How does wage garnishment work in Canada?
A creditor must first obtain a court judgment against you, then apply to the court for a garnishment order directed to your employer. The employer is legally required to withhold the garnished amount from your pay and forward it to the court or creditor. Canada does not have a uniform federal wage garnishment rule — each province sets its own exemption amounts and procedures under their civil enforcement or judgment enforcement legislation. CRA can garnish wages without a court order for tax debts.
Can CRA garnish my wages without a court order?
Yes. The Canada Revenue Agency has special powers under the Income Tax Act (section 224) to issue a 'requirement to pay' directly to your employer without going to court. CRA can demand your employer remit a portion of your wages until the tax debt is paid. CRA typically first sends a demand letter and negotiation opportunity before garnishing. If you owe CRA, contact them immediately to arrange a payment plan — CRA is generally willing to negotiate.
Does filing bankruptcy stop a wage garnishment?
Yes, immediately. Filing for bankruptcy or submitting a consumer proposal creates an automatic stay of proceedings under the Bankruptcy and Insolvency Act. This stay stops all garnishments, collection calls, and legal proceedings by unsecured creditors instantly — often within 24–48 hours. Your employer's garnishment obligation ceases the moment they receive notice of the bankruptcy or proposal from the Licensed Insolvency Trustee.