In the current economic crunch, wage garnishment can hit you where it hurts and adversely affects your ability to pay your bills. It can last from a few weeks to months and worsen your already dire financial situation. Wage garnishments can leave you without the income you need to survive or care for your family. However, certain measures can help prevent this legal action by your creditors from ruining your financial situation.
Wage garnishment is when a certain amount of money is legally retained from your paycheck and handed over to another party instead of your bank account. It’s a court-ordered judgment directing a 3rd party, say, a creditor, to seize your wages from your employer to settle unpaid debts. This is a common debt collection used by debt collectors to ensure you pay back what you owe.
The third-party tasked with collecting the garnished wages is often your employer, and this form of debt collection is used to recover unpaid debts such as credit card debts. The Consumer Credit Protection Act limits what can be garnished from your wages, but exceptions exist. These include defaulted student loans, unpaid taxes, bankruptcy orders, delinquent child support, and voluntary wage assignments. In these cases, as the debtor, you are entitled to relief if you are facing financial difficulties due to wage garnishment.
For your wages to be garnished, a creditor must obtain a court order showing you owe them money and have defaulted on payment. After getting the money judgment, they send the requisite documentation to your employer, directing them to remove a certain amount from your wages to repay your debts. Certain creditors don’t need to get a court order to garnish your wages. This includes debts such as unpaid taxes, alimony, federal student loans, or child support.
That said, you still have certain rights in these proceedings. You will get a notice of the garnishment order, which allows you to protect or exempt some of your wages from garnishment. You can also file for Chapter 7 or Chapter 13 bankruptcy. Additionally, federal law bars employers from firing you to avoid processing garnishment payments.
Under the Consumer Credit Protection Act, the garnishment amount is deducted from your disposable income and has to be either lower than 25 percent of your weekly disposable income exceeding $290 or any amount greater than 30 times the weekly minimum wage ($217.50). If your disposable income is less than $217.50, you do not receive any wage garnishment. However, if your weekly wage is higher than $217.50, they can garnish your wages. For disposable income above $290, only a maximum of 25 percent can be garnished.
Wage garnishment can be embarrassing and even worsen an already tenuous financial situation. Luckily federal and state laws offer several options for debtors to escape wage garnishment. Here are a few you can use to salvage your income and keep that much-needed money in your salary.
Wage exemptions are a type of wage protection that prevents garnishing creditors from taking certain wages or more than a specified amount. This is to allow debtors to pay for basic necessities. Every state has exemptions that allow you to safeguard your wages, and depending on your situation; you can fully or partially protect your income. Specific kinds of income, such as social security, retirement funds, disability, alimony, or child support are exempt from garnishment.
Before you can protect your income, you must file a claim of exemption by filing with the court that issued the garnishment order. You need or include your name, the name of the creditor suing you, and the case number. You also need to describe the exemption that will enable you to retain the greatest amount of your wages and other requisite documentation, such as proof of your dependents.
Once the hearing is set, make sure you attend it, as the judge expects you to justify why the exemption applies to you. The judge will analyze factors such as the size of your family, how many people are dependent on you, your household income, your rent, utility, and other financial obligations paid monthly.
Should the judge rule in your favor, the garnishing creditor will be ordered to reduce the garnished amounts or stop the garnishment together. However, if they disagree, your wages will still be garnished as the order dictates.
If you suspect your creditors will be filing a garnishment order, you can avoid this by reaching out and working out a payment plan on your own terms. Creditors are open to such arrangements and are willing to work with you if you genuinely show you are willing to pay off your debts without the garnishment. You will be required to commit to paying a certain amount regularly, either weekly, bi-monthly, or monthly depending on your financial capability.
You can choose to contest this garnishment order in court and plead your case in front of a judge. Similar to the exemptions, you need to show why you should not pay the debt owed even if it does belong to you. This is a great option in certain situations, such as after getting a divorce and you are being sued for a debt incurred by your former spouse. The court could determine the debt is not yours, and so you have no legal obligation to pay it.
You can permanently escape wage garnishment by filing for bankruptcy. Filing for bankruptcy protects your income while the case is still in court, preventing creditors from collecting on debts. That said, filing for bankruptcy doesn’t mean you won’t have to pay these debts; it simply offers a different way of repaying your debts.
Both Chapters 7 and 13 require credit counseling and have different ways of paying off your debts; however, you no longer owe money to these creditors once your bankruptcy case is discharged. It is a good way to protect your wages from garnishment, but it will not dismiss debts such as your tax obligations, alimony, child support, and student debt loans.
Once you learn your wages will be garnished, you can opt to quit your job. That said unless you have enough savings tucked away, consider this a last resort. Even if you quit and find another job, you might be surprised to find the garnishment order following you to your new job. As such, while quitting is an option, it’s best to consider other methods.
Receiving a wage garnishment order can be distressing. However, you can find the right solution to your situation with proper legal guidance. At Van Horn Law Group, we can help you navigate this legal landmine and protect your wages from garnishment. To get solutions tailored to your specific financial situation, call us today.
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