Judgements, Liens and Garnishments in Canada – No Need to Panic


Category: Personal Bankruptcy (48) comments

judgements-liens-canada

Knowing your rights is always important, whether in good financial times or bad.  It is important to remember that no matter what, life will go on. This is also true with something that seems so final like a judgement, lien or even a wage garnishment.

Even if a creditor gets a judgement against you, it does not mean that you will be at their mercy forever.  In a bankruptcy or a consumer proposal all your creditors’ actions against you are stopped one you file the paperwork.

This means that even if they have gotten a judgement against you, by filing a bankruptcy or consumer proposal, they cannot take any new actions, and all their old actions are also stayed at the date of filing.  Once the bankruptcy or proposal is completed, any seizure, garnishment, or lien are completely taken away.

Remember, before a judgement can be enforced, there is usually a delay period that the creditor must wait, so you have a little bit of time to get things in order.  These delay periods will vary depending on the type of action and the province you are in. To find out more, speak with a trustee close to you.

If a creditor has already taken action, perhaps they have already started a wage garnishment, a bankruptcy or proposal can stop the garnishment almost immediately. As soon as you file, your trustee will notify your employer and they can remove any garnishment that has not yet been processed by the payroll department.

The only lien that will survive after a bankruptcy or proposal is if it is filed by Canada Revenue Agency (or in Quebec, Revenue Quebec), because a lien against property you own once it is filed by CRA cannot be removed by a bankruptcy or proposal. However, if you owe money to CRA and they have not yet filed a lien, then those tax debts can be included in your bankruptcy or proposal which will stop any future actions.

If someone has obtained a judgement against you, or used a judgement to get a seizure lien or garnishment against you, contact a Trustee right away, to see what you can do!

Leave A Comment

  1. R.M. Robinson

    Manitoba Public Insurance got a court judgment against D. in 1989. It was never renewed. D. made small sporadic payments until 2019. Is the Judgment enforceable? When replying, please cite applicable law.

    Reply
    1. Ted Michalos

      Sorry, we are insolvency practitioners, not lawyers. I suggest you contact the Law Society and ask them whether the judgment is enforceable.

      Reply
  2. Dean Meisner

    I have two judgements registered in Nova Scotia one from Scotia Bank from Dec. 15, 1999 and another with NS workers compensation against me. I filed personal Bankruptcy with KPMG in New Brunswick in 2002 and was discharged in 2003. Both of these judgements were from a failed business and both were covered in the bankruptcy. Both took the judgements and related accounts off of my credit report in 2003.
    Last week I tried to buy a house and my lawyer found these judgements still registered at the land office. What can I do to get rid of them? I don’t have the paperwork from the original bankruptcy and KPMG doesn’t have them after 10 years either. I tried to get copies from the Superintendent of Bankruptcy office but they said they destroy them after 10 years also. I do have the file number as well as the court file numbers and my copies of my credit reports from after my discharge as KPMG instructed that I order to check for mistakes. Neither of these judgements ever show up on any of my credit reports even to the present date.
    Is there something or someone I can contact to help get this resolved?
    Thank you for any response

    Reply
    1. Ted Michalos

      All you can do is find out exactly from the Land Registry Office what they require in order to remove the judgments. I suspect the simplest thing will be to request a current Writ/Judgment search from the nearest Court House. If the items do not appear on the Court systems’ records then the land Office should accept that as proof and remove them. Good luck.

      Reply
  3. Gerry

    I have just been denied my LTD claim because they say I work, which is false. I live on a farm and they claim I work for my spouse because she runs a business on the property. My disability does not allow me to be able to work, they just make claim. We have only been married 2 years and now I fear for my wife losing her property. They are claiming I owe them over 200K because of overpayments for 7 years. No judgements have been made, but this stress is cause many issues in my life. Can they take my wife property if they win judgement?

    Reply
  4. suconne saunders

    I have a question regarding small claims court in Ontario. I Barrow 3500 dollar from a friend she took me to court. I have lost my job in January so I’m not able to make the payments until I have secure employment. I received a email from her yesterday that she will be placing a lien on my car for 2800. I’m panicking is there any one that really understands about lien my car is older car 2006 Honda. I bought outright. Can she take away my car

    Reply
    1. Ted Michalos

      No she cannot. She can’t even place a lien on your car unless she loaned you the money to buy the car in the first place. She can take you to Court and get a judgment that will allow her to garnishee your wages if you are working and/or seize your bank account, but she can’t simply put a lien on your car.

