Types of Wage Garnishments and How to Manage Them

Just because a wage garnishment has been imposed, doesn’t mean you have to leave it there.

When a creditor imposes a wage garnishment, the type of wage garnishment matters.

Wage garnishments for family maintenance are unique. They are issued by the court and past due family maintenance can’t be included in an insolvency filing which limits your options if you are dealing with retroactive child support.

On the other hand, you have lots of options for wage garnishments issued by a court order because of creditor debt or by the CRA.

This is where working with a Licensed Insolvency Trustee to assess which solutions and protections are available for your situation is advantageous.

How Can Licensed Insolvency Trustees Help You?

Licensed Insolvency Trustees are the only type of professionals who can administer a consumer proposal or file a bankruptcy. Once you have filed a consumer proposal or bankruptcy, the creditor must stop any wage garnishments they have in place. They must also stop accumulating interest on your debts.

The Licensed Insolvency Trustee will assess your income, assets, liabilities, and cash flow to advise on which options make the most sense for you.

In the case of a consumer proposal, a proposal is made to your creditors to settle your debts. The proposal amount is set, and the payments are fixed. If they accept your proposal, you repay the monthly proposal payment to the trustee and they distribute the funds to your creditors. Repayment generally occurs over the course of 5 years. Proposals are a great option for higher income earners because the monthly payment for bankruptcy can be larger than in a consumer proposal for high income.

In the case of bankruptcy, the amount you repay depends on your income through the course of the bankruptcy. If your financial situation improves, your monthly payments increase. With that said, a first-time bankruptcy is often repaid over 9-12 months which is much shorter than the repayment time of a consumer proposal.

If you are having your wages garnished, the best thing you can do is reach out to a trustee, evaluate your options, and depending on the type of wage garnishment, you may be able to stop it entirely.

For more information about wage garnishments, visit www.dldebthelp.ca or call us at 1-877-732-5457.