Debtors preparing for the effects of bankruptcy by doing research on the subject matter may have found that there are no practical differences between what is known as a wage levy and a wage garnishment. Once a levy or garnishment is enacted on your wages, your employer is then legally obligated to deduct a certain amount from your paycheque every month, and the amount used to pay off valid debts. Regardless of the term used, this type of levy is facilitated via a court order, making the deduction of a pre-set amount from your regular income legal.
“Levy” usually connotes government applications. In the case of a wage levy, it means actions that the Canada Revenue Agency or any similar entity or group uses to gather the payment of unpaid taxes.
Regular creditors that wish to initiate garnishments on debtors have to apply for these through legal proceedings. In comparison, the CRA may affect such levies without the permission of the court and by its own authority as long as the debts these garnishments are associated with are valid.
There are many debtors who pay no heed to collection activity and threats of levies from the CRA or other creditors, as they feel that these creditors will not follow through. The CRA may take a while to validate debts and affect garnishments, but only because of the nature of the tax system. It may also take a while for regular creditors to affect garnishments and apply for these orders, but they, too, will collect in time. After all, there are many debtors who fulfill the responsibility of paying off their debts – in the interest of fairness, no debtor will and should get away from that financial responsibility.
Creditors who have threatened some debtors with wage garnishments may, for the most part, be ignored by debtors because the latter feel that the numerous letters and calls asking for debt payment will not be followed by solid action from the former. These creditors will act upon the matter – there are delays in collection because of the effort of applying for wage garnishment and the expenses that will come with levies such as these – although they will choose to use other means of collecting debt payment at first, and go to the courts for garnishment orders if all else fails.
Wage garnishment orders are legally binding acts that will take legal debt relief options to resolve. There are numerous options available for the filer threatened with wage garnishment, such as a personal bankruptcy filing, the approval of a consumer proposal, or The Orderly Payment of Debts.
If you are thinking of filing for bankruptcy or applying for a consumer proposal anywhere in the country, you can talk to a licensed bankruptcy trustee. Debtors residing in Alberta, Prince Edward Island, Saskatchewan, and Nova Scotia may be eligible for The Orderly Payment of Debts and need the assistance of an approved non-profit credit advisor.An upcoming wage levy can be stopped in its tracks – consult with a qualified advisor for help on avoiding levies and other effects of accumulated debt as soon as possible.