A default judgment in Canada allows a creditor to automatically win their lawsuit if you fail to file a defence within the strict 20 to 21-day provincial deadline. This legal order gives them immediate power to garnish up to 20% to 50% of your wages (depending on the province) and freeze your bank accounts.
When you are struggling with overwhelming debt, opening legal mail is the last thing you want to do. However, burying your head in the sand when served with a Statement of Claim leads directly to one of the most severe legal tools available to creditors: the default judgment. In the Canadian legal system, this judgment means the court essentially accepts the creditor’s claims as absolute truth simply because you did not show up to tell your side of the story. 🚨 Once this judgment is entered, the creditor transforms from someone simply asking for money into an entity with the power of the state behind them.
The impact of a default judgment is aggressively enforced across all provinces. Whether the judgment is issued by the Superior Court of Justice in Ontario, or the Supreme Court in British Columbia, the resulting collection methods are fierce and highly disruptive. 🍁 From garnishing your hard-earned wages to placing a permanent lien on your family home, creditors will not hesitate to use these tools. Fortunately, if you act swiftly, there are established legal avenues to set aside this judgment or halt it entirely.
Step-by-Step Consequences & How to Handle a Default Judgment
If you have recently discovered that a default judgment has been entered against you in cities like Ottawa, Edmonton, or Winnipeg, time is of the essence. The longer you wait, the harder it is to convince a judge to reverse the decision. Here is how the process generally unfolds and what steps you can take. 🏛
Step 1: The Creditor Enforces the Judgment
Once the default judgment is signed by the court registrar, the creditor can immediately apply for enforcement orders. They will likely send a Notice of Garnishment directly to your employer or your local bank branch. 🏦 Suddenly, you might find that a significant portion of your pay cheque is missing, or that your entire chequing account has been frozen, leaving you unable to pay rent or buy groceries.
Step 2: Act Fast to Gather Legal Advice
The moment you realize a judgment exists, you must seek professional guidance. Judges do not look favourably upon individuals who know about a judgment but wait months to address it. 🏃 Contacting a local debt defence lawyer or a Licensed Insolvency Trustee is critical. They can quickly evaluate whether you have valid grounds to ask the court to reopen the case.
Step 3: Draft a Motion to Set Aside the Judgment
To reverse the situation, your lawyer must file a formal Motion to Set Aside the Default Judgment at the local courthouse. This requires a highly detailed sworn Affidavit from you. ⚔ You must convincingly explain exactly why you failed to file a defence on time (e.g., medical emergency, improper service of documents) and prove that you have a genuinely arguable defence against the original debt claim.
Step 4: Attend the Motion Hearing
You or your lawyer will need to appear before a judge or a master in court. During this hearing, the judge will weigh your reasons for the delay against the prejudice the creditor might suffer if the case is reopened. 🗣 If the judge agrees with your motion, the default judgment is essentially erased, and you are granted a fresh opportunity to file your proper Statement of Defence.
Step 5: Consider Insolvency Protections
If the judgment cannot be set aside because the debt is entirely valid and you simply cannot pay it, federal options exist. Filing a Consumer Proposal or declaring personal bankruptcy under the federal Bankruptcy and Insolvency Act immediately halts all wage garnishments and bank freezes, overriding the provincial default judgment. 🛡
How Much Does it Cost to Fight a Default Judgment?
Attempting to overturn a default judgment is considerably more expensive than defending the initial lawsuit on time.
- Court Filing Fees: Filing a formal motion typically incurs court fees ranging from $120 to over $300 CAD, depending strictly on the provincial court tariff. 💵
- Lawyer Fees: Drafting motion records and attending a hearing requires significant legal work. Expect lawyer fees to range from $1,500 to $4,000 CAD for this specific procedure. 💼
- Cost Awards: If you lose the motion, the judge may order you to pay the creditor’s legal costs for attending the hearing, which can add another $500 to $1,500 CAD to your burden. 📉
| Potential Expense | Estimated Cost (CAD) | Notes |
|---|---|---|
| Court Motion Fee | $120 – $350 | Mandatory government fee to request a hearing to set aside the judgment. |
| Lawyer Representation | $1,500 – $4,000+ | Highly variable depending on the complexity and local hourly rates. |
| Consumer Proposal | Varies (Based on Debt) | An alternative that stops the judgment entirely without fighting it in civil court. |
How Long Does a Judgment Last?
A default judgment is not a temporary inconvenience; it has incredible longevity. In provinces like Ontario and British Columbia, a civil judgment is generally valid for 10 years, and creditors can easily apply to renew it for another 10 years. 📅 Furthermore, it will remain as a severe derogatory mark on your Equifax and TransUnion credit reports for up to 6 years from the date it was filed, severely damaging your ability to secure a mortgage or a car loan.
Frequently Asked Questions (FAQ)
Can a default judgment result in my home being sold?
Yes. Creditors can register the default judgment as a writ or a lien against your real estate. While forcing the sale of a home is expensive and less common, it prevents you from selling or refinancing the property without paying the debt first.
Can the CRA get a default judgment against me?
The Canada Revenue Agency (CRA) does not even need to sue you to get a default judgment. Under federal law, they have super-priority powers and can garnish wages or freeze accounts without going through the standard civil court process.
How much of my pay cheque can they garnish?
Garnishment limits are set by provincial law. In Ontario, they can take up to 20% of your net wages. In other provinces, it can range higher, though exemptions exist to ensure you maintain a basic standard of living.
Will changing jobs stop the garnishment?
Only temporarily. Once the creditor discovers your new employer through provincial registries, credit reports, or standard skip-tracing, they will simply serve a new Notice of Garnishment to your new workplace.
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