Can a collection agency garnish your wages?

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In Canada, collection agencies can garnish your wages, but they typically need a court order. However, the Canada Revenue Agency can deduct without court approval. Garnishment limits depend on your province, often with some income protection. Options to avoid wage garnishment include filing a consumer proposal. Just be sure to choose a trustworthy Licensed Insolvency Trustee. Employers can’t fire you for wage garnishment. Reach out via phone, text or live chat if you have any questions. Not all trustees can be trusted.

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Collection Agency Wage Garnish Question

Can a collection agency garnish your wages? Can collection agencies legally take money out of my wages to pay off a debt?

From: Anonymous Question
Location: Fredericton, New Brunswick (NB)
Category: consumer proposal

Collection Agency Wage Garnish Answer

Yes, in Canada, collection agencies can actually dip into your wages to collect those pesky debts. But don’t worry, they usually need a court nod to do this. Think of it like this: they have to sue you, win, and then get the green light from the court to garnish your wages right through your employer. However, the tax folks at the Canada Revenue Agency can scoop some of your earnings without asking the court first, thanks to the Income Tax Act. Now, the rules around how much can be garnished change from province to province, and there’s usually some income protection in place. For instance, the first $800 might be off-limits, and extra considerations could be made if you have dependents.

But hey, there are ways to dodge wage garnishment! One option is filing a consumer proposal which can press pause on creditor actions. Just make sure to pick a trustworthy Licensed Insolvency Trustee, as not all of them play fair. And a heads-up: employers must follow any garnishment orders, and firing you because of this isn’t allowed. So, while garnishments might seem daunting, you have options in your toolkit to tackle debt smartly and legally.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

Yes, a collection agency can garnish your wages, but they cannot do so without a court order. According to the Bankruptcy and Insolvency Act (RSC 1985, c 11) and related regulations, collection agencies must first obtain a judgment against you. Once they have a judgment, they can apply for a garnishment order to collect the debt directly from your wages. This process is governed by provincial laws and may vary, but typically requires legal proceedings as outlined in the Collections Act or similar legislation in your province or territory.

From: OSB Helper

Related Questions to A Collection Agency Garnishing Wages

Here are the top 5 most frequently asked questions related to the topic of wage garnishment by collection agencies in Canada:

1. Can a collection agency garnish my wages?

Yes, a collection agency can garnish your wages after obtaining a court judgment.

2. Who can garnish my wages?

Any creditor, including credit card companies, collection agencies, payday loan lenders, and government agencies like the Canada Revenue Agency, can garnish your wages.

3. Do employers have to comply with wage garnishment orders?

Yes, employers must comply with an order for wage garnishment and cannot fire, suspend, or penalize an employee for it.

4. Can wage garnishment happen if I am self-employed?

Yes, wage garnishment can apply to self-employed individuals, but it involves serving the garnishment order on clients or anyone who owes the self-employed individual money.

5. Does bankruptcy stop a wage garnishment?

Yes, filing for bankruptcy or a consumer proposal can stop a wage garnishment, as it triggers a stay of proceedings that halts most collection actions.

If you have a question about debt see our debt questions or ask your own debt related question.

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