3 Ways To Avoid a Seizure

The best way to avoid a seizure is undeniably to pay your debts on time. Unfortunately however, it is not always possible. Let’s start by providing an overview of the various types of seizures.

Note: This post was updated on April 16, 2018.

Types of seizures

3 types of seizures are available to the creditors.

1. Garnishment of wages

   The garnishment of wages begins with a filing to the court of an application by the creditor to whom the debtor owes money. If a judgement is obtained, the creditor will be allowed to carry it out by garnishing a part of the debtor’s wages. The amount of revenues and the number of dependants are some of the criteria used to determine the garnishable part of his or her wages.
   In Québec, the garnishable part is set at 30% of the gross wages after exemptions; it can be as high as 50% of the gross wages in the case of alimony.
   In Ontario, it instead corresponds to 20% of the net wages after exemptions; it represents 50% of the net wages in the case of alimony.
   As for self-employed workers, 100% of their accounts receivable can be seized.

2. Bank account seizure

   The bank account seizure and blocking are means frequently used by the Canada Revenue Agency and Revenu Québec to get a taxpayer who has a tax liability to react.
   A financial institution may also — in the case of a credit card debt, for example — collect the minimum amount to be paid directly from the customer’s bank account.

3. Personal property seizure

   The process of personal property seizure slightly differs in Québec and Ontario.
   In Québec, essential personal property is exempt from seizure up to a maximum value of $7,000. Clothing, as well as tools used to perform a trade, are also exempt from seizure.
   In Ontario, the exemption for essential personal property is $11,300. It stands at $5,650 for personal belongings, whereas it also corresponds to 11,300 $ for tools used to perform a trade. As for motor vehicles, their value must be lower than $5,650 to be exempt.
   Any other personal property not needed for life can generally be seized to repay debts through the issuance of a writ of seizure in Québec or a writ of execution in Ontario.

3 ways to avoid a seizure

When it becomes impossible for you to make your payments, be proactive. By neglecting the situation, you would just be adding to the problem and delaying the inevitable. You can benefit from 3 alternatives, amongst others, to try and stop your creditors from engaging in seizure procedures.

1. Negotiations with the creditors

   If you are going through a rough time or if you are faced with an unforeseen situation, tell your creditors about it. They may then prove to be quite lenient, to the point of reducing temporarily your obligations towards them. Even though such an alternative does not always work, it’s worth a try.

2. Consumer proposal

   Regulated by the Bankruptcy and Insolvency Act (BIA), the consumer proposal protects you from any type of seizure. Furthermore, it suspends automatically all current seizure procedures.
   The consumer proposal also offers many other benefits, including :

   • Reduction of the total amount of debts to be repaid
   • Interest ceases to accumulate.

3. Bankruptcy

   Bankruptcy may be, given your assets, an alternative to avoid a seizure. By filing for bankruptcy, you are automatically protected from a bank account seizure and garnishment of your wages. The Licensed Insolvency Trustee (LIT) could nevertheless be under the obligation to seize part of your property if it’s not included in the previously mentioned exemptions.

If you have debts that you cannot repay, consider consulting a LIT in bankruptcy. First, the trustee is the only professional authorised to administer the consumer proposal and bankruptcy processes. He will also be able to draw a realistic picture of your financial situation and to tell you where you really stand. With a better understanding of the possibilities available to you and the thoughtful advice of a LIT, you will have everything you need to restructure your finances and to avoid a seizure.

If you are ready to repay your debts, contact a Ginsberg Gingras professional.