Will filing a consumer proposal stop wage garnishments and collection agencies?

Yes. Upon filing a consumer proposal, you are protected from the commencement or continuation of any proceedings by your creditors to collect their debt. Therefore, a wage garnishment and collection calls would stop. The legal term for this is called a “stay of proceedings”.

In practice, your Licensed Insolvency Trustee will ask you for the contact person in your company’s payroll department as well as a contact person for the creditor that is garnishing you. After your consumer proposal has been filed, the Trustee will provide documentation to your company’s payroll and the creditor advising them that you’ve filed a consumer proposal. This will stop the garnishments immediately.

Moreover, if money has already been sent to the Court Sheriff’s office by your payroll department, the Licensed Insolvency Trustee will write a letter to that office demanding a return of the garnished funds before the Sheriff remits it to the creditor.