When you are struggling with debt issues, the notice that one of your creditors is garnisheeing your wages can be devastating. With a creditor taking a large percentage of your pay cheque, it seems impossible that you will be able to meet the needs of your household. It can also be embarrassing that your employer now knows that you are having financial difficulty. While it is recommended that you deal with debt issues before a wage garnishment happens, the good news is that it is still not too late.
Filing for bankruptcy or filing a consumer proposal is still an option for dealing with creditors – even after a wage garnishment. That is because just like your creditors got leave of the court to garnishee your wages, both bankruptcies and consumer proposals are also legal filings.
Once you finalize your bankruptcy or proposal, collection activity must stop. When there is a wage garnishment in place, notification of your bankruptcy or proposal will be sent to your employer, the courts and your creditors as quickly as possible. Your Trustee will not be able to recoup any funds from your creditors that were taken from your pay before you filed, but they can make sure that no further funds are taken. If there is money taken after filing, simply due to the timing of completing your paperwork, these funds can normally be recovered as well.
There are some wage garnishments however that a bankruptcy or consumer proposal cannot stop. These include garnishments from the Family Responsibility Office for back child or spousal support owing. Your Trustee will be able to advise you if your garnishment can be stopped by filing for bankruptcy or filing a consumer proposal.
If you have a garnishment on your wages for a regular creditor, like a credit card or bank loan, then bankruptcy may be the only way to stop the garnishment and deal with your debt issues.
