Garnishment: 12 Common Questions Asked by Creditors

We talked before about how to collect on a Small Claims Court judgment. In this post, we take a closer look at the process of garnishment, which is a common and one of the most effective ways to collect your money. 

Here are the most common questions asked by creditors.

 1. What is a garnishment and what can be garnished?

A garnishment as a concept is when the creditor (plaintiff) directs some third party that owes money to the debtor (defendant) to transfer money owing to the judgment debtor to the court, instead of to the judgment debtor. This means that the creditor can basically collect any money that anyone else owes to the debtor, whether that money is owing to the debtor on a court judgment, return of a loan, or for another reason. The person who owes the debtor and who is instructed to transfer money to the court instead of the debtor is known as the garnishee.

In practice, garnishments are most often used to garnish the debtor’s wages through his/her employer, or garnish the debtor’s account through his/her bank. The employer owes the debtor a salary, and the bank owes the debtor all funds in the debtor’s bank account(s).

 2.What information do I need to garnish a bank account?

To garnish a bank account, you need only to know the name of the debtor and the location of the bank branch where his or her account(s) is held. You don’t need to know account numbers.

 3. What information do I need to garnish wages?

To garnish wages, you need to know the name and contact information of the debtor’s employer. You do not need to know the debtor’s position with the employer, his or her salary, etc.

 4. What kinds of bank accounts can be garnished?

When the debtor’s bank is served with a garnishment, it is obliged to garnish any and all debit accounts the debtor has at that branch. This includes chequing and savings accounts, and does not include credit lines.

 5. What if the debtor’s bank account is joint with his or her spouse?

When the debtor has a joint account, then only a portion (up to 50%) of the funds in that account can be garnished. Therefore, garnishment is still possible, but not of all the money held in the account.

 6. Will it be a problem if the debtor has multiple middle names?

To garnish an account, you need the proper spelling of the debtor’s first and last names, and the name on the judgment must match the name on the account.

7. What if the debtor receives money from his/her employer on contract, instead of on payroll?

Since the premise of a garnishment is that you, as the creditor, can collect any money owed to the debtor, you can collect money owed to the debtor on contract, as well, if you know the name and address of the contracting party.

8. Can I garnish the wages the debtor is paid through her own corporation?

Legally, yes. If the debtor is paid on payroll or contract by his own corporation, you can name the corporation as the garnishee and instruct it to transfer monies owing to the debtor to the court. However, be mindful that because of the close relationship between the garnishee and the debtor, the garnishee may be less cooperative.

9. What if the garnishee refuses to pay?

If the garnishee refuses to pay on a garnishment, he/she/it must provide a reason for failure to do so. Generally, the only legitimate reason for the garnishee’s failure to pay on garnishment is that the garnishee no longer owes anything to the debtor. For example, the garnishee may no longer employ or contract with the debtor, or hold his chequing accounts, or the balance in the chequing account may be $0.00.

If the reason the garnishee provides is not satisfactory, then you can call the garnishee to a Garnishment Hearing, where you can challenge the garnishee’s reason for failure to pay. If the court finds that this reason is unsatisfactory, it can oblige the garnishee to provide payments.

10. Does the garnishment continue until the debt is paid off?

The Notice of Garnishment is valid for six years after it is issued. This means that the garnishee must provide payments to the court for six years, or until the debt is paid off, whichever comes first. If, after six years, the debt is still not paid off, the Notice of Garnishment can be renewed for another six years. It can be renewed as many times as needed until the debt is paid off.

11. How effective are garnishments in collecting money?

In our practice (which, of course, may not apply to each particular case), garnishments are quite effective. Where the garnishee actually owes the debtor money, payments are usually diligently transferred to the court by the garnishee.

12. How long does it take to collect all the money owing on garnishment?

This depends on the amount of the debt and how much the garnishee owes the debtor – if the debtor has $100,000 in savings account, you can expect to receive your money quickly. Apart from that, of note is that the garnishee is obliged to garnish funds immediately after the garnishee becomes indebted to the debtor, and must transfer these funds to the court within ten days. So, for example, a bank would garnish funds as soon as they are deposited into an account, and would need to transfer the money garnished to the court within ten days.

Sylvie, Toronto

I really appreciated your attention to details, your level of preparation which was impressive, and enthusiasm. I am really happy we have Spectrum Paralegal in our corner. Thank you for being the champion of our small claims court!