Introduction
If your wages are being garnished, you may feel like you have no control over your paycheque. A portion of your income is taken before you even see it, leaving less money for rent, groceries, and bills.
The good news: in Canada, you can stop a wage garnishment immediately by filing a Bankruptcy or Consumer Proposal with a Licensed Insolvency Trustee (LIT).
What Is a Wage Garnishment?
A wage garnishment is a legal process that allows a creditor to collect money directly from your wages or bank account. Once a garnishment order is in place, your employer or bank is required to send part of your income to the creditor until the debt is repaid.
Creditors that often use garnishments include:
- Credit card companies
- Payday lenders
- Collection agencies
- The Canada Revenue Agency (CRA)
How Bankruptcy Stops a Wage Garnishment
When you file for Bankruptcy through a Licensed Insolvency Trustee:
- An automatic stay of proceedings takes effect immediately.
- This stay is a legal protection that stops garnishments, lawsuits, and collection calls.
- Creditors must deal with your LIT, not you.
With Bankruptcy, your garnishment ends right away, giving you access to your full paycheque while your debts are handled.
How a Consumer Proposal Stops a Wage Garnishment
A Consumer Proposal also provides immediate legal protection:
- Filing a proposal triggers the same automatic stay of proceedings as Bankruptcy.
- This stops wage garnishments and all other collection activity.
- A Consumer Proposal allows you to repay part of your debt over time, usually at a reduced amount, while keeping your assets.
For many Canadians, a Consumer Proposal is the best solution because it avoids Bankruptcy while still stopping the garnishment.
Why Use a Licensed Insolvency Trustee (LIT)?
Only a Licensed Insolvency Trustee can file a Bankruptcy or Consumer Proposal. LITs are federally regulated and:
- Provide free, confidential consultations
- Explain your debt relief options clearly and without judgment
- Take immediate steps to stop the garnishment
Steps to Take If Your Wages Are Garnished
- Act quickly. Every pay period that passes means more of your money is taken.
- Collect your financial information. List your debts, income, and expenses.
- Meet with a Licensed Insolvency Trustee. They will help you choose between a Consumer Proposal, Bankruptcy, or another debt solution.
Frequently Asked Questions
- How fast does a Bankruptcy or Consumer Proposal stop a wage garnishment?
Usually within days. Once filed, the automatic stay of proceedings legally requires creditors to stop garnishing your wages. - Can the Canada Revenue Agency (CRA) garnishment be stopped?
Yes. Filing a Bankruptcy or Consumer Proposal with an LIT stops CRA wage garnishments and bank account freezes. - Is a debt consolidation loan enough to stop a garnishment?
No. Only a legal process like a Bankruptcy or Consumer Proposal can force creditors to stop garnishment. - Do I have to go bankrupt to stop a garnishment?
Not always. A Consumer Proposal can also stop garnishments while avoiding Bankruptcy.
✅ Key Takeaway:
If your wages are being garnished in Canada, the fastest way to stop it is by filing a Bankruptcy or Consumer Proposal through a Licensed Insolvency Trustee. Both options give you immediate legal protection and peace of mind.
