Garnishment

How BC law treats it

Garnishment in BC is governed by the Court Order Enforcement Act, RSBC 1996, c 78, with procedures in the Supreme Court Civil Rules and the Small Claims Rules. The creditor applies with an affidavit for a garnishing order, which is served on the garnishee (the third party who owes the debtor money, such as a bank, employer or customer). The garnishee must pay the debts it owes the debtor into court, up to the amount stated, or file a dispute. A garnishee that fails to comply can face judgment against itself. Garnishment attaches debts owed to the debtor, such as bank balances, wages and accounts receivable. It does not seize land, vehicles or equipment. Those assets are reached through other remedies, such as a writ of seizure and sale or registering a judgment against land. After judgment, a creditor can garnish bank accounts, receivables and wages. Under section 3(5) of the Act, 70 percent of wages is exempt, subject to minimum monthly exemptions, so generally no more than 30 percent can be taken, and the court can vary the exemption (s. 4). A wage garnishing order is not continuing: it attaches only wages payable shortly after it is obtained, so a creditor must obtain a new order for each pay period. Before judgment, garnishment is available only in limited cases, generally where the claim is for a debt or liquidated amount, and wages cannot be garnished before judgment (s. 3(4)). Because prejudgment garnishment freezes funds before the claim is proved, the affidavit must be accurate and the creditor can be liable if it is misused. Money paid into court is held until the court orders it paid out, usually after judgment and once any competing claims have been dealt with.

What it means for your business

For a business owed money, garnishment is one of the most effective collection tools once judgment is obtained, especially against bank accounts and customer receivables. Many businesses also encounter garnishment as the garnishee, when served with an order to pay an employee's wages or a supplier's invoices into court. Ignoring that order can make the business liable for the debtor's debt. Every business should have a process for responding to garnishing orders promptly and accurately. Example: A Victoria marketing agency wins a $28,000 Small Claims judgment against a former client and garnishes the client's bank account. Separately, a Surrey retailer served with a garnishing order for an employee's wages pays the non-exempt portion of the next pay into court, and the agency serves a fresh order for each later pay period.

Risks and common mistakes

Ignoring a garnishing order served on the business as garnishee, which can lead to judgment against the business itself. Trying to garnish wages before obtaining judgment. Assuming garnishment can seize vehicles, inventory or equipment. Paying the debtor directly after being served with a garnishing order. Swearing an inaccurate affidavit to obtain a prejudgment garnishing order.