To garnish a commercial debtor’s credit card revenue in Ontario, you must obtain a Notice of Garnishment and serve it directly on their payment processor (such as Moneris, Stripe, or Square). Filing the enforcement forms costs approximately $144 CAD in Small Claims Court or $155 CAD in the Superior Court of Justice.
Securing a court judgment against an Ontario business is often only half the battle. When a corporate debtor refuses to pay, litigators and creditors must actively hunt for the debtor’s assets. Traditional bank account garnishments frequently fail because savvy business owners move their cash quickly or change banking institutions. However, if the business relies on daily customer sales-such as a restaurant in Toronto, a retail store in Mississauga, or an e-commerce brand in Ottawa-they must use a merchant terminal to process credit cards.
Targeting the merchant service provider (the payment gateway) is a highly effective, advanced debt collection tactic. 📍 By serving the legal order directly to the company that processes their daily transactions, you legally intercept the funds before they even reach the debtor’s bank account. This effectively chokes off their cash flow. Because corporate enforcement can be procedurally rigid, hiring an experienced business litigation lawyer from our directory is strongly recommended to ensure your documents are perfectly drafted.
Step-by-Step Process in Ontario
Executing a garnishment against a third-party payment processor requires precision. The merchant provider is legally referred to as the “garnishee,” and they will only comply if your Ontario court documents are flawless.
Step 1: Obtain a Final Court Judgment
Before you can seize any assets, you must win your lawsuit. 📄 You need a final judgment or order for the payment of money from either the Ontario Small Claims Court (for debts under $50,000 CAD) or the Superior Court of Justice (for larger commercial debts). Without this foundational document, no enforcement action can proceed.
Step 2: Identify the Merchant Service Provider
You must find out which company processes the debtor’s payments. You can often discover this by making a small test purchase at their retail location and looking at the receipt, or by inspecting the checkout page of their website. Common processors operating in Canada include Moneris, Stripe, Square, Global Payments, and Elavon. You must identify the exact legal name of the Canadian subsidiary to name them as the garnishee.
Step 3: Draft and Issue the Notice of Garnishment
Your lawyer will prepare a Notice of Garnishment (Form 20E in Small Claims) alongside a sworn affidavit detailing the amount owed, including post-judgment interest. 📝 You must file these documents at the local courthouse where the judgment was obtained. The court clerk will stamp and issue the formal Notice, legally compelling the processor to divert funds to the court.
Step 4: Serve the Processor and the Debtor
The issued Notice of Garnishment must be formally served on the corporate headquarters of the payment processor. Within five days of serving the processor, you must also serve a copy on the corporate debtor. Proper service is critical; if Stripe or Moneris is not served at their correct legal address in Ontario or Canada, their legal department will likely reject the order.
Step 5: Collect the Intercepted Funds
Once served, the processor is legally obligated to freeze the debtor’s incoming daily payouts and remit those funds directly to the Accountant of the Superior Court of Justice. 💵 The court will hold the funds briefly to allow the debtor to dispute the garnishment. If no dispute is filed, the court will mail a cheque to you or your lawyer, paying down the judgment debt.
How Much Does it Cost in Ontario?
Enforcement involves upfront costs, though these expenses are generally added to the total amount the debtor owes you.
- Court Filing Fees: Issuing a Notice of Garnishment costs $144 CAD in Small Claims Court, or roughly $155 CAD in the Superior Court of Justice.
- Process Server Fees: Hiring a professional to physically serve the documents to the processor and the debtor usually costs between $100 and $250 CAD per address.
- Lawyer Fees: Retaining a commercial litigator to handle post-judgment enforcement typically ranges from $300 to $700 CAD per hour, depending on complexity.
- Test Purchases: Spending $5 to $20 CAD at the debtor’s business to identify their payment processor.
How Long Does the Process Take?
Intercepting cash flow via a merchant terminal can be swift once the paperwork is approved. ⏱ Drafting and filing the Notice of Garnishment at the courthouse generally takes 1 to 2 weeks. Once the processor is served, they typically have 10 to 30 days to begin remitting the intercepted funds to the court. After the court receives the money, administrative processing and mailing out your cheque usually takes an additional 3 to 4 weeks. The garnishment remains active for years (or indefinitely, depending on the court level) until the entire debt is satisfied.
| Entity Involved | Legal Role in Process | Obligation Under Ontario Law |
|---|---|---|
| You (The Creditor) | Judgment Creditor | Must identify the processor and file accurate court forms. |
| The Debtor Business | Judgment Debtor | Must pay the debt; loses access to daily sales revenue. |
| Payment Processor | Garnishee | Must legally divert all cleared funds to the Ontario court. |
Frequently Asked Questions (FAQ)
Can a payment processor ignore the garnishment order?
No. If a processor like Moneris or Square ignores a valid Ontario court order, you can schedule a Garnishee Hearing. The court can potentially hold the processor directly liable for the amount they failed to remit.
What happens if the debtor changes their payment processor?
This is a common evasion tactic. If the debtor switches from Stripe to Square, your current garnishment becomes useless. You must identify the new processor, pay the court fees again, and serve a brand new Notice of Garnishment.
Can I garnish 100% of their daily credit card sales?
Unlike individual wages (which are capped at 20% in Ontario), corporate debts and merchant receivables generally do not have statutory percentage limits. You can typically garnish 100% of the funds owed to the corporate debtor until the judgment is paid.
Can I garnish a US-based processor?
If the foreign payment processor does not have a registered corporate presence or subsidiary in Canada, an Ontario court order may not automatically compel them. You would need to navigate complex cross-border enforcement laws.
Will the court notify me when money is received?
The court accounting office does not usually send proactive email updates. Your lawyer must periodically check in with the local courthouse clerk to see if the garnishee has deposited funds into the court’s trust account.
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