Difference between revisions of "When a Creditor Wants to Take Money From Your Wages or Bank Account"

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{{REVIEWEDPLS | reviewer = [https://morellichertkow.com/lawyer/rachel-r-lammers/ Rachel Lammers], Morelli Chertkow LLP|date= July 2018}} {{Dial-A-Law TOC|expanded = money}}
If you don’t repay a debt, the creditor might try accessing money owed to you by someone else. The legal process in play is called '''garnishment'''. Learn how it works.


{{Dial-A-Law TOC|expanded = credit}}
==What you should know==
When a debtor doesn’t pay a debt, a creditor may try to access money owed to the debtor by someone else. The creditor can do this through a process called garnishment.  
===If a creditor tries to garnish your wages===
If you don’t pay back a debt, the person you owe can try having a portion of your wages paid to them. This is called '''garnishing wages'''.


==Understand your legal rights==
====The garnishing process====
There are several steps the person you owe (the '''creditor''') must follow. To begin, they must bring a legal action against you for the debt. They must get a '''court judgment''' in that action to be able to garnish your wages.


===Garnishment is a way to collect a debt===
As well, the creditor must apply for a '''garnishing order'''. This is a separate court order. It requires a third party who owes money to you (in this case, your employer) to make payments to the creditor.
Under the [http://canlii.ca/t/84h5 law in BC], if a debtor doesn’t pay a debt, a creditor can tap into money the debtor is owed by someone else (that is, a third party).  


The creditor must go to court to do this. They can ask the court to “attach” (or “'''garnish'''”) money owed to the debtor and redirect it to the creditor.  
If the garnishing order is made, the creditor serves that order on your employer. The employer must send a portion of your wages to the court registry.


The most common moneys attached are wages and bank accounts. Other sources of money owed to a debtor can also be targets, such as retirement savings funds, estate proceeds (inheritances), or insurance settlements.
The creditor then must apply to the court to have the money paid out to them.


For example, say you don’t pay back a loan. The creditor can seek a court order to get your employer to redirect a portion of your wages to the creditor. This process is called '''garnishment'''.
====Laws to protect you if your wages are garnished====
If your wages are garnished, there’s a limit to how much of your wages a creditor can take. Usually, that limit is 30% of your net income.


===If a creditor wants to take some of a debtor’s wages===
However, if the creditor is claiming spousal or child support payments, they can take up to 50%.
Several steps are involved if a creditor seeks to garnish a debtor’s wages.


====The creditor needs to get two court orders====
A garnishing order applies only to wages payable within the next seven days. So if the creditor wants to tap into what you’re owed in the next pay period, they must apply for a new garnishing order. (There’s an exception for support payments.)
A creditor must first get a court judgment against the debtor. The judgment confirms the debtor owes the debt.


The creditor must then seek a second court order, called a '''garnishing order'''. This is an order requiring a third party who owes money to the debtor (in this case, an employer) to make payments to the creditor.  
An employer isn’t allowed to dismiss or demote a worker just because the employer receives a garnishing order. If that happens to you, you should seek legal advice. [https://www.peopleslawschool.ca/options-legal-help/ There are options for free or low-cost legal advice].


The creditor serves the garnishing order on the employer. The employer must then send a portion of the debtor’s wages to the court. The employer only has to send wages owing within seven days, up to the amount of the debt.  
Meanwhile, if having your wages garnished causes you serious financial hardship, you can apply to court for relief. We explain how shortly.


The creditor must then apply to the court to have the money paid out.  
===If a creditor tries to garnish your bank account===
If you don’t pay a debt, a creditor may try to get funds from your bank account. This is called '''garnishing a bank account'''.


====There are laws to protect the debtor====
There’s no limit on how much money can be garnished from a bank account. All the money in the account — up to the amount of the judgment — can be taken.
There’s a limit to how much of a debtor’s wages a creditor can garnish. Usually, that limit is 30% of the debtor’s net income. If the creditor is claiming spousal or child support payments, the limit goes up to 50%.  


If garnishing a debtor’s wages causes serious financial hardship, the debtor can apply to court for relief.  
And there’s a difference in the process as well.


Under the [https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-78/latest/rsbc-1996-c-78.html#sec27_smooth law in BC], an employer is not allowed to dismiss or demote an employee just because the employer receives a garnishing order. If that has happened to you, you should [[Low Cost and Free Legal Services (Script 430)|seek legal advice]].  
This type of garnishment also starts with a creditor bringing a legal action against you to confirm the debt.


===If a creditor wants to draw money from a debtor’s bank account===
However, the creditor can seek a garnishing order for your bank account at the same time as they start the debt lawsuit against you. No court hearing is required, and no notice is owed to you. These types of garnishing orders often take debtors by surprise.
To recover a debt, a creditor may seek to garnish money from the debtor’s bank account.  


