In this guide
How wage garnishment works in Canada
If you fail to pay your debts, a creditor may ask the court to issue a wage garnishment, also called a garnishee order, against your employer or your bank, which is legally required to comply. The correct legal terms are “garnishment” or “garnishee order,” which may also be called a “garnishee summons.”
Wage garnishment is a legal process where part of your pay goes straight to a creditor instead of you. It happens when a creditor sues you, wins the case, and obtains a court order. This is typically known as a garnishee summons or writ of seizure. The court sends that order to your employer, who must withhold the specified amount and send it to the court or directly to the creditor.
The court process for an ordinary creditor
A Statement of Claim is the document a creditor files to start a lawsuit against you. Upon receiving it, you must respond within 20 days in Ontario and Alberta (if served there), and within 21 days in British Columbia (if served in Canada).
Source: Ontario Rules of Civil Procedure – Form 14A Statement of Claim; Alberta Courts – What happens after the civil claim has been served; Supreme Court of British Columbia – Responding to an Action Basics
If you file a statement of defence in time, the court will consider it. If you don’t respond, the creditor gets a default judgment against you.
Winning the lawsuit enables the creditor to apply for a separate garnishment order, which instructs your employer on the amount to withhold from each paycheque and where to send it.
Which creditors don’t need to sue?
Some creditors have the authority to garnish your wages without a court order. The Canada Revenue Agency and provincial programs collecting unpaid child or spousal support can skip that step.
A similar order can be issued against your bank account instead of your paycheque, or against both. A wage garnishment stays in place until the debt is paid or you take action to stop it.
How long before a creditor can garnish your wages?
The timeline for a creditor to garnish wages can range from a few months to over a year. Typically, it takes about four to six months to obtain a default judgment if the debtor does not respond. If there is a defence against the claim or delays from the creditor, it can take longer.
CRA and family support enforcement move quickly and can bypass lawsuits. A Requirement to Pay can arrive weeks after the first collection letter, not months.
If you’re facing repeated collection calls, letters from a collection lawyer, or CRA notices about unpaid taxes, a wage garnishment becomes more likely.
Who can garnish your wages?
Creditors can initiate wage garnishment in Canada if you owe them money and haven’t paid. A judgment creditor is any person or company that sued you, won, and registered a garnishee summons with the court. This includes credit card companies, banks, collection agencies and payday lenders.
Some creditors can garnish your wages without going to court:
- The CRA, for unpaid income tax, GST or HST debt, or a defaulted federal student loan once it’s transferred to CRA collections
- A provincial support enforcement program, such as Ontario’s Family Responsibility Office or Alberta’s Maintenance Enforcement Program, for unpaid child or spousal support
Voluntary wage assignments
A voluntary wage assignment is a clause you sign in a loan agreement that lets the lender collect directly from your employer, without a court order.
In Canada, every province that regulates payday loans prohibits payday lenders from using or enforcing such assignments. That includes British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. In those provinces, a payday lender cannot contact your employer to collect or force a direct payroll deduction.
Source: Financial Consumer Agency of Canada – Payday loans; Government of Ontario – Payday loans: your rights
In Quebec, the Consumer Protection Act keeps credit charges low enough that the typical payday loan business model doesn’t operate there, so wage assignment rarely comes up.
Some unlicensed online lenders, often operating from offshore, still slip a wage assignment or “voluntary payroll deduction” clause into their contracts. Whether an employer has to act on a wage assignment at all depends on the province, and in Ontario an employer isn’t obligated to honour one without a court-ordered garnishment.
Credit unions can be the exception. In some provinces, a credit union wage assignment is enforceable without going to court, so if you see one in an active credit union loan agreement, check whether it holds where you live.
Can the CRA garnish your wages without going to court?
Yes. The Canada Revenue Agency can quickly garnish wages without a court order. Once you owe a federal tax debt, the CRA can issue a Requirement to Pay to your employer or bank, redirecting some of your pay to the Receiver General. Employers who fail to remit the owed amount become liable for the shortfall.
Source: Canada Revenue Agency – Requirement to pay
The CRA doesn’t publish a fixed percentage cap on these amounts the way the provinces do. If the number surprises you, ask for the calculation in writing and check it against the notice of assessment behind the debt.
