Many people who request our services are confronted with various forms of garnishments, and therefore ask us to provide suggestions that may help them in these matters. Let us have a look at the mechanisms governing the main forms of garnishments (salary, bank account and personal property) and consider some solutions to get by.
Salary garnishment
A salary garnishment begins with a request to the Court by a creditor against someone who is indebted to him. If a judgement is obtained, the creditor will be authorized to seize a part of the debtor’s salary to be determined according to criteria such as the debtor’s income and the number of people he is responsible for. In Québec, the portion available for garnishment corresponds to 30% of the gross salary after exemptions, and can reach up to 50% of the gross salary in the case of alimony. In Ontario, it is based on 20% of the net salary after exemptions and 50% of the net salary in the case of alimony. It should be noted that 100% of a self-employed person’s receivables are liable to garnishment.
Bank account seizure
Revenu Québec and the Canada Revenue Agency often resort to a bank account freeze to bring a taxpayer who has an income tax debt to react. A bank may also occasionally — in the case of a credit card debt, for example — garnish directly from the debtor’s bank account the minimum amount owed.
Personal property seizure
In Québec
The creditor may, if a judgement is obtained, require an executing officer to go to the debtor’s place of residence to make an inventory of goods liable to seizure. This officer, provided with a writ of seizure from the Court, is then entitled to enter inside the debtor’s place of residence.
Any essential personal property, to the extent of $6Â 000, is not liable to seizure. Clothes, as well as working tools personally used to perform a trade, are also not liable to seizure. However, motor vehicles and any other non-essential goods are generally liable to seizure for the payment of debts.
In Ontario
The creditor must register the writ of seizure with the sheriff’s office of the district in which the debtor’s assets are. He may request the sheriff to take custody of the seized goods, but the sheriff may only seize the debtor’s goods which are in his own district, in accordance with the instructions provided by the creditor’s lawyer. A creditor may deposit a writ against a debtor in one or more of the 49 Ontario counties or districts (sheriff’s or execution offices).
Once the writ is registered and becomes effective, any land or interest in land owned, or any land the debtor may eventually buy in the country or countries or the district or districts where the writ was registered, may be subject to a security or charge.
The exemption for personal property in Ontario is established at $11 300, and at $5 650 for personal effects. As for working tools, the exemption is also of $11 300. Unlike in Québec, motor vehicles whose estimated value is lower than $5 650 are not liable to seizure.
In both Québec and Ontario, as soon as the list of the goods liable to seizure has been established by the executing officer, the debtor becomes the custodian of these goods until their sale, the date of which will be determined by the executing officer. A notice of such a sale is to be published in a local paper.
What are the rights of the debtor who faces a seizure or garnishment?
- Appeal the bankruptcy application to a judge before a judgement is rendered.
- Object to the seizure or garnishment, totally or in part, insofar if he can demonstrate that he is not the owner of the goods or that these goods are not liable to seizure or garnishment.
- Consult a trustee in bankruptcy to make an inventory of possible solutions.
How can the experts of Ginsberg Gingras help a debtor who faces a seizure or garnishment?
- By filing a notice of intention to make a consumer proposal.
- By filing a consumer proposal.
- By filing a bankruptcy application.
Section 69 of the Bankruptcy and Insolvency Act provides a stay of proceedings, as soon as a file has been registered by a trustee in bankruptcy, of all procedures initiated by the creditors against a debtor who is indebted to them. This means, in particular, the unfreezing of a bank account, the end of a salary garnishment and the termination of a sale published by the executing officer.
The trustee in bankruptcy remains undoubtedly a debtor’s best ally. His role is to advise people who are having debt problems and to help them find solutions if they are facing a seizure or garnishment. For further information concerning seizures or garnishment or for any other form of assistance related to insolvency, please do not hesitate to consult Ginsberg Gingras by visiting its Web Site, or by contacting its office closest to you.