You’re in debt to someone and haven’t paid them back. They’ve given up waiting and are poised to take action to recover their money. They might want a portion of your monthly pay cheque until the debt is cleared. Or access to money in your bank account. Both are options under a legal procedure called garnishment. Learn about your rights if a creditor wants to take money from your wages or bank account.
If a creditor wants to take some of your wages
Under the law in BC, if a debtor doesn’t pay a debt, a creditor can tap into money the debtor is owed by a third party. That third party can be an employer.
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.
The creditor must get a court judgment before wages can be garnished
The garnishment process starts with a creditor bringing a legal action against the debtor. The creditor must get a judgment against the debtor. The judgment confirms that the debtor owes the debt.
The debtor will receive a document telling them about the claim and how to dispute it. If the debtor doesn’t agree that they owe the money, they can file a document with the court saying why they dispute the claim.
Once a judgment has been entered against the debtor, the creditor seeks what’s called a garnishing order. This is a court order requiring a third party who owes money to a debtor (in this case, an employer) to make payments to the creditor.
The creditor serves the garnishing order on the employer. The employer must then send a portion of the debtor’s wages to the court registry. They only have to send wages owing within seven days, up to the amount of the debt. So the creditor may issue multiple garnishing orders in order to garnish money owing in different pay periods. The creditor must then apply to the court to have the money paid out.
If a creditor wants to garnish your wages and you don’t dispute the debt, consider making a payment plan. That way, you may avoid having to pay the extra costs from multiple garnishing order applications.
There are laws to protect you if your wages are garnished
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. However, if the creditor is claiming spousal or child support payments, they can take up to 50%.
If garnishing your wages causes you serious financial hardship, you can apply to court for relief. See the “Deal with the problem” section below.
In some cases, it may be possible to have a debt judgment against you set aside. For example, you might dispute the amount of the debt, or think you don’t owe anything at all. If you believe there are grounds to have a judgment set aside, you should seek legal advice. See the options for free or low-cost legal advice.
If a creditor wants to draw from your bank account
A creditor has another option to recover a debt. They can try to get money from the debtor’s bank account. This is called garnishing the debtor’s bank account.
The garnishing process has several steps. It starts with a creditor bringing a legal action against the debtor. The creditor can seek a garnishing order for the debtor’s bank account at the same time as they start the lawsuit against the debtor. No court hearing is required, and no notice is owed the debtor. These types of garnishing orders often take debtors by surprise.
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.
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 judgment against both account holders.
Some types of benefits are protected
Under the law in BC, income assistance received by a debtor cannot be garnished. Other types of government benefits are also exempt from garnishment by non-government creditors, including:
- Canada Pension Plan payments
- Old Age Security pension payments
- 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.
In some cases, benefit payments may be exempt even after they’re deposited to your bank account. However, the law in this area is evolving. Consider seeking legal advice if this applies to you.
Step 1. Apply to set aside a garnishing order
If a creditor obtains a garnishing order against you, you can apply to court to set aside (or “release”) the order. You might argue that the order causes you serious financial hardship. Or that the order isn’t necessary to ensure you pay the judgment.
The first step is to prepare a court form to start the application. Which form you use depends on where the garnishing order was obtained.
- If the garnishing order was obtained in Small Claims Court, prepare an Application to a Judge (Small Claims Form 17). The form includes instructions on how to fill it out.
- If the garnishing order was obtained in Supreme Court, prepare a Requisition (Supreme Court Form 17). The BC Supreme Court website has an information package, with instructions, on release of a garnishing order.
Your material should explain why it would be “just in all the circumstances” to release the garnishing order. For example, if you’re claiming the 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. (See the Small Claims Court Statement of Finances or, for Supreme Court, the information package includes a statement of finances.)
Step 2. File and serve the application
File the application in the relevant court registry location nearest to where you live:
Under the law in BC, a court can release a garnishing order without telling the creditor it has done so. Still, it’s usually best to serve the application on the other party.
You can serve the application in various ways, such as leaving a copy with the other party or sending it by snail mail to the other party’s address. Check the service rules of Small Claims Court or Supreme Court for more details.
Step 3. Attend the court hearing
Attend court on the day of your scheduled hearing. Try to arrive a bit early to give yourself time to locate the courtroom.
When your case is called, tell the judge you’re making an application to release a garnishing order. Explain the facts that support your position. Address the judge as “Your Honour”.
The judge will make one of the following decisions:
- Grant your order and release all the money held in court.
- Grant an order to release only some of the money held in court.
- Refuse to grant your order.
Can a creditor take my entire pay cheque to satisfy a debt?
No. The law in BC says a creditor can garnish up to 30% of a debtor’s net income. This means you’d keep at least 70% of your pay cheque. However, if a creditor’s claim is for spousal or child support payments, they can garnish up to 50%.
You can apply to court for an order allowing you to protect more than 70% of your wages from garnishment. You need to present evidence to a judge that you or your family are suffering financial hardship. The process is similar to that described under “Deal with the problem”, above.
Can a creditor take money from my bank account without telling me?
Yes. A creditor can apply for an order to garnish your bank account without notifying you. The creditor doesn’t need to have a judgment against you to do so.
The creditor must start a lawsuit against you for the debt before getting a garnishing order. Often, creditors will start a lawsuit and apply for a garnishing order at the same time. So you might not know about the garnishing order until you’re served with the legal paperwork.
Money that’s garnished from a bank account is paid into court. The creditor can’t access the money until they get a judgment against you.
I receive income assistance payments. Can my creditors take this money?
Typically, no. The law in BC protects income assistance and hardship assistance payments from garnishment. However, some government agencies, such as the Family Maintenance Enforcement Program, are able to garnish these types of benefits.
See the “Understand your legal rights” section above.