Wage garnishment in Canada is a legal order that requires your employer to send part of your pay directly to a creditor. Most private creditors need a court judgment first, while the Canada Revenue Agency and some government lenders can garnish without going to court. Each province limits how much can be taken, and filing a consumer proposal or bankruptcy generally stops most garnishments. This guide explains how garnishment works, how much of your pay can be taken, how to respond if you receive a notice, and which options can stop it.

What is wage garnishment?

Wage garnishment (sometimes called a garnishee order or wage seizure) is an enforcement tool. When you owe money and do not pay, a creditor can ask the legal system to force payment by intercepting part of your wages before they reach you. Your employer is legally required to comply. It is not a negotiation between you and your boss: once your employer is served with a valid garnishment order, it must withhold the required amount and remit it.

Garnishment can also target other sources of money, such as funds in a bank account or certain amounts owed to you by third parties. In this guide we focus on wages because that is what most people search for, but the same principles often apply to bank account garnishment.

Who can garnish your wages in Canada?

Private creditors with a court judgment

For ordinary consumer debts such as credit cards, personal loans, lines of credit and many collection accounts, the creditor generally must first sue you and obtain a judgment. Only then can it apply for a garnishment order under provincial rules. This process takes time, which is why a phone call from a collector threatening to “take your wages tomorrow” should be treated with caution. Our guide to collection agency rights in Canada explains what collectors can and cannot say.

The Canada Revenue Agency

The CRA has special collection powers under federal law. For unpaid tax debts, it can issue a requirement to pay to your employer or bank without first obtaining a court judgment. This is one reason tax debt deserves urgent attention. Our article on what to do if you owe the CRA and can’t pay covers payment arrangements and relief options.

Government student loans and other public debts

Federal and provincial governments have their own collection tools for defaulted government student loans and certain other public debts. These can include withholding tax refunds or other federal payments. The exact tools depend on the program and province.

Family support obligations

Unpaid child or spousal support is enforced by provincial maintenance enforcement programs, which can garnish wages and have higher limits than ordinary creditors because support is treated as a priority obligation.

How much of your pay can be garnished?

The amount is set by provincial law, so it depends on where you live and work. Rules commonly distinguish between ordinary debts and family support, and some provinces use a percentage while others use a formula or exemption amounts that depend on your income and dependants.

A frequently cited example is Ontario, where creditors with an ordinary judgment can generally garnish up to 20% of net wages, while support orders can reach up to 50%. In some circumstances a court can be asked to change the percentage based on hardship. Other provinces have their own exemptions, and Quebec uses a formula under its Code of Civil Procedure that protects a base amount depending on your family situation.

Because the rules vary and change over time, always check the garnishment notice itself, which should state the amount or percentage, and confirm the rules with your provincial court office or a Licensed Insolvency Trustee.

The garnishment process step by step

1. Missed payments and collection. The account falls behind, the original lender tries to collect, and the debt may be sent to a collection agency.
2. Demand letter. You may receive a final demand stating that legal action will follow.
3. Lawsuit. The creditor files a claim in small claims court or a higher court, depending on the amount.
4. Service. You are served with the claim and have a limited time to file a defence.
5. Judgment. If you do not respond, the creditor can obtain a default judgment. If you respond, the case proceeds through the court process.
6. Garnishment application. With a judgment, the creditor applies for a garnishment order directed to your employer or bank.
7. Employer deductions. Your employer withholds the permitted amount from each pay and sends it to the court or creditor until the judgment, interest and allowable costs are paid.

Every step creates an opportunity to act. Ignoring court papers is the most common way people end up with a garnishment they could have avoided or negotiated.

What to do if you are sued for a debt

• Do not ignore the claim. Note the deadline to respond.
• Check whether the debt is too old. Each province has a limitation period for suing on a debt. If the creditor waited too long, that can be a defence. See our guide to the statute of limitations on debt in Canada.
• Verify the amount. Ask for a statement showing principal, interest and fees.
• Propose a payment plan. Many creditors prefer a realistic voluntary plan to the cost and delay of enforcement.
• Get advice. Community legal clinics, non-profit credit counsellors and Licensed Insolvency Trustees can help you understand your options.

How to stop or reduce a wage garnishment

1. Pay or settle the judgment

If you can pay in full, the garnishment ends. If you cannot, you may be able to negotiate a lump-sum settlement or a payment arrangement in exchange for the creditor withdrawing the garnishment. Get any agreement in writing before you pay.

