Answer: If you are behind on your payments on a car loan or lease, the lender does have the legal ability to repossess the vehicle, and sell it to recover the amount owing.  If there remains a balance owing after they have sold the vehicle, they can take you to court and sue you, and potentially garnishee your wages.

While legally they can repossess the car and garnishee your wages, practically that is generally a last resort.  The car lender doesn’t want to go through all of the hassle of seizing your car, selling it, and then suing you.  They just want their money.  You have the following choices:

First, talk to the lender, and make payment arrangements.  Obviously they want all of their money now, and they will use the threat of seizing your vehicle to make you pay, but they don’t really want to take your car.  They are making threats because you haven’t paid, so offer to make a payment when you get your next paycheque, and propose a plan where you will get caught up over the next month or two.  If you have the ability to make extra payments and get caught up, they will probably allow you to do so.

Second, if the lender refuses to take your money, or if you don’t have the ability to get caught up, you will probably lose your vehicle, so you could consider voluntarily surrendering it to them.

If they do take the vehicle and pursue you for the shortfall, you have a few choices:

1. Pay them, or work out payment arrangements
2. File a consumer proposal or
3. File bankruptcy in Ontario

Filing a proposal or bankruptcy immediately stops a garnishment, but obviously it’s better if you can work out a plan with them first to avoid having to file.

Answer: All trustee firms in Ontario are private companies, so they require a contribution from you to cover the costs of administering your bankruptcy.  In addition, the trustee must incur costs to mail the documents to your creditors, and to complete other duties.

However, all trustees will work with you to come up with a payment arrangement that works for you.  Here are some things to consider:

First, what are you currently paying to service your debts?  Once you file bankruptcy in Ontario you are no longer making payments on your unsecured debts, so in most cases the cost of bankruptcy is much less than what you are currently paying.

Second, the reason most people file for bankruptcy is to prevent their wages from being garnisheed.  If you are not currently working, you have no wages to garnishee, so it may not be necessary for you to file bankruptcy at this time.

Third, your Ontario bankruptcy trustee will explain all of your options, so it may not be necessary to file bankruptcy.

Please help us figure out what to do

thanks

Answer: You have four choices to stop a wage garnishment.

First, you could talk to the finance company and see if they will allow you to defer one or two payments, with the promise that you’ll get caught up once your income recovers.  They may agree to defer one or two payments to the end of your term.

Second, if they don’t agree to that, you can attempt to delay them from repossessing your vehicle by making partial payments each month, in whatever amount you can afford.  You may be able to delay long enough to get caught up, since the finance company doesn’t really want your vehicle.

Third, if they do repossess your vehicle, they will not immediately start garnisheeing your wages.  They will first contact you to attempt to work out a payment plan.  At that point you may be able to make payment arrangements with them.

If all else fails and they do start a garnishment of your wages, you could either let the garnishment continue until finished, or you could file a second bankruptcy, or a consumer proposal.

Answer: Under the Ontario Wages Act a normal creditor (not the government or child support) can garnishee up to 20% of your gross wages.  Generally bonuses and commissions are treated the same.

If you have a garnishment against you, or expect that your wages may be garnisheed, please see this article on how to stop a wage garnishment for more information.

Answer: Under the Ontario Wages Act only wages can be garnisheed.  The only exception would be if you owe money to the government, such as the Canada Revenue Agency, they can garnishee a CPP or OAS payment.

One option would be to simply open a new bank account at a new bank, and deposit your CPP and OAS payments there; since your other creditors do not know about that bank account, they cannot automatically take money out of it.

Another option would be to file a consumer proposal or bankruptcy to officially eliminate your debt.  However, you are then making payments towards your debt to protect yourself from creditors who may not have any legal recourse against you, so you should consult a licensed Ontario bankruptcy trustee to determine if that approach is in your best interests.

Answer: The short answer is yes, since you owe the money, the creditor can continue to add interest to the amount you owe until it’s paid.

If you are being garnisheed for $9,500, it may be prudent to review your options for how to stop a wage garnishment.

Due to my own error, I am currently in collections. I am being threatened with wage garnishee. They have not taken me to court as of yet; however, I am being harassed daily.

What action can the collections agency take when I am making consistent payments? I am paying what I can afford of $150/month. My outstanding debt is just over $5300.

I’ve been advised that they can’t do anything as long as I am making payments; however the harassment is making wonder.

Thank you for your help.

Answer: Legally, if you owe money, the collection agency can call you, even if you are making payments. Practically, if you are making payments, it is unlikely that they will take you to court, sue you, and attempt to garnishee your wages. They know that as soon as they take you to court you will stop paying them, and if they do get a wage garnishment you may then have no choice but to file bankruptcy in Ontario, and then they may get nothing.

If this is your only debt, and if you want to avoid bankruptcy, continuing to pay them is probably your best option. However, if you have other debts, or if you are tired of the harassment, it may be time to speak to an Ontario bankruptcy trustee about your other options.

Will they go ahead with this wage garnishment? The last thing I want is my employer to know I’m in trouble.

Answer: Probably not, but they might. It costs money for a creditor to go to court, sue you, and obtain a wage garnishment. In most cases if the amount is small they won’t bother.

However, if you don’t pay, a creditor can take you to court and attempt to garnishee your wages. If they do, you are left with three choices:

1. let the garnishment continue until they have been repaid in full (including legal costs)

2. file a consumer proposal; or

3. file bankruptcy in Ontario.

It’s up to you to decide which option is best for you. For more information, read this article on How to Stop a Wage Garnishment?

Answer: Under the Ontario Wages Act, the maximum wage garnishment in Ontario is 50% of your wages. The only exception would be where the government can take 100% of the compensation received by a self-employed contractor. If you are an employee, your employer cannot take all of your last paycheque to satisfy a garnishment, unless there is a specific court order allowing a 100% garnishment.

For more information, consult this article on How to Stop a Wage Garnishment.

Answer: There is no guarantee that you can find out about a wage garnishment before it starts. You could go to your local court and ask the clerk if there are any judgments registered against you, but if the court action was in a different court it may not show up. You could also do a credit check through Equifax to see if there are any registered legal items. Your final option is to simply talk to your payroll person at work and ask them to inform you immediately if they receive any garnishment papers.