Recently I had an individual come to see me, because his employer had just received notice that there was a garnishment against his pay. His next pay cheque would be about 20% less than normal and continue that way until the creditor was paid in full. He was a single father with shared custody of two kids, but his income was barely enough to support himself and the children.
We reviewed his current financial situation and he told me that he had separated and there was a division of property. He had recently signed over his share of the house (and any equity) to his former wife through a separation agreement, instead of her receiving any of his pension. The agreement was not Court ordered, so it was possible it could be considered a reviewable transaction depending on the value of the house and other assets including any pensions.
When a couple separate, in many cases there is an equalization of property. As long as the assets are fairly distributed – it is a function of law to legally dissolve a civil union. It turned out that the garnishing creditor was the Canada Revenue Agency (CRA) for an Employment Insurance (EI) over payment. For this individual, it was another obstacle he might have to overcome with CRA if there was an issue of valuations in the settlement.
I worked with him to try to put together a consumer proposal, but he was not able to commit to making the necessary payments. Regardless of his intentions, his options were limited. There was an urgency to the situation in order to stop the pending garnishment. In the end the debtor decided that filing for bankruptcy was his best option to resolving his government and other debts.