Garnishment is a method of collecting money owed by a debtor under a court judgment. A creditor seeking to collect money can obtain a garnishment order from the court. The person who owes money to the creditor is called a garnishee. There are three different types of garnishments: garnishing wages, garnishing bank accounts, and garnishing rent. The employer, bank or tenant receiving the garnishment order pays money into court. The creditor who obtained the garnishment order is responsible for requesting that the court release the accumulated money.
A creditor with a garnishment order can collect wages payable to the garnishee by his or her employer. A garnishment order permits recovery of up to 20 per cent of the garnishee’s paycheque until the total debt is paid. There are certain restrictions imposed on wage garnishments in Ontario’s Wages Act.
Garnishing bank accounts
A creditor may recover money owned by a debtor by garnishing the debtor’s bank account. A bank in receipt of a garnishment order will pay the full amount of the garnishee’s account balance into court, up to the total amount of the garnishee’s debt.
A creditor may garnish rent under a garnishment only if the garnishee is a landlord. If the garnishee is a landlord, the creditor may serve the garnishment order on the landlord’s tenant(s). Tenants who receive the garnishment order will pay their rent into court, up to the total amount of the landlord’s debt.
There are several important exemptions to garnishment orders. Not every source of a garnishee’s income can be garnished. Exemptions include employment insurance payments, old age security benefits, pension benefits, and benefits under the Workplace Safety and Insurance Act and Ontario Disability Support Program. These benefits are exempt from garnishment by a creditor even if they are deposited into a bank account that is referred to in a garnishment order.