      Reply
  5. Marie

    Having declared joint bankruptcy back in 1998 with my former spouse, I hope to avoid it again as I don’t want a 14 yr stain on my credit file. I’d like to do a proposal instead.
    Two issues though – one is that most of my income is from CPP (I have a small business that helps me pay bills) and the other issue is I’ve heard Royal Bank turns down proposals often and they do have a writ/judgement on my home which is due to expire in 2021. Can I fight a renewal?
    Also I have approx $113k left on the mortgage but the cost to sell and move and with $10k allowable equity I wonder if I did have to go bankrupt, would I have to sell my home?
    By the way, they aren’t my only creditor. I owe them 15k and there is another 15-18k in debt spread amongst various creditors so I wonder if their vote would count less against other creditors if they voted a yes.
    Can you help clarify that n these points/questions please?
    I feel like I’m really stuck with no real option, except for a consumer proposal acceptance.

    Reply
    1. Ted Michalos

      First, RBC often counter offers with consumer proposals – that means they ask for a higher monthly payment. They rarely reject a proposal outright. The starting offer should be 1/3 of your debt or as much as they may receive in a second bankruptcy. Every dollar you owe is a vote and if RBC represents less than half of the total unsecured debt then the other creditors may out vote them anyway…

      The Writ in and of itself does not complicate a proposal – once you file the writ is “stayed” (cannot be enforced) and once the proposal has been completed the debt is gone so the Writ is void. The lawyers may try and charge you a fee to remove the Writ, but it won’t be a big number and it is negotiable.

      If you do end up in a second bankruptcy then your creditors are entitled to your share of the equity in your home. If you can afford to make monthly payments to cover your equity then the house won’t have to be sold. If you cannot then it may very well be seized and sold for the benefit of your creditors.

      You’ve got enough going on in this post that you really should call a licenced insolvency trustee to discuss your situation and your options.

      Reply
  6. Cat

    Hi, I have a deficiency judgment from a previous property 20 years, would I be able to get a new mortgage without getting lien against the new property.Thank you

    Reply
    1. J. Douglas Hoyes

      Hi Cat. That would depend on whether or not there was a judgement against you for the deficiency, and whether or not it appears on your credit report. I would suggest you start by reviewing your credit report, and then talking to a real estate lawyer to see if there are any potential issues.

      Reply
  7. Nafisa

    Dear Sir,

    I have a MIF Deficiency Judgement against me since 2016. It appears in my CRA profile as well. How long will this stay in my CRA records? Thank you.

    Reply
    1. Ted Michalos

      Likely until it has been dealt with… Judgments expire, but may be renewed so if they want the Judgment to remain it will until it has been cleared by payment or some form of insolvency procedure.

      Reply
  8. Roger

    HI I had a judgment registered against my property by the Real Estate council of BC, I only own 1/100 of that property, so my question is can they take anymore than the 1% and I understand that a debtor can claim upto $12000 before they can get any money , how does one do that and I am correct in thinking that they would only get 1% after the mortgagee has taken their share. Now does that also including real estate commissions and lawyer expenses

    Reply
  9. Andre

    I have a judgment against me( not CRA) and want to do a proposal. They have placed a lien on my property. Once the proposal is accepted I want to sell my house to pay it off. I was told that I would have to pay the entire proposal off before the lien would be lifted. Can I use the proceeds from my house to pay this off?

    Reply
    1. Ted Michalos

      Before you do anything else please check to see if the Judgment Creditor has registered a Writ with your local Sherriff’s office, or if they were awarded a specific charge that they allowed them to register on title. In 99% of the cases it is a Writ which is not a charge on title. So if you file a proposal the Writ is unenforceable. If the creditor refuses to remove it (and they don’t have to until the proposal has been paid in full) then when you sell the house the money may still have to be paid to the Sheriff, the Sheriff has to pay it to your trustee (not the creditor) and your trustee will have to return it to you. In most cases the creditors agree to simply lift the Writ to make the process simpler.

      Have a detailed discussion with your trustee before you sign anything. If you are in Ontario feel free to give us a call – I’ll be pleased to explain all of this in greater detail.

