To stop a wage garnishment immediately you should contact a lawyer who can determine if you will have to file for bankruptcy or create an objection with the court. You may also be able to make a settlement to respond to your debts. The options available vary according to your state laws and other factors.
Wage garnishment is a serious problem that is affecting millions of Americans each year. According to ADP Research Institute, men are affected more by wage garnishment than women largely due to child support payments. It can be a scary situation that changes the financial well-being of many families.
Fortunately, depending on what state you live in and various factors unique to your case, it is possible to stop wage garnishment and its debilitating financial consequences. With the help of a lawyer, you may be able to protect yourself from this overwhelming situation.
Defining Wage Garnishment
The U.S. Department of Labor defines wage garnishment as a legal procedure and debt collection tool by various creditors to force you to start paying back your debt. When a garnishment order goes into effect, your employer’s payroll department is required to withhold a portion of your paycheck.
It is a legal action taken against you, the debtor, to seize a percentage of your wages, money in your bank account, or other assets. Under the law, a creditor can continue to garnish wages until the amount you owe is completely paid off.
Understanding Various Categories of Wage Garnishments
People accumulate debt of various types. Wage garnishments fall under these common categories:
- Child Support and Alimony
- Creditor Garnishments
- Tax Debts
- Student Loans
What are Examples of Wage Garnishment?
One common type of wage garnishment is when the IRS takes legal action against you to cover a tax debt. For example, if you owe unpaid taxes, the IRS can file a legal order against you to garnish your wages. First, the IRS would direct your employer to provide a portion of your salary for a determined amount of time until the tax debt is fully paid off.
Another example is when you go through a divorce or a child custody case where a judge finds you liable for providing alimony or child support. In this case, your employer receives an order from the court to receive a portion of your paycheck.
What Type of Creditors Are Able to Garnish my Wages?
In many states, consumer creditors such as credit cards, medical bills, car loans, debt collectors, and others can file a motion to garnish your wages. Other creditors do not need a court order to file your wages. These include the IRS, federal student loan services, federal agencies, and others.
What Options Do I have to Stop or Reduce Wage Garnishment?
Depending on your state laws, you may be able to stop or reduce wage garnishment with the help of an attorney or a nonprofit organization that helps people in this type of situation. It is possible to file legal motions or find other ways to make a deal with debt collectors with a repayment plan.
Bankruptcy Can Stop Wage Garnishment
There are cases where a person requires a completely fresh start to stop wage garnishment. If you have multiple debts and have many creditors filing lawsuits against you, a good option might be getting a fresh start by filing for bankruptcy. Once your bankruptcy case has been filed, you will be able to stop wage garnishment and regain control of your assets.
What is Automatic Stay in Bankruptcy Cases?
Once you are successful at filing for bankruptcy, the creditors that are garnishing your wages will receive a notice from the court stating that you are protected from wage garnishment. The automatic stay is a court order that instructs creditors to stop garnishing your wages.
In the case of dischargeable debts such as from a medical bill or a credit card, the bankruptcy will erase them and the wage garnishment will stop permanently.
How Can I Stop Wage Garnishment Without Filing for Bankruptcy?
There are many ways to stop wage garnishment without having to file for bankruptcy such as:
- Reply to Creditor’s Demand Letter: When a creditor obtains a judgment against you, it is likely that you will receive a warning before your garnishment starts. This depends on your state and its specific laws. Your creditor is supposed to send you a “demand letter” that gives you one last notice before you can expect the wage garnishment to begin.Generally, creditors prefer to negotiate a repayment plan with you instead of garnishing your wages, which costs them time and money. It is important to reply to the creditor’s demand letter because it is an opportunity for you to negotiate new terms with them and prevent your wages from being garnished.
- Implement Remedies Available in Your State: Another way to stop wage garnishment is to check with your state laws. Some states allow you to request the court to appoint a trustee who will receive payments from you and distribute them to your creditors. When you are legally in a trusteeship, your wages will not be able to garnished by your creditors. You can start the process by contacting your county clerk’s office, local municipality, or attorney who can confirm what state laws apply to your case.
- Receive Debt Counseling: Connecting to a consumer credit counseling service (CCS) may be an effective way to stop wage garnishment. Unlike debt repair companies, a CCS is a non-profit agency that assists you to reach an agreement or negotiate with all your creditors to put a repayment plan in place. As long as you make timely payments on your repayment plan, creditors will not be able to garnish your wages.
- File an Objection Against the Garnishment: You will be able to file an objection in writing with the court and request that a hearing be held. When you receive the garnishment order from your employer or notice of the garnishment, it should include documents that allow you to request a hearing. If you don’t receive those types of forms, you will be able to file a request separately. Objections include a request that the amount garnished be decreased, that your creditor did not follow proper procedures, or that your creditor was paid off. Once you attend the objection hearing, you will have the opportunity to negotiate with creditors or eliminate the garnishment.
