Script 251 gives information only, not legal advice. If you have a legal problem or need legal advice, you should speak to a lawyer. For the name of a lawyer to consult, call Lawyer Referral at 604.687.3221 in the lower mainland or 1.800.663.1919 elsewhere in British Columbia.

This script discusses a legal proceeding called “garnishment,” used to collect money on a judgment or debt.

What is garnishment?
Normally, if you owe someone money, you’re expected to pay that person. But if someone else is indebted to you, and you’re not paying your debts, it’s possible for your creditor to intercept the payments that would otherwise go to you and have that money paid to the court, instead of to you. This process is called garnishment.

Technically known as “attachment of debts,” garnishment involves three parties:  a creditor who seeks payment of a debt, a debtor who owes money to the creditor, and a third party (called the “garnishee”) who owes money to the debtor. Three important facts to know about garnishment are:

• Garnishment is always made by court order. 
• A garnishing order always requires that money is paid to the court. It’s never paid directly to the creditor.
• The debt must be owing at the time the garnishing order is delivered to the garnishee. (Some garnishing orders don’t “attach” or collect any money at all because at that particular point in time, no money is owed.)

What are some examples of garnishment?
Say you work for a warehouse company. At the end of every two-week period, the warehouse company owes you wages. You have an outstanding amount owing on your Visa card, which you’re not dealing with. The Visa credit card company may be able to intercept your wages and have those wages paid to the court according to a garnishing order.

Or say you’re divorced, and there’s a maintenance or support order requiring you to pay financial support to your ex-spouse and/or children. If you’re in “arrears” (meaning you haven’t paid support as ordered), your ex-spouse can apply for a garnishing order to have money taken from your bank account.

Most often, garnishing orders are “served” on or given to employers who owe wages to employees or to banks and financial institutions that hold deposits for customers.

How does a creditor get a garnishing order?
The creditor must have what’s called a “liquidated claim” in order to ask the court for a garnishing order. This means that the creditor must be able to confirm exactly what is owing. If, for example, a person has a claim against you for damages, such as damages for personal injury, they cannot obtain a garnishing order, because there’s been no determination of the damages.

The creditor would first start a lawsuit against you for the debt you owe, and could then ask the court for a garnishing order to take out money from your bank or financial institution. If the creditor gets a court judgment against you, they can get an order to “garnish” or intercept your wages.

What happens if there’s a garnishing order served on your bank?
A creditor can obtain a garnishing order even if there is no judgment against you, and even before you’ve been served with the court documents starting the lawsuit against you. But the money that is taken from your bank account or other financial institution doesn’t automatically become the property of your creditor. It won’t be paid to the creditor unless the creditor carries through with the lawsuit and gets a judgment against you. If you disagree with the claim against you, you can defend the lawsuit. If you’re successful or prove that you don’t owe as much as the creditor claims, then the appropriate amount of money will be paid back out of the court to you.

Note that a garnishing order served on your bank or financial institution can create credit problems for you, even if no money is attached. If you change banks because of your debt and the garnishing orders that come with it, you might be penalized under the Fraudulent Conveyance Act for trying to delay your creditors.

Since the law about garnishing orders before judgment is very technical in nature, it’s best to obtain legal advice if you’re faced with this situation. Through the Lawyer Referral Service, you can get some general advice for a very small initial fee. Sometimes, you may be able to get the information you need over the phone.

What happens if there’s a garnishing order to intercept your wages?
If you’re employed, the creditor would need to get a court judgment against you before garnishing your wages. While a judgment is more commonly obtained after a trial in court, judgment in a lawsuit can also be obtained by default if you, the debtor, don’t defend the lawsuit.

A garnishing order to intercept wages must be served within a week of payday, or it won’t attach any money. Also, when garnishing wages, a new garnishing order has to be issued and served on your employer every pay period. A creditor cannot serve the garnishing order once, and hope to receive payments every payday. This can make garnishment a slow and expensive process for creditors in collecting a debt.

But there are exceptions. Some types of garnishing orders can follow your assets and wages for a long time and don’t need to be reissued every payday. If you owe child or spousal support under a court order, then your spouse or partner who is owed the support payment can register with the Family Maintenance Enforcement Program to have your wages continuously garnished. Also, if you owe money to the Canada Revenue Agency for taxes, they can issue a Requirement to Pay to your bank or your employer. A Requirement to Pay can remain effective for up to 90 days without having to be re-issued.

If you are an independent contractor, your creditor can serve a garnishing order on the person with whom you contract. Even if no money is attached or intercepted, you might find this garnishing order causes you embarrassment.

What can you do if garnishing your wages creates a serious hardship for you?
The law restricts a garnishing order for wages to attaching or intercepting 30% of the wages. The amount is different if your wages are being garnished for support payments for a child or spouse. But you may be able to reduce the amount of wages garnished by applying to the court.

If because of your personal financial circumstances, the garnishing order creates a serious hardship for you and your family, you can ask a judge or registrar of the court to release the garnishment and allow you to pay the judgment by installments. Contact the court registry where the order was issued, and make an appointment to have a hearing in front of the registrar. For a Small Claims Court judgment, you’ll probably appear in front of a judge.

At the hearing, a monthly payment will be set which is manageable for you. There are no court administration costs for this procedure. The creditor will have the right to ask questions about your financial situation, and the judge or registrar may also ask you some questions. If you’re in real financial difficulty, the judge or registrar has the power to order that nothing need be paid for the time being.

What should you do if you receive a garnishing order?
Garnishment involves an order of the court, so if you’re the garnishee (for example, the debtor’s employer), don’t ignore the garnishing order. You must pay the appropriate money to the court. If you’re an employer who is served with a garnishing order, pay the court whatever you owe your employee (i.e., the debtor) at the time you received the order, up to the amount claimed in the order. Any money that you pay into court, you don't have to pay to your employee. If you ignore a garnishing order and pay the debtor instead, you may have to pay the money twice – the second time to the creditor.

If you believe you don’t owe the debtor anything, then you should contact the court registry and submit what is called a Dispute Note. The Dispute Note explains your reasons why you believe you don’t owe the debtor anything. If the creditor disagrees with you, then a judge will have to decide the matter.

Note that it’s illegal to discipline an employee who is a debtor because you’ve received a garnishing order, and there may be harsh penalties if you do.

What happens to any money paid into court?
If a garnishing order is successful in attaching money, and if money is paid to the court, the creditor cannot have the money paid out to them without a court order or the debtor’s consent.

Where can you get help or find more information?

• If you’re having trouble paying your bills, contact the Credit Counselling Society of BC, a non-profit debt counselling service. They can help set up a debt management program for you. Call 1.888.527.8999 (toll-free) or see their website at www.nomoredebts.org.
• Refer to Dial-A-Law script 253 on “When You Can’t Pay Your Debts.”
• See the brochure on “Consumer Law and Credit/Debt Law,” published by the Legal Services Society of BC. To find a free copy on their website, go to www.lss.bc.ca, then click on “Publications,” then search under the subject of “Consumer Law.”

[updated October 2007]

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