      Reply
  10. Peter

    Hello,

    I tried to post on another page about debt collectors but the page seems to be not working. I live in Montreal, Quebec and I have a dept of about 8000$ to my credit card for about a year and a half. It has since then been sold to a collection agency. I know they have 3 years to take legal procedures against me but how can I know? I’ve moved and changed my number since then…They are still calling my mother but she isn’t answering. If they do get a judgment against me, can they take money from any bank account or just the one associated with my credit card? Can they do this if I’m unemployed? Also, if they do get a judgment against me I understand they have 10 years to garnish the money?

    Thanks for your time.

    Peter

    Reply
    1. Ted Michalos

      It sounds like you understand your rights and the various timelines. If a credit gets a Court Order (Judgment) against you then they may use a Writ of Seizure to attach to any bank account they may be able to locate. You are required to advise your creditors when you move so that they have current/accurate address information on your account. If you haven’t done that your creditors are simply required to use whatever address of record they have for you. You may not know if you’ve been sued and a judgment issued against you. You may check with the Court system directly. A judgment may (should) also appear on your credit report.

      Reply
  11. Michael

    How many liens can there be attached to a property? Meaning, what if I was to put in a lien on my own house – would anyone else be able to put one on it too after that, on top of mine?

    Reply
    1. Ted Michalos

      There is no limit per se, but once the existing liens exceed the value of the property then there is not much point in adding more. If you registered a lien on your own property there would have to be some legal basis to do so. There is no point in registering a lien for $1 million dollars if there is no basis for the charge. Similarly, if someone is suing you then your ownership interest in the lien is something they could attach to (a lien on your lien so to speak). You’d better talk to a lawyer before you do this…

      Reply
  12. Peter

    Hello,

    Thanks for answering! I’ve checked on Transunion and in the ”Public records” there is nothing so I take it there is no judgment against me? Also, when you say I should let my creditors know when I move does that mean I should let my bank know? On my credit reports they (my credit cards) do not show in the collection accounts but they do have ”Bad Debt Write Off” as remarks and status : Collection / Charge-Off. I see other debts (under 1000$) in the collection section with the agency names…Does that mean that my credit cards debts were not transferred to a collection agency? Meaning the calls and letter were for my other small debts?

    Reply
  13. Peter

    Sorry for my last post I know that my credit cards debts are now with the collection agency…I was just confused by the credit report. The public records section is still clean and I’ve changed my address on my bank’s profile so at least I should know if they sue me. I’ve read on another website that it’s best to open up another bank account as they can only freeze the one associated with my debt…Also, it seems I’m not broke enough to do a consumner proposal so at this point I guess my only option is to wait another year and hopefully they dont sue me! I would like to pay it to cleat that but I don’t have the full amount and the person I consulted told me to pay the collection agency which semms to be bad advice…

    Reply
  14. Daryl

    Hello,
    I have recently been discharged from a bankruptcy (Saskatchewan). I had little equity in the home so it was advised to go this route by the trustees. My understanding was that after discharge the liens (judgements) would be removed. I’d like to leave my share of the property to my spouse and move on with life, but now it seems I have to obtain a court order to have the liens removed, or maybe they can’t ever be removed? The liens are not CRA, and and you stated previously, CRA is the only one that will survive a bankruptcy. I’m confused and have read conflicting statements regarding liens after bankruptcy discharge.

    Thank you for your time in answering mine and all these other questions I see posted.

    Reply
    1. J. Douglas Hoyes

      Hi Daryl. This is a complicated question, and without more information it’s impossible to answer here. I suggest you contact your trustee and ask for their advice regarding the liens (since they were the ones who advised you to go this route) and see what they suggest. Depending on the answer, you may need to also consult with a lawyer, but I would start with the trustee.

      Reply
  15. Ary

    I had a legal judgement filed against me (nova scotia), I’ve paid the debt owning in its entirety and have the certificate of satisfaction – how long does the legal judgement stay on my credit report? I’m looking to buy a home next year and really don’t want this on my Equifax or TU reports.

    Best,
    Ary

    Reply
    1. J. Douglas Hoyes

      Most debts are purged after 6 years, but that time limit does not necessarily apply to judgements, because the credit bureau is not necessarily informed that the judgement was satisfied. I would recommend providing the certificate of satisfaction to the credit bureaus and request that they remove the judgement, as it no longer exists.

