Dealing with wage garnishments can be a stressful experience, especially if you're already struggling with debt. However, there are options available to help you stop wage garnishments and get back on track financially. In Ontario, two of the most common options are a consumer proposal and personal bankruptcy. In this blog, we'll explore how to stop garnishments with these two options.

What is Wage Garnishment?

Wage garnishment is a legal process in which a creditor obtains a court order to have a portion of your wages deducted to pay off your debt. The amount of your wages that can be garnished varies depending on your province and your individual circumstances. In Ontario, creditors can garnish up to 20% of your gross wages.

How to Stop Garnishments with a Consumer Proposal

A consumer proposal is a formal offer to your creditors to pay a portion of your debt over a period of time, typically up to five years. Once you file for a consumer proposal, an automatic stay of proceedings is put in place. This will stop all wage garnishments and other legal actions against you. Once the proposal is approved, you will begin making monthly payments to your licensed insolvency trustee, who will distribute the funds to your creditors. The proposal is binding on all unsecured creditors, and interest on your debts will be frozen.

How to Stop Garnishments with Personal Bankruptcy

Personal bankruptcy is another option to stop wage garnishments in Ontario. Once you file for bankruptcy protection, an automatic stay of proceedings is put in place, which stops almost all wage garnishments and other legal actions against you.

Pros and Cons of Consumer Proposals and Personal Bankruptcy

Consumer proposals and personal bankruptcy both offer the advantage of stopping wage garnishments, but they have their own pros and cons to consider.

Pros of a Consumer Proposal:

• You can keep your assets, including your home and vehicle.
• You can reduce your debts by up to 80% or more. However, each case is different.
• You will be protected from collection agencies and creditors.

Cons of a Consumer Proposal:

• Your creditors may not accept the proposal, in which case you may need to consider other options, such as bankruptcy.
• It is typically more expensive than a bankruptcy

.Pros of Personal Bankruptcy:

• Most unsecured debts are discharged at the end of the process.
• The process is usually quicker and cheaper than a consumer proposal.
• Your creditors will not be able to take legal action against you.

Cons of Personal Bankruptcy:

• You may be required to sell some of your assets to pay off your creditors.
• Your credit score will be negatively impacted for several years.

Conclusion

Wage garnishments can be a stressful experience, but there are options available to help you stop them and get back on track financially. A consumer proposal or personal bankruptcy can provide relief from overwhelming debt and stop wage garnishments. However, it's important to speak with a licensed insolvency trustee to determine the best course of action for your individual situation. With the right guidance and support, you can get back on track and achieve financial stability.