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Garnishment lets a judgment creditor intercept money owed to a debtor by a third party, like a bank. Learn how it works, when it’s effective, and the legal limits that apply in BC.
Last post, we talked about registration of judgments and how they can be an effective tool in collecting from a judgment debtor.
This week we talk about garnishment, another method which can be very effective to collect from a judgment debtor.
What is garnishment?
Garnishment is when a judgment creditor “intercepts” money which is owed to the judgment debtor by an unrelated party.
As an example: A bank holds money for a judgment debtor. The judgment debtor is entitled at any time to ask for that money. However, a judgment creditor who knows about that bank account can (through a court order) ask the bank to pay that money into court, instead. Once in court, the judgment creditor can ask the court to pay them that money in satisfaction of their judgment.
That is garnishment.
Garnishment can be a highly effective tool for collection. If someone owes the judgment debtor a large sum of money, having that money paid to the court is a relatively quick process.
Garnishment can be a more difficult process, however.
Garnishment requires knowledge of other debts. This means the judgment creditor needs to know details about the judgment debtor’s bank accounts, employment, or other sources of debts. If that information is unknown, garnishment is impossible.
Garnishment also requires there to be funds available. A judgment debtor might have a bank account with no funds available. If that is the case, no money will be paid.
There are also restrictions on garnishment. Only a portion of a judgment debtor’s wages can be garnished – meaning you cannot take an entire paycheque from a judgment debtor. Garnishment must follow strict procedural requirements or it can be reversed. Certain types of savings (such as RRSPs) are exempt from garnishment. Finally, garnishment pays the money into court, and the judgment creditor must apply to have the money paid from court to their account. That process can take some time, and the judgment debtor can object and try to explain why the money should not be paid out.
As such, garnishment is an uncertain tool. While it can be highly effective in some circumstances, it can also cost time and money and result in little benefit.
In our next post in this series, we discuss seizure and sale of other assets.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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