Trying to recover a debt can be frustrating, and losing out on payment can potentially leave you in financial peril. However, various debt collection options are available to those who remain unpaid. Working with an experienced litigation lawyer can help you recover what you are owed.
In Alberta, one option that can be useful is a garnishment proceeding. This process occurs when money owed to the debtor (the person in debt) is diverted to the creditor (the person to whom the debtor owes money).
What is garnishment?
Sometimes, even when there is a court judgment in your favour that orders the debtor to pay you an outstanding sum of money, payment may still not be forthcoming.
One method to ensure you get what you are owed is the process of garnishment (also referred to as wage garnishment). This is a legal procedure which the creditor can proceed with after they have obtained a court judgment to receive outstanding payment.
A garnishee is a third party who may be served with a court notice to surrender money owed in a claim or settlement. There are a number of potential garnishees, including:
- the debtor’s employer, who can be required to garnishee the debtor’s wages,
- a financial institution at which the debtor holds an account, or
- a person that owes money to the debtor.
What is the process for initiating garnishment?
There are multiple steps which can occur throughout the garnishment process, several of which are outlined below:
The writ of enforcement
After filing your judgment with the court, the first stage in enforcing debt recovery is preparing a writ of enforcement. Once completed, this document is filed with the court clerk and then registered with the Personal Property Registry.
The garnishee summons
Completing a garnishee summons is the next step when enforcing a judgment through garnishment. This document is addressed to the garnishee and directs them to pay money to the court rather than the debtor.
The garnishee summons sets out necessary information pertaining to the judgment, including the amount of money owed and the source to be garnished, which is often either employment earnings, deposit accounts or money owing from other sources. The garnishee summons also contains a supporting affidavit by the creditor or their agent or lawyer. Therefore, the summons must be complete and accurate.
The garnishee summons then must be served on the garnishee, and an administration fee must be paid.
What steps must the garnishee take?
After receiving the garnishee summons, the garnishee is required to serve the debtor with a copy of it and subsequently complete the certificate of service on the debtor.
The garnishee then files a garnishee’s response with the court clerk, along with the certificate of service and confirmation of the amount being paid into court for the creditor.
The garnishee’s response contains information, including the amount the garnishee owes to the debtor and the amount being paid to the court. It can also include other information, for example, if the garnishee is of the view that they do not have an obligation to pay the debtor or that the obligation may be owed to someone other than the debtor.
The court will then advise the creditor by written correspondence if any funds have been paid into court.
What if the garnishee has insufficient funds to satisfy the debt?
If insufficient money is available to cover the debt on the day the garnishee summons is served, the debtor’s wages or accounts will continue to be garnished until the debt is paid in full.
Generally, a garnishee summons expires two years from the day on which the summons was issued. An exception to this rule is with respect to deposit accounts which expire after 60 days unless it is a joint account which applies only as a one-time obligation.
If the debt is not paid in full by the expiry of the garnishee summons, it can be renewed. A creditor can also reissue a summons to continue garnishing a joint account.
Can the debtor object to garnishment?
In order to stop the garnishment process or make any changes to the garnishment, the debtor will need to apply to the court for an order.
The court has the power to determine any matter or issue arising from civil enforcement proceedings. It can make any order necessary to ensure compliance with the legislation or to protect the interests of any person in property subject to civil enforcement proceedings, including a stay of enforcement.
What is the limit of debt that can be recovered through garnishment?
Limits do apply when it comes to the amount of debt that can be recovered through garnishment. The creditor cannot obtain more than the amount of the total judgment debt plus costs.
Regarding employment earnings, the debtor is entitled to a monthly exemption. The minimum monthly exemption amount that cannot be garnished is $800 plus $200 for each of the debtor’s dependents.
If the debtor makes over this amount, half of that can be taken up to the maximum exemption, which is $2,400 plus $200 for each of the debtor’s dependents. All employment earnings beyond this amount can be taken to satisfy the debt.
If the garnishee is a financial institution where the debtor has a joint account, the institution will only pay the creditor the amount which is considered to be owned by the debtor. For example, if there are two account holders, half of the funds can normally be obtained.
Contact DBH Law in Calgary for Assistance with Debt Collection Enforcement
If you are a creditor trying to collect an outstanding payment, the strategic litigation lawyers at DBH Law in Calgary can assist you in enforcing a judgment and recover your outstanding funds. We also work with debtors to defend them against unjustified collections and claims. For advice on debt collection or other litigation concerns, please reach out to us online or by phone at 403-252-9937 to schedule a confidential consultation.