If the CRA is already garnishing your pay, our guide on how to stop a CRA wage garnishment explains what you can do about it. And if the bigger problem is the tax debt itself, see CRA tax debt relief for ways to reduce or clear what you owe.
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How much of your wages can be garnished in Canada?
Every province sets its own limit for wage garnishment. Ask a Licensed Insolvency Trustee what applies to you.
| Province | Ordinary debt exemption | Source |
|---|---|---|
| Ontario | 80% of net wages exempt (50% for support orders) | Wages Act, s. 7 |
| Alberta | Minimum $800/month, plus half of net pay above that, capped at a $2,400 maximum (all higher with dependants) | Civil Enforcement Regulation |
| British Columbia | 70% of wages exempt, minimum $100/month ($200 with dependants) | Court Order Enforcement Act, s. 3 |
| Saskatchewan | The greater of 70% of net wages or $1,500/month plus $300 per dependant | Enforcement of Money Judgments Regulations, s. 23(7) |
| Manitoba | 70% of wages exempt, minimum $250/month ($350 with dependants) | The Garnishment Act, s. 5 |
| Quebec | Formula-based, with a monthly base exemption of about $1,647 with no dependants, rising with each dependant, updated April 1 each year | Code of Civil Procedure |
| Nova Scotia | 85% of gross wages exempt, so up to 15% garnishable, and net income can’t drop below $330/week ($450/week with dependants) | Civil Procedure Rule 79.08(3) |
| New Brunswick | No fixed percentage. Income is exempt only so far as it’s needed to meet the debtor’s reasonable needs | Enforcement of Money Judgments Act, SNB 2013, c 23 |
| Prince Edward Island | No fixed percentage. The court sets the protected amount from basic living needs and family circumstances | Judgment and Execution Act |
| Newfoundland and Labrador | No fixed percentage. The exempt amount is set case by case from the debtor’s financial circumstances | Judgment Enforcement Act |
Wage garnishment rules in Ontario
The Wages Act allows creditors to garnish 20% of your net wages for ordinary debts. For child and spousal support orders, they can deduct 50%.
The Wages Act protects wages paid by an employer. If you’re self-employed or paid as an independent contractor, 100% of the funds owed or contract income can be subject to garnishment by judgment creditors.
Source: Government of Ontario – Wages Act, R.S.O. 1990, c. W.1, s. 7
Wage garnishment rules in Alberta
Alberta’s formula is one of the most confusing among the provinces. You keep a minimum exemption of $800 a month with no dependants, plus half of whatever you earn above that, up to a maximum exemption of $2,400. Both the minimum and the maximum rise by $200 for every dependant.
Source: Civil Enforcement Regulation, Alta Reg 276/1995; Alberta Courts – Getting and Enforcing Your Judgment in Alberta
For instance, if your monthly net pay is $2,000 with no dependents, then $1,400 is protected and $600 is withheld, with $590 of that amount reaching the court after a $10 garnishee fee. When net pay increases to a point where the exemption formula exceeds $2,400, it stops growing. Any amount above this limit is fully garnishable.
Ways to stop wage garnishment in Canada
If your wages are being garnished, you have several options: pay the debt, negotiate with the creditor, dispute it in court, or file for a consumer proposal or bankruptcy. Which one fits depends on the amount you owe, your monthly income, and who the creditor is.
Pay, negotiate or dispute a wage garnishment
Paying off the debt that led to a wage garnishment stops it immediately. However, if you had the funds to pay, you likely wouldn’t be facing a garnishment in the first place.
Try negotiating directly with the creditor. Ask them to provide a written agreement to withdraw the garnishment once you’ve arranged a payment plan, though not all creditors will comply.
You can also dispute a wage garnishment if you think it’s wrong. For example, if the debt is already paid or belongs to someone else. But by the time wages are being garnished, a judgment is usually already in place, because the original claim wasn’t answered in time.
Reopening it means filing a motion to set aside the default judgment. The court will require a reasonable explanation for missing the deadline, along with a defence that has some merit.
File a consumer proposal
A consumer proposal is a formal debt relief option that lets you make a legally binding deal with your unsecured creditors to repay a percentage of what you owe, usually through monthly payments for up to five years. Creditors weigh a proposal against what they’d get if you filed bankruptcy.
