Credit expert warns New Brunswickers about new law allowing wage garnishment
Law went into effect in December allowing creditors to garnishee wages with court order
A Saint John credit counsellor is warning New Brunswickers about a new law that could allow creditors to garnishee the wages of people who owe them money.
The Enforcement of Money Judgments Act came into effect in December.
The law would, for the first time in New Brunswick, allow creditors to take borrowers to court to have their wages garnisheed.
"For 40 years we've not had a money enforcement act and creditors have threatened, or collection agencies have threatened, 'We're going to garnish your wages', said John Eisner, the president of Credit Counselling Services of Atlantic Canada.
It was nothing more than a threat.
"But now with the new act, if they have a judgment, they can act immediately."
In a statement late last year, Justice Minister Andrea Anderson-Mason called the new law a "complete overhaul."
"In many cases people who have received a judgment in their favour struggle to receive what they are entitled to," said Anderson-Mason.
"This act is being brought into force to address this problem and modernize the law."
Eisner said the new rules would exempt some earnings, such as pensions and RRSP contributions, but he's concerned about how it will be determined what percentage of earnings can be taken.
"The people that are going to be determining [the percentage] are the sheriffs or the bailiffs," said Eisner.
"Certainly that would not be their expertise."
Eisner is also concerned about the potential stigma on employees who have their wages garnisheed, since the employer would have to be made aware of the garnishee order.
And, he worries that creditors will use the new law as an intimidation tactic.
"I think it'll fall into the wrong hands," said Eisner.
"People [will] be threatening and intimidating people saying 'we're going to garnish your wages' when in true reality they may not be able to. They need to have a judgment placed on them in order for that garnishment to work."
Eisner's advice is to deal with any debt issues now, before they have a chance to work their way through the court system.
"It's a new year. Maybe it's time to take a good hard look and say 'let's get someone to properly look at it,'" said Eisner.