2. Ask the court to vary the amount

In some provinces you can apply to the court to reduce the amount garnished if it causes serious hardship, for example if you have dependants and very low income. The procedure and chances of success depend on your province and situation.

3. Make a consumer proposal

A consumer proposal is a legally binding arrangement under the federal Bankruptcy and Insolvency Act, filed through a Licensed Insolvency Trustee. Once filed, it triggers a stay of proceedings that generally stops wage garnishments by unsecured creditors, including the CRA for most tax debts. You then repay a portion of your debts through affordable monthly payments. Our comparison of a consumer proposal vs bankruptcy explains the trade-offs.

4. File for bankruptcy

Bankruptcy also creates a stay of proceedings that generally stops garnishment of most unsecured debts. It has larger consequences for your assets and credit, and may require surplus income payments if your income is above a set threshold.

5. Debts that are not stopped

Some obligations are not eliminated or stayed in the same way, most notably child and spousal support. Secured debts like a mortgage or car loan also follow different rules because the lender has rights over the property.

What garnishment means for your job and credit

Garnishment is a legal process between the creditor and the court; your employer simply follows the order. Many provinces have employment standards that protect workers in various situations, but the specific protections connected to garnishment differ, so check your provincial employment standards office if you are concerned about how your employer is treating you.

On your credit file, the underlying debt in collection and any court judgment may already have affected your score. The garnishment itself reflects that the account was not paid as agreed. Once the debt is resolved, focus on rebuilding: on-time payments and low credit utilization matter most. Our guide on how debt affects your credit score walks through the recovery process.

Bank account garnishment

Creditors with a judgment may also garnish a bank account. Depending on the province, the order may capture funds in the account at the time it is served or for a set period. Some government benefits deposited into an account may be protected, but once mixed with other funds the protection can become harder to prove. If you receive federal benefits, keep records showing the source of deposits.

A practical example

Consider a worker in Ontario with $2,400 in net pay every two weeks and an unpaid credit card judgment of $6,000 including interest and costs. If the creditor obtains a garnishment for 20% of net wages, roughly $480 would be withheld from each pay. At that pace, it would take about 13 pay periods, or roughly six months, to clear the judgment before further interest. If the worker also has other unsecured debts and cannot cover rent and food on the remaining $1,920, a conversation with a Licensed Insolvency Trustee about a consumer proposal may make sense, because it could stop the garnishment and consolidate all unsecured debts into one payment.

This example is illustrative only and simplified; actual amounts depend on the order, provincial rules and court costs.

Warning signs that garnishment is coming

• You have received a statement of claim or court documents.
• You missed a court date or did not file a defence.
• A creditor says it has obtained a judgment.
• You owe the CRA and have not responded to collection letters.
• A government student loan is in default.

If any of these apply, act now. Options are broader before enforcement begins. Building a realistic budget and checking your debt-to-income ratio will show whether a repayment plan is realistic or whether formal debt relief is the better path.

Frequently asked questions

Can a collection agency garnish my wages without going to court?

For ordinary consumer debts, a private creditor or collection agency generally needs a court judgment before it can garnish wages. Government bodies such as the CRA have additional powers.

How long does a wage garnishment last?

It usually continues until the judgment amount, allowable interest and costs are paid, unless it is withdrawn, varied by the court or stopped by a consumer proposal or bankruptcy.

Can my employer fire me because of a garnishment?

Employment protections vary by province and situation. Contact your provincial employment standards office or a legal clinic if you are worried about job consequences.

Does a consumer proposal stop CRA garnishment?

Filing a consumer proposal generally triggers a stay of proceedings that stops most collection actions by unsecured creditors, including the CRA for most personal tax debts. A Licensed Insolvency Trustee can confirm how it applies to you.

Can they garnish my EI or CPP?

Certain government benefits have special protections, while others can be subject to deductions for specific debts such as federal debts or support. The rules depend on the benefit and the type of debt.

Will a garnishment show on my credit report?

Credit reports reflect the debt in collection and public records such as judgments in many cases. The best way to limit long-term damage is to resolve the debt and rebuild a positive payment history.

Disclaimer: This article provides general information about debt in Canada and is not legal or financial advice. Garnishment rules vary by province and change over time. Speak with a lawyer, a legal clinic, a non-profit credit counsellor or a Licensed Insolvency Trustee about your specific situation.