      Reply
  16. Kaylee

    My neighbour took me to small claims in Nova Scotia and I had lost over a discrepancy with trees being cut down that were later found to be on her property, long story short, I am Now required to pay her just under $10k.

    Can a small claims judgement be included in a consumer proposal?

    Reply
    1. Ted Michalos

      Yes it can. Keep in mind proposals are “offers” that your creditors get to vote for or against. You need more than 50% of the total amount you owe to agree for it to be accepted. You should assume the $10,000 judgment will vote no so you need enough other debts to out vote them…

      Reply
  17. John

    I owe 49k to the bank for unpaid margin on stocks, there is nothing on credit file about this margin,also I changed my bank.. Now collection agency sent me a letter, they are planning to sue me, I have a joint property with my wife, can they put lien on it or force us to sell? Why there is nothing in my credit file yet? What can be garnished besides accounts and wage?

    Thank you

    Reply
    1. J. Douglas Hoyes

      Hi John. I don’t know why nothing is appearing on your credit file yet. It may be that the brokerage firm doesn’t regularly report to the credit bureau. The collection agency will attempt to collect, and they could sue you, or have the bank sue you if you owe the money and don’t pay. If they sue you and get a judgement against you, yes, they could put a lien on your property. I suggest you either speak to a lawyer or a Licensed Insolvency Trustee to review your options.

      Reply
  18. Susan Moss

    Hello,
    I have a 1400.00 judgement from BC that is against my closed business in Alberta. I had to close the business permanently, last October 2020 due to Covid. The judgement names the business, but that business no longer exists and has no money in order to pay. Can the claimant come after me personally to get the money? I have some stock left over from the business. Can I offer that up in lieu of payment? Any help would be sincerely appreciated. Thank you for your time.

    Reply
    1. Ted Michalos

      If you were not named in the Judgment then you are not personally liable for the debt. To pursue you personally they’d have to sue you personally – no basis for that unless you signed for the debt personally (as opposed to as the company’s rep).

      Reply
  19. Paula

    First, thank you for being so generous with your time and information–your blogs are awesome!

    My question: Is there a delay period between a default judgement and the start of wage garnishments/lien on home, etc. I’ve been sued and won’t be defending the claim. My last day to file the defence would be August 10 but I cannot see a Trustee to file bankruptcy/proposal until August 12. Should I be freaking out and calling every other Trustee in the province (NS) to get an earlier appt?

    Just to clarify, because I read conflicting information…once a default judgment is awarded, a lien can be placed on my home…if that were to happen, would a bankruptcy/proposal get rid of the lien?

    Reply
    1. Ted Michalos

      Stay with me as this confuses professions as often as it messes up the general public. A default judgment allows the person that sued you to obtain a Writ of Seizure or Execution. The Writ is registered against the tile of your house, but it is not a charge like a mortgage. When you file for bankruptcy the Writ is “stayed” – cannot be enforced. When you are discharged from bankruptcy the debt is discharged and the Writ is no longer valid. So you don’t need to rush all over to file before the notice period expires. In most cases, the person doing the suing doesn’t apply for a Default Judgement for a few days after the notice period expires anyway…

      To be sure I’d call a local trustee and ask for 5 minutes on the phone to confirm what I am telling you. I am in Ontario, but the laws in Nova Scotia should be similar.

      Reply
  20. Lisa

    Hi! I just did a credit check with Credit Karma. Under public there is a judgement that says filed Mar 17,2015 from Capital One for $7500, I’m in Ontario. I was never summoned to court, had received no papers regarding a judgement & this is the first I’ve heard of such a thing. I worked for about a year after the judgement but didn’t get garnished. My house is in mine & my mother’s name as joint tenants, so I’m assuming they couldn’t put a lien on my house? There is a case number. How do I find out the details of this judgement & advice on what I can do, thank you.