Filing a consumer proposal automatically grants a stay of proceedings under the Bankruptcy and Insolvency Act, which stops most wage garnishments, collection calls and legal action against you.
Source: Government of Canada – Bankruptcy and Insolvency Act, s. 69.2
The stay doesn’t cover everything. Child and spousal support garnishments continue even after you file a consumer proposal.
Declare bankruptcy
Personal bankruptcy is a legal process, filed through a Licensed Insolvency Trustee, that discharges most unsecured debts in exchange for surrendering certain assets.
Like a consumer proposal, bankruptcy automatically triggers a stay of proceedings when filed, providing immediate protection against garnishment.
Source: Government of Canada – Bankruptcy and Insolvency Act, s. 69.3
Our Licensed Insolvency Trustees can help you file a consumer proposal or bankruptcy to alleviate creditor harassment and wage garnishments. Schedule a free consultation today.
Can creditors garnish your bank account?
If a creditor has obtained a court judgment against you, they can seek a garnishment order for your bank account and wages. If the order covers the full debt, they can take whatever’s there.
The CRA can freeze your bank account without a court order. They issue a requirement to pay notice to your bank, which then holds your funds. This often happens when someone owes back taxes and has not established a payment arrangement.
If you’re self-employed, creditors often use bank account garnishment to collect debts since there’s no employer for wage garnishment. If a creditor has a judgment against you, your bank account is just as vulnerable as your wages.
Source: Canada.ca – Garnishing your income and accounts
What income is protected from garnishment?
Certain types of income are typically exempt from garnishment by regular creditors. These include Employment Insurance (EI), social assistance, Canada Pension Plan (CPP), Old Age Security (OAS), and the Guaranteed Income Supplement (GIS).
But be warned that once government benefits are deposited into your bank account, those benefits can be seized by creditors with a garnishment order. The protection only applies before the money reaches your account.
The Canada Revenue Agency (CRA) can garnish Canada Pension Plan (CPP) and Old Age Security (OAS) payments directly, without a court order, by notifying the Income Security Program office. Similarly, family support enforcement can garnish a large share of your pension income if you owe child or spousal support.
At that point, a creditor with a garnishment order against your bank account can take those funds. The protection only applies at the source, not in your account.
Source: Canada.ca – Garnishing your income and accounts
What about student loan wage garnishment?
Federal student loans go into default after 270 days of missed payments, and the National Student Loans Service Centre transfers it to the CRA, or to your province or territory, for collection.
A bankruptcy or consumer proposal can include student loan debt if it is filed at least seven years after your last day as a student.
Source: National Student Loans Service Centre – Stages of a Loan; Government of Canada – Bankruptcy and Insolvency Act, s. 178
Stop wage garnishment in Canada with a Licensed Insolvency Trustee
A Licensed Insolvency Trustee can assess your finances, explain your options and help you stop a wage garnishment. Book a free consultation to find out how.
Frequently asked questions
Can wage garnishment and a bank account freeze happen at the same time?
Yes. A creditor with a judgment can pursue your wages and your bank account at once, since they’re separate assets under separate garnishee orders. Bank account garnishment isn’t limited to a percentage the way wages are, so a creditor can seize up to the full balance sitting in the account on the day the order lands.
How much debt do I need before a creditor can garnish my wages?
There is no minimum dollar amount of debt required for a creditor to garnish your wages. A creditor can seek a wage garnishment for any debt amount after they have sued you and won the case. However, smaller debts typically do not justify the legal costs associated with pursuing garnishment.
Can my employer fire me because of wage garnishment?
In Ontario, no. The Employment Standards Act bars an employer from firing or penalizing you because your wages are being garnished. Other provinces set their own employment rules, so check where you work.
What happens if I ignore a Statement of Claim?
If you fail to respond by the deadline, the court may issue a default judgment against you, allowing your creditor to request wage garnishment without your consent.
Does a consumer proposal stop wage garnishment immediately?
Yes, filing a consumer proposal with a Licensed Insolvency Trustee immediately stops wage garnishments, including CRA garnishments for most personal tax debt.