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How Can a Business Have Their Wages Garnished?

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How Can a Business Have Their Wages Garnished?

wage-garnished-smWage garnishments, in the credit collection world, are all too common an occurrence. As a form of collection action, garnishing a person’s wages is often an effective way to retrieve a debt owed, and many collectors view it as the best way to collect. Usually these come in the form of personal wages being garnished, so when businesses have their monies garnished they are often surprised and wondering how this has happened.

Can a business have its monies garnished? Yes, and this can be very embarrassing, not to mention damaging to your professional reputation.

If you, as a business, owe a creditor money, and they’ve gone through the appropriate channels to retrieve it with no luck, they may just turn to a collection agency to have your business’s monies garnished. This usually requires a court order which then gives the collection agency the legal ability to seize monies owing to your business, freeze money in your business bank account, or other money your business has, to repay its debt. If, however, you owe the Canada Revenue Agency, a court order is not required and the CRA can levy a wage garnishment whenever they feel like doing so – so be very careful with these tax debts.

Once the court order is obtained, a notice of this garnishment is sent to your customers, and a portion of your receivables are to be directed to pay the debt, rather than going to your business. Not only does this take away from your business income, making it difficult to meet payroll obligations or pay your other accounts, it also reflects poorly on your business as your customers are made fully aware of the unpaid debt.

There are only a few ways to get a garnishment lifted:

  1. Pay the debt in full
  2. Negotiate with the other side to reach a favourable settlement
  3. File a consumer proposal or bankruptcy

Many people opt for a consumer proposal in these circumstances because a proposal:

  • Removes the wage garnishment
  • Stops interest
  • Often reduces the overall debt
  • Stops other collection action
  • Allows for a voluntary monthly payment that you can afford

If you owe a debt and as a result your business’s wages are being garnished, ignoring the problem will not make it go away. The best thing that you can do is to resolve the issue and have the garnishment lifted as soon as possible.

To find out more about your options and to get started, call DebtCare today. We can help: 1-888-890-0888.

 

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