Negotiation with Creditor for a Repayment Plan
No matter if a wage garnishment has begun, you will still have the opportunity to negotiate a repayment plan with your creditors. For example, if your financial circumstances change and you are able to make a lump sum payment, it is possible to settle a new repayment plan to stop wage garnishment.
Seek the Professional Assistance of an Attorney
One of the most effective ways to properly deal with wage garnishment is to seek the assistance of an attorney that specializes in these types of cases. A law firm will be able to guide you every step of the way and negotiate on your behalf. Attorneys know state laws very well and are familiar with the various options you may have. They are trained to take the right approach in your unique case to stop wage garnishment.
Arrange a Refinancing or Debt Consolidation Deal to Stop Wage Garnishment
You may have the option to refinance or consolidate what you owe creditors to prevent your wages from being garnished. It is best to take this step before you receive a wage garnishment order. By doing this, you will be able to have more time to recover financially and potentially prevent your credit score from being negatively impacted.
Arrange a Repayment Plan with the Assistance of a Credit Counselor
A credit counseling agency will be able to assist you in arranging a repayment plan with your creditors. There are many credit counseling organizations around the country that are non-profit and designed to help you get out of debt. However, you must choose the organization carefully as some of them charge high fees and have hidden charges.
Find Out What Remedies Your State Offers
Some states offer specific remedies against wage garnishment. For instance, your state might allow you to request the court to appoint a trustee to whom you can make payments. The trustee will then distribute the payments to your creditors and thus prevent your wages from being garnished.
Other states allow you to claim wage garnishment exemption if you can prove economic hardship. You may be given the option to eliminate or at least decrease the garnishment to provide financially for your family.
Receive Debt Counseling
When you connect with a debt counseling agency, you may be able to negotiate a new agreement with your creditors to stop wage garnishment. Once your creditors agree to accept your request and allow you to participate in a repayment plan, they will no longer garnish your wages.
File an Objection to the Garnishment
There are various reasons why you can file an objection to the garnishment. One example is when the creditor is taking too much money, when they have not followed proper procedures, and when you have already paid the debt.
Exemptions that May Apply to You
Depending on your state laws, you may qualify to file an exemption to wage garnishment. In general, most creditors are not able to garnish wages from sources such as alimony, social security, child support, disability, and retirement.
How Does a Wage Exemption Function?
An attorney is a great source of information about your state laws to see if you may qualify for an exemption. First, you will have to complete a claim of exemption form that explains why you should be exempt from wage garnishment. This form is filed with the court that issued and is allowing the garnishment to take place.
The judge will review your case and request for exemption to determine if you qualify. If the findings favor you, the wage garnishment will stop and you will be able to have a reduced or eliminated conclusion to your wage garnishment.
What Amount of My Wages Can I Expect to be Garnished?
Under federal law, creditors cannot garnish more than 30 times the federal minimum wage or no more than 25% of your disposable income, whichever is calculated to be less. Your disposable income is calculated per pay period after mandatory deductions.
How Does Wage Garnishment Take Place?
The proper way wage garnishment takes place is with a court order sent to your employer. A specific garnishment amount is determined and taken out of your paycheck to be sent directly to the creditor who filed the order. Wage garnishment commonly takes place when a person fails to pay debts such as child support, student loans, and consumer debts.
When Are Creditors Able Garnish Your Wages?
Creditors may only garnish your wages once they file a court order. They are not able to do so without a legal request sent by the court.
Calculating Garnishment Amounts
The highest amount for weekly garnishment can be calculated as the lesser of 30 times the federal minimum hourly wage or 25% of your disposable earnings after mandatory deductions.
How Can I File a Garnishment Exemption Claim?
Depending on your state, you may pursue a claim to be exempt from wage garnishment by filing an affidavit with the court. You must detail the reason why you should be exempt from garnishment. The affidavit must be sent to both the judgment creditor and their attorney.
How can I apply for garnishment hardship?
You will be able to request a hearing to show evidence of financial hardship to your creditors. This request has to be submitted in writing and must detail a proposed repayment plan.
Wage garnishment after paid in full?
The garnishment will continue until your debt is paid in full. When the debt is fully paid, the creditor will notify your employer to stop deductions.
Employer did not notify me of wage garnishment?
Generally, employers are not required by law to notify you before wage garnishment begins. However, you are likely to receive a notification from your creditor before wage garnishment takes place.
Professional Help with Tax Issues
Are you experiencing issues with California state tax? The experienced financial professionals at The Tax Crisis Institute have been helping California and Nevada residents with federal, state and property tax issues since 1983, and they are committed to making sure that their clients do not pay the government any more than they have to. If you need help with a tax matter, you can fill out our online form or call one of our offices. We have locations in Orange County, Bakersfield, Los Angeles and Las Vegas.