    Reply
    1. J. Douglas Hoyes

      Hi Lisa. The first step would be to contact the court and ask for a copy of the judgement. Whether or not you were properly served is a moot point now, since they have a judgement. Capital One could put a lien on your house, but for $7,500 they either decided it wasn’t worth it, or they don’t know about your house. If you have other debts, you could consider filing a consumer proposal. If this is your only debt, or your other debts are manageable, you could ignore it, since it was a long time ago that Capital One obtained the judgement, so it does not appear that they are aggressively enforcing it. However, it is a judgement, so it may impact your ability to renew the mortgage, or borrow again in the future, so your other option is to contact Capital One and see if they are willing to make a settlement with you. If they know you own a house they will likely want the full amount owing. They may or may not be willing to accept a payment plan. Feel free to contact a Licensed Insolvency Trustee or a lawyer if you would like to explore your options in more detail. Hope that helps.

      Reply
  21. Kev

    Hi

    I have business loan with bdc for around $160000 in BC for purchase of existing business and due to covid and business issue with the franchisor and they by playing dirty games we were forced to close down. And we were not able to pay any payments to bdc as the business is closed . And now this shope is running by the same franchise head office with out paying any thing or taking over the loan.Now bdc put judgement of $170000 to my property.I dont know how to approach this and solve. Any chance of loan forgive ness ? Or sue the franchise for the loss? Or charge The BDC loan to franchise?

    Reply
    1. Ted Michalos

      I am sorry – this is an insolvency site – not a site for free legal advice. you need to speak to a lawyer specializing in contracts and commercial laws.

      Reply
  22. Lacy

    Hi, I’m trying to find out if I ever had a judgement. I checked my credit report and it doesn’t show any judgments, is there any other way to find out if I EVER had a judgement (20 years history)?

    Reply
    1. J. Douglas Hoyes

      Hi Lacy. If the judgement is not on your credit report, it probably doesn’t exist. However, the only other way is to check with every court, to see if they have a judgement registered against you (which is difficult, because you’d have to check with the court in whatever city you may have been sued in at some point in the past). Hope that helps.

      Reply
  23. wil stevens

    we had a situation where our only option to replace our furnace was through a questionable company. of course they applied a lien on the furnace. unfortunately i am looking at possibly having to declare bankruptcy. once discharged from bankruptcy, would that clear the lien?

    Reply
    1. Ted Michalos

      No, if they have properly registered the lien then it will survive a bankruptcy. Bankruptcy deals with unsecured debts – if a lien has been properly registered the debt is secured and therefore excluded from the bankruptcy unless you surrender the security. Sorry.

      Reply
  24. Cam Ellison

    I have an incorporated business with a judgement against it but since after 2 years, the debt still remains unpaid, he’s going after me personally looking for any inconsistencies in my company books that could allow him to sue me personally. I shouldn’t have anything to worry about but there’s been odd rulings already in the same small claims court so I’m a bit concerned. If he wins the ability to sue me personally, can he put a lien on my home? Can personal bankruptcy get rid of that lien? If it is determined that I’ve got equity in my home(debatable due to size of mortgage)is the equity up for grabs and even though I thought your house and belongings were safe in a bankruptcy, I could be forced to sell? Also how long does the house have to be considered your principle residence to be protected by bankruptcy? This house is in the later stages of being built and has painstakingly taken 9 years to get it this far. I wouldn’t want to lose it now just months from being able to call it home. On paper I’ve owned the property for 9 years and the home has been there about 7 years but never has been lived in or considered my primary residence because it hasn’t been finished and therefore never got a final inspection.

    Reply
    1. Ted Michalos

      I understand that you are stressed out about this, but I suggest you contact a trustee directly in your area to discuss your situation. That will be more beneficial than general answers from a website. If you file for bankruptcy and their is equity (net value) in your home then it may come into play. It is important that you understand the process and the calculation before you decide to file.

      Reply
  25. Anne

    2012 I let my credit card lapse at $7000 I didnt know I got sued but in 2020 when I for the very first time checked my credit report i saw a judgement showed up on my credit report from 2014. I couldnt find anything anywhere to contact anyone so I left it and now today I got a letter in the mail from the law firm saying I have 10 days to pay $19,000. I finally got my life back on track and now I’m worried, I’m a co signer on a mortgage that is only 4 months old and I have a car payment. Can they go after those? I cant come up with $19,000 in 10 days. The judgement hasnt been on my credit report for a year now.

    Reply
    1. Ted Michalos

      I think you should contact a lawyer to discuss your options and the timing of all of this. A Writ normally expires in Ontario after 6 years unless they apply to renew it before it expires. You definitely want to look into this further before you make any payments to anyone.

      Reply

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