Creditor Remedies

Wage Garnishees

A wage garnishee is a formal recourse available to your creditors, whereby they can seek a court ordered judgment to deduct a percentage of your wages at source until the debt has been repaid. The Canada Revenue Agency (CRA) under the Excise Tax Act can bypass a court order and directly send your employer a requirement to pay (RTP) notice which they must comply with. If you are faced with or are currently subject to a wage garnishee, it is crucial that you communicate with our office right away to discuss your options.

Collection Calls and Communications

Collection calls and communications are the most common way for a creditor to attempt to collect on a debt without force of law. Once you have been placed in collections, your creditor(s) will contact you repeatedly to attempt to recover the debt. If unsuccessful, they may hire or sell your debt to a collection agency, who will repeatedly contact you, your friends, family, known associates or even your employer to elicit repayment. Collection activity and agencies in Canada are provincially regulated. In Ontario, The Office of the Consumer Affairs – Consumer Protection Ontario is the Government body that licenses collection agencies and imposes limitations on the frequency and times at which collection agencies may call you. It is important to remember that even though a debt may no longer be legally enforceable, collection agencies may continue to contact you by phone or other means indefinitely until the debt has been paid. Although it may not appear as such, collection calls and activity can have debilitating effects due to the stress induced from repeated calls. In extreme cases, they have been known to cause job loss due to repeated calls to employers. If you are faced with creditor collection activity, contact us today to discover how you can seek protection and stop the calls.

Bank Garnishees

A bank garnishee is similar to a wage garnishee; however, the creditor has instead obtained leave (permission) of the Court to seize the funds available in your bank account for repayment.

This is also commonly referred to as a ‘’frozen account’’.

In addition, if you owe to the financial institution that houses your account and default on your payments, they may exercise the right to set off certain monies held with them against your debt, without requiring a court order.

The CRA also retains the same rights to garnish your bank accounts under the requirement to pay (RTP) notice mentioned previously.

Derogatory Credit Reporting

Credit reporting agencies, also known as credit bureaus, are independent entities which source their information from a network of lenders, for the purpose of reporting and identifying a person’s or a company’s total credit, total usage of said credit and repayment history.

If the repayment terms of a credit arrangement that you have with a lender are not respected, they may report negatively against your credit history with one or several of these agencies. Derogatory entries on a credit report can have serious ramifications and may impair your ability to do certain things, such as but not limited to:

  • Your ability to seek future credit
  • Your ability to obtain security clearances or certain employment
  • Your ability to secure leased housing or obtain/renew a mortgage

Although some debts may become legally unenforceable over time (statute barred), creditors will still be able to report against your credit indefinitely until the debt has been paid or until you have been cleared of the debt following a discharge from bankruptcy or full performance of a consumer proposal.

Next Steps?

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