Many people require assistance in comprehending their options if their salary is garnished. You can stop wage garnishment if you can negotiate with creditors or seek help from a nonprofit credit counseling organization. Remember, your creditors can only garnish your wages after a court has entered a judgment against you. Learn more about the garnishment process below:
What Is Garnishment?
Wage garnishment is when a creditor legally instructs your employer to withhold a percentage or amount from each paycheck and send it directly to the person or institution you owe money. It typically starts after a creditor wins a court case through pleadings before a judge or summary judgments against you. The creditor then sends documentation to your employer, telling them to withhold a certain percentage or amount of each paycheck until your debt is paid off. In some cases, such as regarding back taxes or child support, the creditor can do this without winning a court case, but they will usually have first to give you notice that a wage garnishment payroll is taking place. The amount that can be taken from a debtor’s paycheck through wage garnishment is limited by state and federal law. Disposable income is the amount of your earnings left after your employer makes legally required deductions, such as federal and state taxes, Social Security, and unemployment insurance. In addition, deductions for voluntary wage assignments, union dues, and health or life insurance are not included in disposable income under the CCPA.
There are also a variety of exemptions that can protect you from garnishment, including head of household status, income-based repayment plans, and child or elderly dependent allowances. Suppose you communicate with your creditors and debt collectors promptly. In that case, they may be more willing to work out a repayment plan than impose the expense and inconvenience of wage garnishment on you.
How Does Garnishment Work?
Once a creditor has a court judgment, it can ask your employer to withhold a certain amount from each paycheck and send it directly to the person or entity to whom you owe debt payments. Typically, it is calculated as a percentage of your disposable income that factors in taxes. When you or your employer receive a notice explaining the specifics of the request from the court or a government body like the IRS, the garnishment procedure starts. Employers must comply with garnishment requests or risk noncompliance penalties. Before wage garnishment takes effect, the court will usually allow you to file an objection. It is a written declaration stating why you believe the garnishment shouldn’t go through and can be filed with the same court that issued the writ of garnishment or other legal document. If you don’t timely file an objection, you may have waived your right to fight the garnishment later.
The Consumer Credit Protection Act (CCPA) establishes limits on the amount of your pay that can be subject to garnishment. These limits are based on your “disposable earnings,” which include all of the money left over from legally required deductions, such as federal and state taxes, withholding for retirement systems, health and life insurance, charitable contributions, and deductions for payroll advances and purchases. Deductions that aren’t mandatory, such as union dues or donations to personal charities, generally can’t be subtracted from your wages.
What Can I Do to Stop Garnishment?
Once a creditor wins a judgment in court, it can send documentation to your employer (typically through the sheriff) directing your employer to take a specific amount from each paycheck. Your employer must then withhold that amount from your wages and send it to the creditor until your debt is paid. Some lenders are prepared to collaborate with you to create a repayment schedule within your means. If you can communicate with them, it may be possible to avoid wage garnishment altogether. You can also protect your income from garnishment by claiming an exemption with the court issuing the order. Depending on state laws, this may require you to attend a hearing where you explain your situation to a judge. If the judge agrees, they can order the creditor to stop or reduce the garnishment.
Other options include seeking help from a nonprofit credit counseling organization or filing for bankruptcy. Bankruptcy can immediately halt most garnishments and potentially discharge your underlying debts. However, you should consult an experienced attorney before filing for bankruptcy to determine whether it’s right for you.
What Can I Do to Reduce Garnishment?
A creditor generally won’t garnish your wages as a first step but will instead try to collect the debt in other ways, like repossessing or foreclosing your property. But garnishment may become an option if these efforts are unsuccessful or the debt is nearing the statute of limitations (the time limit within which debts can be collected). Documentation is sent to your employer (usually through the marshal or sheriff) when a creditor obtains a judgment against you. It typically includes an order that your employer withhold a portion of each paycheck and forward this money to the creditor until the debt is paid. The amount withheld will depend on state law and your particular circumstances.
Some deductions, including local and federal taxes, employee contributions to retirement systems and alimony/child support, are not subject to wage garnishment. Other deductions, however, can be subject to garnishment. A claim of exemption can be submitted to the court that issued the garnishment order to challenge a garnishment. A judge will then decide if the exemption applies and whether or not to reduce or even stop the garnishment. You can file this claim with an attorney’s assistance and mount a successful garnishment defense. It is also important to consider filing for bankruptcy, which can be a powerful tool to halt most garnishments and eliminate some debts.
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