To do so involves several steps. To begin, the creditor brings a legal action for the debt. At the same time as they start this lawsuit, the creditor can seek a garnishing order for the debtor’s bank account. No court hearing is required, and no notice is owed the debtor. For this reason, these types of garnishing orders often take debtors by surprise.
Money that’s garnished from a bank account doesn’t go directly to a creditor. It gets paid into court. The creditor can’t access it until they get a judgment against you for the debt.
 
Money that’s garnished from a bank account is paid into court. The creditor can’t access it until they get a judgment against the debtor in their action on the debt.
 
Unlike wage garnishments, there’s no limit on how much money can be garnished from a bank account. All the money in the account — up to the amount of the creditor’s judgment — can be taken.
 
A creditor '''can not''' garnish money from a joint bank account unless they have a court judgment against both account holders.


===Some types of benefits are protected===
===Some types of benefits are protected===
Under the [https://www.canlii.org/en/bc/laws/stat/sbc-2002-c-40/latest/sbc-2002-c-40.html#sec29_smooth law in BC], income assistance received by a debtor cannot be garnished (except where spousal or child support payments are involved; see below).  
Any government benefits you receive cannot be garnished — except by some government agencies.


Other types of government benefits are also exempt from garnishment by '''non-government''' creditors, including:
For example, income assistance received by a debtor cannot be garnished. But there’s an exception for the Family Maintenance Enforcement Program, in enforcing a court order for child and spousal support.
*Canada Pension Plan benefits
*Old Age Security benefits
*Guaranteed Income Supplement payments


However, most government benefits '''can''' be garnished by government bodies such as the Canada Revenue Agency. Money garnished by the government doesn’t get paid into court. Instead, it goes directly to the government body.
==Work out the problem==


===If spousal or child support payments are involved===
There are steps you can take if a creditor gets a garnishing order against you.
Special rules apply if the creditor seeking a garnishing order is owed spousal or child support payments. For example, income assistance received by a debtor cannot be garnished — except by the [https://www.fmep.gov.bc.ca/ Family Maintenance Enforcement Program], a government program that enforces court orders for support.  


As well, if support payments are involved, a garnishing order for wages does not need to be renewed each pay period. (In other cases, a garnishing order applies only to wages owing within seven days of the order.)
===Step 1. Apply to set aside the garnishing order===


===A debtor can apply to court to set aside a garnishing order===
You can apply to court to set aside (or “release”) a garnishing order.
If a creditor obtains a garnishing order, a debtor can apply to court to set aside (or “release”) the order. The debtor might do this arguing that the order causes them serious financial hardship. Or that the order isn’t necessary to ensure they pay the creditor’s judgment for the debt.   


In applying to release a garnishing order, the material must explain why it would be “just in all the circumstances” to release the order. For example, if you’re claiming a garnishing order causes you serious financial hardship, provide a snapshot of your financial situation. Include a statement of finances and any other information that backs up your position.
First, you’ll need to prepare a court form to start the application. Your material will need to explain why it’s “just in all the circumstances” to release the garnishing order. For example, you might argue that the order causes you serious financial hardship.


Tip
===Step 2. File and serve the application===
People’s Law School’s information on [https://www.peopleslawschool.ca/everyday-legal-problems/money-debt/dealing-debt/creditor-wants-take-money-your-wages-or-bank-account garnishment] provides step-by-step guidance on applying to set aside a garnishing order. 
Common questions


I owe money to a creditor. Can they take my entire pay cheque to satisfy the debt?
Next, you file the application in court, and serve it on the other party.
No. The law in BC says a creditor can garnish up to 30% of a debtor’s net income — that is, after statutory deductions for things like income tax, Canada Pension Plan, and Employment Insurance. This means you’d keep at least 70% of your pay cheque.


Note a garnishing order applies only to wages owing within seven days of the order. A new garnishing order must be issued and given to your employer every pay period.
===Step 3. Attend the court hearing===


(Special rules apply if a creditor’s claim is for spousal or child support payments; see above.)
At your hearing, you explain to the judge why they should release the garnishing order.


What happens to money paid into court?
We go into detail on these steps and provide links to the court forms involved. [https://www.peopleslawschool.ca/creditor-garnish-wages-or-bank/ See our in-depth information on this topic].
A creditor must apply to court to get access to any money that has been paid into court under a garnishing order.


I’ve been served with a garnishing order. What should I do?
==Who can help==
Never ignore a garnishing order served on you. There are serious consequences for not complying with a court order.  
===Helpful agencies===
Consider reaching out to this agency for help with managing your money.
:'''Credit Counselling Society of BC'''
:A non-profit society that helps people better manage their money and debt.
:Call 1-888-527-8999
:Email: info@nomoredebts.org
:[https://www.nomoredebts.org/ Visit website]


You have two options.  
==Legal advice==
Getting legal advice can help you clarify how to proceed.
:'''Lawyer Referral Service'''
:Helps you connect with a lawyer for a complimentary 15-minute consult to see if you want to hire them.
:Call 1-800-663-1919
:[https://www.accessprobono.ca/our-programs/lawyer-referral-service Visit website]


