you think you don’t owe any money (or owe less)?

If an order has already been made against you, you must apply to the court to set it aside or change it. This is hard to do unless you can prove that you never got notice of the court proceeding that led to the order. If the order was granted recently, you might also be able to appeal it, but there are strict time limits to appeal. You should see a lawyer about how to change or set aside a judgment after its been granted.

In child or spousal support cases, you need to apply to the court to change the support order. You may be able to claim that the support payment is too high, or that some part of any accumulated missed payments be reduced. Again, you should see a family-law lawyer to see if this can work in your case.

Tax debts can also be reviewed or appealed in some situations. You should see a lawyer in those cases.

What should you do if you are a garnishee?

Never ignore a garnishing order if you’re the garnishee (for example, a debtor’s employer). Garnishment involves a court order—it’s important and has serious consequences. You must pay the court whatever you owe the debtor (your employee, in this example) at the time you get the order, up to the amount claimed in the order. Then you don’t have to pay that amount (what you paid to court) to the debtor. But if you ignore a garnishing order and pay the debtor instead, you may end up having to pay the money twice—to the debtor and then to the court.

If you, as garnishee, believe you don’t owe the debtor anything, you should contact the court registry and submit a Dispute Note. The Dispute Note explains why you don’t owe the debtor anything. The Dispute Note doesn’t have to be on a particular form—it can be a letter on your letterhead. If the creditor disagrees with you, then a judge will decide the matter.

It’s illegal to dismiss or demote an employee who is a debtor because you’ve received a garnishing order, and there may be harsh penalties if you do.

What cannot be garnished?

If you receive BC Income Assistance, the Employment and Assistance Act says it cannot be garnished. Similarly, Canada Pension Plan (CPP), Old Age Pension (OAP) and Guaranteed Income Support (GIS) payments (by cheque or direct deposit) cannot be garnished by non-government creditors. But most government benefits like Employment Insurance and CPP can be garnished to pay other government bodies such as CRA or FMEP. These government garnishments are not paid into court—they go directly to the government agency.

What happens to money paid into court?

A creditor must get a court order to get the money that has been paid into court under a garnishing order.

How is garnishment by the Family Maintenance Enforcement Program (FMEP) different?

The FMEP is a BC government program that enforces court orders and agreements for child and spousal support. It can also enforce court orders and agreements from other provinces. FMEP has special, wide-ranging powers to garnish bank accounts, tax returns, and wages of people who must pay support.

Many rules that apply to normal garnishment don’t apply to garnishment by the FMEP. If you owe money under a support order by the FMEP, you can ask the court to suspend enforcement, in some cases. But it may be better to negotiate a payment arrangement directly with the FMEP or consult a family lawyer about changing the court order that caused you to go into debt in the first place.

For more on the FMEP, check script 132 on “Enforcing Orders and Agreements for Support”.

More information

• If you’re having trouble paying your bills, contact the Credit Counselling Society of BC, a non-profit debt counselling service. They can help set up a debt-management program for you. Call 1.888.527.8999 (toll-free).
• Check Dial-A-Law script 253 on “When You Can’t Pay Your Debts”.
• See Consumer Law and Credit/Debt Law published by the Legal Services Society of BC. This manual is for paralegals, legal information counsellors, and lawyers with clients who have consumer and debt problems.

[updated November 2016]

The above was last reviewed for accuracy by Rachel Lammers and edited by John Blois.

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