Car Loan With a Wage Garnishment in Alberta

It depends on the file. A garnishment means part of each paycheque goes to someone else to pay a debt. A lender reading your file usually wants to know three things.

• How much pay do you keep? The garnishment comes out before the money reaches you, so your deposits are the smaller amount. A car payment has to fit the pay you actually keep.
• What debt is behind it? A garnishment is one way a debt gets collected. A lender will want to know what the debt is, how much is left and whether it is going down.
• When does it end? A garnishment that is nearly finished is a different file from one that has just started. The section on end dates below explains why.

Lenders differ. Some will look at a file with a garnishment still running. Others will want it finished first. We cannot promise what any lender will decide. We review every application and call you back, and every lender decides each file.

If the garnishment followed other credit trouble, our guides to car loans with accounts in collections and getting a car loan after a repossession cover those parts of the file.

A lender can see a garnishment in three places.

• Your pay stubs. A garnishment usually shows up as its own deduction line, with the pay you keep below it.
• Your bank statements. Your deposits are the pay after the garnishment.
• Your credit report. The Financial Consumer Agency of Canada says a credit report can list court decisions related to your credit and debts sent to collection agencies. If a court judgment is behind your garnishment, it says credit bureaus usually keep the judgment on your report for 6 years, and Equifax says the same.

Other kinds of garnishment, such as for support, fines or taxes, may not show up on a credit report the same way. The way to know is to read your own report. Equifax says you can order a free copy of your credit reports from Equifax or TransUnion, the two main bureaus. Check what is on it before you apply.

It depends on who is collecting. This section covers a garnishment that comes from a court judgment under Alberta’s Civil Enforcement Act. Support payments, government fines and federal debts follow other rules, shown in the next section.

Here is how the Act and its Regulation work. Each month, the garnishment takes only the part of your net pay that is above a protected amount.

• Net pay means your pay after income tax, Canada Pension Plan contributions and unemployment insurance (EI) contributions, and nothing else.
• The protected amount starts at $800, plus $200 for each dependant. It then grows by half of every dollar of net pay above that, up to a ceiling of $2,400, plus $200 for each dependant.
• A dependant includes your spouse or adult interdependent partner and a child under 18 who lives with you.
• A court can change these amounts for a particular case.

For example, with $3,900 of net pay a month and no dependants, the protected amount is $2,350. The garnishment takes the rest, $1,550, and you keep $2,350. This illustrates the formula; it is not legal advice, and your own figures can differ.

No. The rules depend on what the debt is. Here are four common kinds, from the government pages listed at the foot of this page.

If you are not sure which kind you have, the papers your employer received say who sent them. A lender will usually want to know too.

Because a lender is reading your pay for the months ahead, not just today. A garnishment with a clear end changes what your pay looks like once it stops. One with no clear end leaves a lender guessing.

For a court garnishment in Alberta, the Act sets an outer limit: a garnishee summons expires 2 years after the day it is issued. But the creditor can renew it, in the 60 days before it expires, for another 2 years. The Regulation says there is no limit on the number of times it can be renewed.

It can also end sooner. The Act says a garnishee summons stays in effect until the earliest of four things:

• it expires;
• your employer has paid the full amount on the summons to the court clerk;
• the creditor tells your employer it is no longer in effect; or
• a court ends the garnishment proceedings.

So a date on the papers tells you when the garnishment ends unless the creditor renews it. What a lender can rely on is proof that it did end: the creditor’s notice that it is no longer in effect, and pay stubs without the deduction line. If the creditor sends or copies that notice to you, keep it. The other kinds in the section above end by their own rules.

Bring what shows your pay, the garnishment and where it stands. Having it ready saves a lender from chasing it.

• Your last two pay stubs. They show the garnishment line and the pay you keep.
• A copy of the garnishment papers. Your employer received them. The Canada Revenue Agency says it sends the person who owes the debt a copy of any garnishment request. If you do not have a copy, ask your payroll office or whoever is collecting.
• Proof of where it stands: what is still owing and when it should end. A letter from the creditor, the court or the agency collecting is the best proof.
• If it has ended: the notice or letter that says so, plus a recent pay stub without the deduction line.
• The usual papers: government photo ID, proof of address, a void cheque and recent bank statements.

The quickest start is the online application. We review every application and call you back. Or call us at (825) 736-4438. If your pay is not the usual kind, see what car lenders verify when you work.

This is where legal advice starts, and we do not give it. Here is what the government pages say.

• A court can change it. The Regulation says the Court, on application, may modify the minimum or maximum employment earnings exemption. That is a question for a lawyer.
• A consumer proposal or bankruptcy can stop it for the debts it covers. The federal Office of the Superintendent of Bankruptcy says the stay of proceedings stops most collection actions, including wage garnishment. It also says the stay usually does not apply to secured debts, like a car loan, or to child or spousal support. See car loans during a consumer proposal for the financing side.
• A licensed insolvency trustee can go through your options. The Office says that if you are facing serious financial difficulties, you will want to meet with one, and that trustees typically do not charge for the first meeting.

We cannot give legal advice or negotiate with the creditor. We can look at your file as it stands today.

The same payment takes a bigger share of what you keep while the garnishment runs. That is one reason lenders ask when it ends, and why a smaller loan or a bigger down payment can matter more when part of your pay is spoken for. To try your own numbers, use the payment calculator. For how pay and credit fit together, see how Alberta car loans work with good income and bad credit.