You could pay into court whatever amount you owe the debtor (up to the amount claimed in the garnishing order). Whatever amount you pay into court you don’t have to pay to the debtor.
:'''Access Pro Bono's Free Legal Advice'''
:Volunteer lawyers provide 30 minutes of free legal advice to people with low or modest income.
Your second option, if you believe you don’t owe the debtor anything, is to file a “dispute note” in court. This note explains why you don’t owe the debtor anything. It doesn’t have to be on a particular form; it can be on your letterhead. If the creditor disagrees with you, then a judge will decide the matter.
:Call 1-877-762-6664
:[https://www.accessprobono.ca/get-legal-help Visit website]
Get help


With managing your finances
:'''People’s Law School'''
The Credit Counselling Society of BC is a non-profit society that helps people better manage their money and debt.
:See more options for free or low-cost legal help.
:Toll-free: 1-888-527-8999
:[https://www.peopleslawschool.ca/options-legal-help/ Visit website]
:Web: nomoredebts.org
 
 
 
[updated July 2018]
 
'''The above was last reviewed for legal accuracy by [https://www.morellichertkow.com/rachel-r-lammers.htm Rachel Lammers], Morelli Chertkow LLP.'''
 
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Latest revision as of 01:05, 7 November 2023

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Rachel Lammers, Morelli Chertkow LLP in July 2018.
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If you don’t repay a debt, the creditor might try accessing money owed to you by someone else. The legal process in play is called garnishment. Learn how it works.

What you should know

If a creditor tries to garnish your wages

If you don’t pay back a debt, the person you owe can try having a portion of your wages paid to them. This is called garnishing wages.

The garnishing process

There are several steps the person you owe (the creditor) must follow. To begin, they must bring a legal action against you for the debt. They must get a court judgment in that action to be able to garnish your wages.

As well, the creditor must apply for a garnishing order. This is a separate court order. It requires a third party who owes money to you (in this case, your employer) to make payments to the creditor.

If the garnishing order is made, the creditor serves that order on your employer. The employer must send a portion of your wages to the court registry.

The creditor then must apply to the court to have the money paid out to them.

Laws to protect you if your wages are garnished

If your wages are garnished, there’s a limit to how much of your wages a creditor can take. Usually, that limit is 30% of your net income.

However, if the creditor is claiming spousal or child support payments, they can take up to 50%.

A garnishing order applies only to wages payable within the next seven days. So if the creditor wants to tap into what you’re owed in the next pay period, they must apply for a new garnishing order. (There’s an exception for support payments.)

An employer isn’t allowed to dismiss or demote a worker just because the employer receives a garnishing order. If that happens to you, you should seek legal advice. There are options for free or low-cost legal advice.

Meanwhile, if having your wages garnished causes you serious financial hardship, you can apply to court for relief. We explain how shortly.

If a creditor tries to garnish your bank account

If you don’t pay a debt, a creditor may try to get funds from your bank account. This is called garnishing a bank account.

There’s no limit on how much money can be garnished from a bank account. All the money in the account — up to the amount of the judgment — can be taken.

And there’s a difference in the process as well.

This type of garnishment also starts with a creditor bringing a legal action against you to confirm the debt.

However, the creditor can seek a garnishing order for your bank account at the same time as they start the debt lawsuit against you. No court hearing is required, and no notice is owed to you. These types of garnishing orders often take debtors by surprise.

Money that’s garnished from a bank account doesn’t go directly to a creditor. It gets paid into court. The creditor can’t access it until they get a judgment against you for the debt.

Some types of benefits are protected

Any government benefits you receive cannot be garnished — except by some government agencies.

For example, income assistance received by a debtor cannot be garnished. But there’s an exception for the Family Maintenance Enforcement Program, in enforcing a court order for child and spousal support.

Work out the problem

There are steps you can take if a creditor gets a garnishing order against you.

Step 1. Apply to set aside the garnishing order

You can apply to court to set aside (or “release”) a garnishing order.

First, you’ll need to prepare a court form to start the application. Your material will need to explain why it’s “just in all the circumstances” to release the garnishing order. For example, you might argue that the order causes you serious financial hardship.

Step 2. File and serve the application

Next, you file the application in court, and serve it on the other party.

Step 3. Attend the court hearing

At your hearing, you explain to the judge why they should release the garnishing order.

We go into detail on these steps and provide links to the court forms involved. See our in-depth information on this topic.

Who can help

Helpful agencies

Consider reaching out to this agency for help with managing your money.

Credit Counselling Society of BC
A non-profit society that helps people better manage their money and debt.
Call 1-888-527-8999
Email: info@nomoredebts.org
Visit website

Legal advice

Getting legal advice can help you clarify how to proceed.

Lawyer Referral Service
Helps you connect with a lawyer for a complimentary 15-minute consult to see if you want to hire them.
Call 1-800-663-1919
Visit website
Access Pro Bono's Free Legal Advice
Volunteer lawyers provide 30 minutes of free legal advice to people with low or modest income.
Call 1-877-762-6664
Visit website
People’s Law School
See more options for free or low-cost legal help.
Visit website
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