The Difference Between a Wage Garnishment from the Government and a Creditor
A wage garnishment is a very popular (or unpopular, depending on your experience) form of collection action. When money is owed to a creditor, obtaining a judgment for enforcement action and implementing a wage garnishment is a common method for retrieval of funds. The Canada Revenue Agency (CRA) is also well known for imposing wage garnishments when money is owed. The process, however, is different for each. So, what’s the difference between a wage garnishment from the government and one from a creditor? We’ll explain.
Firstly, what is a wage garnishment? When you owe a creditor or the CRA, but have failed to make the necessary payments, that organization has the ability to pursue a garnishment of your wages. Once this happens, your employer will receive a notice of garnishment, which lists the debt amount and the name of the creditor. Your employer is then required by law to pay a portion of your wages. The amount can differ depending on a variety of factors, as well as the organization seeking the garnishment.
When a creditor garnishes your wages, you will have some warning. Not only will you receive a letter informing you of their intention, the creditor is also required to obtain a judgment against you in court, meaning they must sue you in an action which you can defend. If you fail to defend or don’t receive the letter and judgment is obtained, a notice is sent, as mentioned, to your employer and your employer must then submit the specified portion of your wages to pay your outstanding debt.
The major difference when the CRA garnishes your wages is that they are not required to obtain a court order. When you owe the CRA and they choose to garnish your wages, they simply send a notice to your employer directly. You may not receive any warning, only finding out about the garnishment on payday. As with a creditor, once this garnishment notice is received by your employer, they are required by law to submit a portion of your paycheque.
What can you do if your wages are being garnished? Wage garnishments can be devastating financially, so it is important to address the issue as soon as you are made aware of it. Once it is in place, your options are few. To have a garnishment removed you can try negotiating with your creditor to settle the debt, pay the debt in full, or file a consumer proposal or bankruptcy. These options are the same whether you are being garnished by a creditor or the CRA.
It is a very common practice for both creditors and the CRA to garnish wages. Wage garnishments are typically very effective as they allow the creditor to intercept money before it gets to you.
At DebtCare, we deal with wage garnishments every day.
If you’re struggling as a result of one, get in touch with us today to discuss your options for having it removed. 1 (888) 890-0888.