Unpaid debt can lead to wage garnishment or frozen bank accounts. If you are in these situations, we can help.
If you owe money to the Canada Revenue Agency (tax debt), the agency can garnish your wages until this money has been repaid. If you owe money where you bank (such as bank debt or credit card debt, depending on the lender), the bank can put a freeze on your account so that you can’t touch the money in it until the debt has been repaid.
Other creditors can take legal action that allows them to instruct your bank to restrict withdrawals from your account. Creditors may even be able to take action to seize funds in an account.
These activities obviously cost you money and prevent you from accessing money that you earned. The good news is that there are ways to regain access to funds in a frozen bank account or put a stop to wage garnishment.
Stopping Wage Garnishment
Wage garnishment can be difficult to deal with. Although it may be incredibly frustrating to have a creditor take money that you have earned and stressful to lose control of your money, your creditors have a legitimate right to do this as you have not paid your bills. In addition, with most wage garnishments, your employer will find out about your debt troubles when he or she is ordered by a creditor to start garnishing your wages. This can lead to embarrassment and other issues.
Wage garnishment happens when a creditor takes legal action and gets a Garnishment Order from the court. In this order, the court also decides how much of your wages will be garnished. Credit card companies, payday loan companies, credit unions and nearly every other type of creditor can go to court in order to obtain a Wage Garnishment Order. However, the Canada Revenue Agency can garnish your wages without a court order.
There are three ways to put an end to wage garnishment in Canada:
- Pay the debt that you owe
- File a consumer proposal
- File for bankruptcy
Unfreezing Frozen Bank Accounts
The Canada Revenue Agency (CRA) can order your bank account frozen if you owe the agency money. If you owe your bank money (through a bank loan or a credit card supplied by the bank, for example) the bank can also freeze your bank account.
When your bank account is frozen, you are unable with withdraw any money from the account. Instead, the CRA or your bank can take money directly from your account in order to repay the debt that is owed.
In order to unfreeze a frozen bank account in Canada, you will need to:
- Pay the debt that you owe
- File a consumer proposal with your creditors, or
- File for personal bankruptcy
About Consumer Proposals
A consumer proposal is a legal process through which you make an offer to your creditors. In most consumer proposals, a person offers to repay a portion of the debt that is owed in monthly payments. Once the proposal is complete, the remaining outstanding debt is eliminated.
A consumer proposal allows you to effectively reduce the overall amount that you owe to your creditors.
A consumer proposal also puts a stop to wage garnishments and unfreezes frozen bank accounts. The process also ends any civil legal action against you to collect debt. The main exception is wage garnishments and legal action that are a result of unpaid child support or spousal support. These debts cannot be eliminated by a consumer proposal and filing a proposal does not stop legal action or wage garnishment in these cases.
The consumer proposal process makes it possible to repay a portion of your debt without having to repay everything that is owed. This allows you to pay what you can afford and still satisfy your creditors.
Bankruptcy is also a legal process. It is designed to eliminate most, if not all, of a person’s debts and provide them an opportunity for a fresh start.
Much like a consumer proposal, filing for bankruptcy puts an end to frozen bank accounts, wage garnishments and civil legal action to collect debt (except for cases of spousal support or child support).
If you are unable to repay your debts as they become due, filing for personal bankruptcy could be an option for you.
Contact Us For Help with Wage Garnishments and Frozen Bank Accounts
For more information on how the bankruptcy and consumer proposal processes can help you with frozen bank accounts and wage garnishment, please contact us today. Our team has the experience and skill necessary to review your financial situation, provide you with details on the processes available to you and help you regain access to your money.