If you’ve received a wage garnishment judgment then you might be wondering how does wage garnishment work. It can be a scary and stressful time as you possibly face losing some of your income. The Tax Crisis Institute is here to walk you through everything and make sure you have all the information and help you need.
How Does Wage Garnishment Work?
Wage garnishment is when the legal system orders your workplace to withhold a certain amount of your paycheck. Your employer then sends this portion of your paycheck directly to the person or entity that you owe money to. Your wages will be garnished until the debt is paid off.
This is more common than most think. In fact, about 7-10% of the working force had open judgments as of a few years ago. This happens for a variety of reasons including student loans, consumer or health debts, and child support.
Types of Wage Garnishment
Generally, this happens when you’re sued for a debt you owe and you lose. Typically, the judgment handed down is wage garnishment. There are two types of garnishments:
- Non Wage garnishment: This is when the creditors can take money directly from your bank account
- Wage garnishment: This is when your employer is required to hand over a percentage of your paycheck to the creditor
It can also happen outside of court, such as when you owe money for child support, back taxes, or student loan debt. Typically, you’ll receive a notice from the court about the wage garnishment and it starts within 5-30 business days from the date of the notice.
How Much Can They Garnish?
The amount that can be garnished depends on what your wages are being garnished for. There’s also a cap which means they can’t take more than a certain percentage from your disposable income. Disposable income refers to the income left after deducting taxes, social security, and other applicable deductions.
Here are some examples of types of debt and how what percentage they can garnish every week:
- Taxes: Up to 15%
- Child support: 50-60%
- Federal student loans: 15%
- Consumer debts such as medical bills, credit cards, and personal loans: 25% or the amount when your weekly income exceeds 30 times the federal minimum wage, whichever is less
There are also state laws that will affect your garnishment. These laws can protect more of your income or provide for more deductions from your disposable income.
Things to Consider If You Get A Wage Garnishment Judgement
There are a few things to keep in mind if you get a wage garnishment. Here are some of your rights:
- The creditor has to notify you
- You’re able to file a dispute with the court
- Some forms of income are exempt
- Your employer can’t fire you for getting a judgment although it’s smart to be proactive and communicate with your employer about it
Make sure you act quickly if you’re going to challenge them. Pay attention to the court dates on the judgment so you can plan ahead to be in court to challenge it. Some also allow you to challenge it in writing.
What You Can Do About Wage Garnishment
You do have rights when it comes to wage garnishment but it’s your responsibility to be aware of and exercise these rights. When you get a one, look over it carefully to make sure it’s your debt and that it hasn’t already been paid. Here are some steps you can take if you get a judgment.
1. Try to Work Out A Deal
When you first get a judgment, it can be alarming. The best thing to do is call the creditor and see if you can work out a deal. Take a look at your budget and money you have on hand and see if they can set up a payment plan with you. Most creditors will set up a payment plan for you because they’d rather get the money they have to go to court.
2. Challenge the Judgement
You can challenge the judgment if you believe the creditor is in error or for a few other reasons. Look over the legal documents carefully to see how long you have to challenge it and what steps to take.
3. Accept the Wage Garnishment
You can also just accept it and pay it off in installments listed in the judgment. You can also take out a personal loan or borrow money to pay it in one lump sum. Sometimes, this is a better course of action so you don’t have the stress of it looming over you.
What to Do If the Garnishment Is A Financial Burden
If the wage garnishment will cause you to go into a financial crisis, talk to a nonprofit financial consultant to see what you can do. You can try to set up a payment plan or even claim bankruptcy. Keep in mind that a wage garnishment will stay on your credit report for up to seven years.
Let the Tax Crisis Institute Help You Out
Our team can take care of all the paperwork for you and even advise you on how to avoid a wage garnishment. We want to make sure that you face as little stress as possible in this otherwise stressful time. Our office is located in Bakersfield, California but we also serve a few other cities. Give our team a call today so we can chat!