How to Stop a Wage Garnishment in Canada

TL;DR

A wage garnishment in Canada can be stopped immediately by filing a consumer proposal or bankruptcy. Both trigger a Stay of Proceedings under the Bankruptcy and Insolvency Act (BIA) that legally requires your employer to stop redirecting your wages. Other options include negotiating with the creditor, challenging the garnishment in court, or paying the debt. CRA wage garnishments are particularly aggressive and typically require a formal insolvency filing to stop.

What Is a Wage Garnishment?

A wage garnishment (also called a garnishment order or Requirement to Pay) is a legal process where a portion of your wages is redirected from your employer directly to a creditor. Your employer has no choice but to comply — they face legal consequences if they do not.

In Canada, most creditors must obtain a court judgment before garnishing your wages. The major exception is the Canada Revenue Agency (CRA), which can issue a Requirement to Pay directly to your employer without any court involvement.

Provincial Garnishment Limits

Each province sets its own rules for how much of your wages can be garnished:

| Province | Maximum Garnishment (% of Net Wages) | |---|---| | Ontario | 20% | | British Columbia | 30% | | Alberta | Varies by income level | | Saskatchewan | Set by court order | | Manitoba | 30% | | Quebec | 30% | | Nova Scotia | 15% | | New Brunswick | Set by court order |

Important: These limits apply to regular creditors. CRA is not bound by provincial wage garnishment laws and can garnish significantly more — including your entire paycheque in extreme cases.

How to Stop a Wage Garnishment

Option 1: File a Consumer Proposal (Most Effective)

Filing a consumer proposal immediately stops all wage garnishments through the Stay of Proceedings. This is the most effective method because:

• The garnishment stops on the day of filing — not after creditor approval
• It applies to all creditors including CRA
• You also eliminate or reduce the underlying debt (typically repaying 20% to 50%)
• All interest charges stop
• No further collection actions can be taken by any creditor

A consumer proposal is administered by a Licensed Insolvency Trustee and is legally binding under the BIA. Use our consumer proposal calculator to estimate your payments.

Option 2: File for Bankruptcy

Bankruptcy also triggers an immediate Stay of Proceedings that stops wage garnishments. This option is typically used when:

• You have few assets to protect
• Your income is below the surplus income threshold
• You want the fastest possible debt discharge (9 months for a first-time bankruptcy)

Option 3: Pay the Debt in Full

If you can pay the full amount owed (including court costs and interest), the garnishment will be removed. This is often not practical for people facing garnishment, but options like borrowing from family or using savings may be considered.

Option 4: Negotiate with the Creditor

You can contact the creditor (or their lawyer) and propose a voluntary repayment plan. If the creditor agrees, they can instruct the court to withdraw the garnishment order. This approach works best when:

• You can offer a reasonable monthly payment
• The creditor believes the voluntary plan will result in faster payment
• You have not previously broken payment agreements with this creditor

Option 5: Challenge the Garnishment in Court

If you believe the garnishment was obtained improperly (for example, you were not properly served with the lawsuit), you can apply to the court to have it set aside. This requires legal representation and is time-consuming, so it is generally only practical if there are legitimate procedural issues.

Stopping a CRA Garnishment

CRA garnishments deserve special attention because CRA does not need a court order to garnish your wages. They issue a Requirement to Pay (RTP) directly to your employer, and your employer must comply immediately.

CRA's garnishment powers include:

• Garnishing wages without a court order
• Freezing bank accounts
• Seizing funds from your bank account
• Garnishing amounts owed to you by third parties (such as clients if you are self-employed)

The most effective way to stop a CRA garnishment is to file a consumer proposal or bankruptcy. The Stay of Proceedings overrides CRA's collection powers and stops all garnishment activity immediately.

Before filing, ensure all your tax returns are up to date. CRA is unlikely to support a proposal if you have unfiled returns. Your Licensed Insolvency Trustee can help coordinate this.

What Debts Cannot Be Garnished For?

Certain debts have special rules:

• Child and spousal support: Garnishments for family support obligations are not stopped by a consumer proposal or bankruptcy. These debts are not dischargeable.
• Court-ordered fines: Criminal fines and penalties are generally not affected by insolvency filings.
• Student loans (less than 7 years): Student loan debts less than 7 years old are not discharged in bankruptcy or consumer proposals, though garnishment is still stopped during the insolvency process.

Your Rights During a Garnishment

Even while a garnishment is active, you have rights:

• Your employer cannot fire you because of a garnishment
• Certain types of income are protected (social assistance, EI benefits in some provinces)
• You can apply to the court for a reduction if the garnishment causes undue hardship
• You are entitled to notice before a garnishment takes effect (except from CRA)

Explore all your debt relief options to understand which approach makes sense for your situation, or take our debt relief quiz for a personalized assessment.

FAQ

Can my employer fire me for a wage garnishment? No. In Canada, employers cannot terminate your employment solely because of a wage garnishment. Employment standards legislation in every province protects employees from this type of retaliation.

Does a wage garnishment affect my credit score? The garnishment itself does not appear on your credit report. However, the underlying judgment and the defaulted debt that led to the garnishment will be reported and will significantly impact your credit score.

Can I be garnished for credit card debt? Yes, but the credit card company must first obtain a court judgment against you. They cannot garnish your wages without going through the legal process. This typically takes several months, giving you time to explore debt relief options.

How long does a wage garnishment last? A garnishment continues until the debt is paid in full, you reach a settlement with the creditor, or you file a consumer proposal or bankruptcy. There is no automatic expiry date.

Sources

• Office of the Superintendent of Bankruptcy Canada (OSB)
• Bankruptcy and Insolvency Act (BIA), R.S.C., 1985, c. B-3
• Canada Revenue Agency — Collections
• Ontario Wages Act, R.S.O. 1990, c. W.1