Payroll seizure is a legal order of the court in Canada that allows a creditor to whom a person owes money to seize a percentage of that person’s wages until his or her debt is repaid. A creditor can not simply enter your salary; there is a procedure to follow that must generally be observed:
- First, a creditor must obtain a judgment from the court; it is an acknowledgment on the part of the court that the creditor has a claim on the debtor.
- Then the creditor must be granted an attachment.
- If there are no physical assets that the creditor has access to, the creditor will usually send a seizure to your employer and pay it back.
- Your salary will be seized until your debt is repaid.
Payroll seizure is common with those who have no assets or capital that could be used to pay off your debt.
There are provincial and federal laws governing the type of property that can be seized.
In general, laws are similar across Canada with the exception of British Columbia and New Brunswick.
In British Columbia, household goods and appliances cannot be seized by a creditor.
In New Brunswick, creditors cannot do a payroll seizure.
Creditors can not enter a line of credit because there is no real money to take.
But they can grab money directly from your bank account.
In some provinces, creditors can not seize more than 30% of a paycheck from your employer. While in other provinces, the rules are much more complicated.
If your salary is currently under seizure, it is important that you contact an authorized insolvency agent to provide you with information specific to your province.
How can my salary be seized if I am self-employed?
Unfortunately, the self-employed can see up to 100% of their wages seized. Most of the rules regarding payroll seizure apply only to fixed job wages. Do not panic, while it is possible for a creditor to take 100% of your salary, most will not. If a creditor takes a reasonable percentage of your income, you will be less likely to change jobs and thereby change the amount they can take.
Finally, in order to capture the income of a self-employed worker, the creditor must deal with one of his clients. This sometimes leads to complications since a seizure is only valid for a certain period of time. Thus, it requires the creditor a good organization in collecting their money.
When will the creditors take my salary?
Unfortunately, there is no concrete answer to this question. Creditors do not always capture wages, even if debtors have stopped making payments. Generally, it takes time and energy for creditors to come to seize your salary.
How to stop the payroll seizure?
If you currently have a creditor who threatens to seize your salary, a creditor who has already obtained a court judgment or even a creditor who has provided a seizure to your employer, you are still able to stop the seizure of happening.
Here are some of your options:
- You can quit your job and by the same token will not get any wages. While this is a valid option, it may not be the best option for most people.
- You can contact your creditor and negotiate a new repayment plan and ask to cancel the seizure.
- Apply for a personal loan and use it to repay the creditor who threatens to seize your salary.
If your salary is currently being entered and you want to stop the process immediately, your two best options are either filling out a consumer proposal or going bankrupt. Both of these measures lead to a stay of proceedings. You are thus protected from creditors. Remember that a consumer proposal and a bankruptcy will prevent the seizure of your salary, but will also affect your credit as well as your financial situation- Bankruptcy Solutions.
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