Wage garnishments in Nova Scotia can be complicated. Today, we’ll walk through the legalities surrounding wage garnishments and who has authority to initiate one. We’ll also provide some actionable steps for preventing or mitigating wage garnishment situations.
You see, understanding your financial landscape is just like exploring an unknown city– daunting at first but fascinating once familiar with its twists and turns!
Understanding Wage Garnishment in Nova Scotia
Wage garnishment is a legal process that lets creditors get the money they’re owed directly from your income sources. So, how does wage garnishment work in Nova Scotia and what are the regulations?
The Process and Legalities of Wage Garnishment
The process starts when you owe money to someone – maybe for credit card debt or child support – and they take you to court to collect payment.
In Nova Scotia, wage garnishments begin with a Court Order. This Court Order can be from Small Claims Court, Supreme Court or Family Court (in the case of support payments).
After the Court Order is issued, if arrangements are not made with the creditor, they can ask the Court for an Execution Order. The Execution Order is then provided to the Sheriff’s Office and they will serve it on your employer. The Execution Order instructs an employer or bank (the ‘garnishee’) to redirect part of your wages towards paying off the debt. For more information on this topic, consult the Nova Scotia Rules of Civil Procedure to learn about provincial limits on wage garnishments.
Canada Revenue Agency (CRA) can garnishee wages without a Court Order. The Income Tax Act allows them to skip that step. CRA can issue a Requirement to Pay directly to your employer to garnishee wages or to your bank to freeze your bank account.
Provincial Limits on Wage Garnishments
Nova Scotia law has set limits on wage garnishments.The limit set for credit card companies, banks or other creditors is 15% of your gross (before tax) wages can be taken unless ordered otherwise by a judge.
The 15% rule aims to make sure you have enough left over each week after debts are paid: $450 if supporting dependents, and $330 if not.
Once again, the rules for CRA and income tax are different. CRA can garnish up to 50% of your wages if your employed. If you are a contract worker or self- employed, CRA can seize 100% of your receivables for tax arrears.
The limits for garnishee orders for child support and spousal support are also different. The Maintenance Enforcement Program (MEP) can garnishee your monthly support amount plus up to 25% of your gross wages towards arrears.
Note: If facing financial difficulties like these, remember help is available through licensed insolvency trustees such as Golding & Associates.
Who Can Initiate Wage Garnishment in Nova Scotia
In Nova Scotia, anyone you owe money to can take you to court. They might get a judgment and a court order, which lets them garnish your wages.
If you owe a bank or finance company for a credit card, line of credit or loan they can take you to Court.
Another type of debt we see are deficiencies are car loans. If you are unable to pay for a vehicle, the first step would be the vehicle would be repossessed and sold at auction. The creditor would then pursue you for any balance remaining after the vehicle was sold (the deficiency). If you are unable to pay it they can go to Court to get a judgment for the deficiency so they can garnish from your wages. The same stands for a mortgage deficiency.
If you owe an individual money, they can also go to Small Claims Court and get an order if they are unable to collect it directly from you.
It is important to remember that the Court’s role is not to determine if you can pay the money, they are only determining if you owe the money. Ability to pay does not influence the Courts decision on granting an Order.
As mentioned earlier, CRA can garnish wages for income tax arrears and also for overpayments of EI or CERB benefits.
The Nova Scotia Maintenance Enforcement Program can garnishee wages for child support and spousal support.
Role of Collection Agencies and Court Orders
A person or entity you owe money to may ask for help from a collection agency. The agency’s job is then to collect the debt owed. If they cannot collect it, they may follow the legal process of obtaining a court order.
If they’re successful in their efforts, these agencies have the power not only to request but also enforce wage garnishments.
Note: It may sound daunting, but remember that licensed insolvency trustees like Golding & Associates are always ready to give some much-needed advice on how best navigate through such situations so don’t hesitate reaching out should need arise.
Steps to Prevent or Mitigate Wage Garnishment in Nova Scotia
Facing garnishment of your hard-earned income can be stressful. But, there are ways to prevent or reduce the effect of wage garnishment.
Negotiating with Creditors
Direct negotiation with creditors may help ease the burden of wage garnishments without resorting to more drastic measures like filing for bankruptcy.
If approached correctly (and you respectfully explain about your financial hardship due to reduced net pay after deduction towards debt obligations), many creditors show willingness towards amicable solutions. These may include reducing interest rates or accepting smaller monthly payments until things get better financially at the debtor’s end.
Filing a Consumer Proposal or Bankruptcy
The moment you file for a consumer proposal or bankruptcy, a Stay of Proceedings goes into wage garnishments for debts, except support payments, stop immediately.In both scenarios, an insolvency trustee will work with you on the terms that fit within your income source range.
In cases involving tax debt, this approach also prevents Canada Revenue Agency from freezing bank accounts.
Filing a consumer proposal or bankruptcy does not stop wage garnishment for support payments. Child support and spousal support are non-dischargeable debts, and a result filing a bankruptcy or proposal does not affect the collection of those debts.
Wage garnishment in Nova Scotia can seem daunting. However, with a clear understanding, it becomes manageable. We can help! Get in touch today.