A creditor can garnish your wages if you owe them money, such as back taxes or federal student loans. It can also be used to collect court judgments.
Garnishments are legal, but they can hurt your finances. You can challenge a wage garnishment by filing an objection. The procedures you must follow depend on the type of debt collection and state law.
Creditors File a Lawsuit
If you owe a debt and can’t pay it, your creditor can file a lawsuit against you. This legal process is standard for people who owe old medical bills, credit card bills or other consumer debt.
Your creditors can only garnish your wages once they file a lawsuit and get a judgment against you. They must personally serve you with the lawsuit and a summons. They can’t mail it to you, so responding to the summons and complaint in person or through a lawyer is vital.
Once they get a judgment, your creditor can file a court order called a “writ of garnishment.” This court order tells your employer how much to withhold from each paycheck.
State and federal laws govern the amount a creditor can deduct from your earnings. A creditor can generally garnish up to 25% of your disposable income (after obligatory deductions) or the amount by which your disposable earnings exceed 30 times the federal minimum hourly wage, whichever is smaller.
In addition to reducing the number of your wages, a creditor can also take an interest, late fees and attorney’s fees. These fees can quickly add up, making it difficult to make ends meet.
You may consider filing for bankruptcy if you owe a debt and cannot afford to pay it. However, there may be better options for you like wage garnishment payroll. It would help if you spoke with a bankruptcy attorney to discuss your situation and options.
Creditors Get a Judgment
Creditors can take a portion of your paycheck when you have an unpaid debt. They can also garnish your bank account and freeze it until you pay it off.
A creditor must first get a court judgment before garnishing her pay. They must win a trial, sue you, and secure a monetary judgment against you to collect the debt.
However, there are some exceptions to this rule. For example, if you have unpaid child support or alimony, you can be garnished for that amount. Your state and local tax agencies can also decorate your wages if you’re delinquent.
Once the judgment creditor has garnished your wages, you can challenge the garnishment by objecting. The process for objecting varies by state and the type of debt you owe.
You can ask the court to lower or vacate your wage garnishment, depending on your situation. To do this, you must go to court and explain your financial circumstances to a judge. You can bring proof of your income, rent, bills, and monthly expenses to convince the judge that you need a lower garnishment rate.
If the court agrees, you can repay the creditor through your income. This will allow you to pay off your debt faster. You can work out a repayment plan with your creditor that will enable you to make manageable installments.
Creditors Get a Court Order
Most creditors will need to sue you and get a court order before they can garnish your wages. However, exceptions exist for certain debts like credit card balances or medical bills.
A court order is usually issued for a hearing that involves questioning you on oath or affirmation about how much you owe. This will help the creditor decide whether they want to pursue the garnishment.
If you don’t have enough money to pay your debt, the court may order that your creditor make you a lump-sum payment that you can afford. This can give you time to find ways to get your debt paid off.
For example, you can ask the creditor to give you a repayment plan that considers your income and expenses. Then you can negotiate with them to find out if they’re willing to work with you.
If your creditor doesn’t agree to the plan, you can go to court again and request that they stop garnishing your wages. If you do this, you’ll be able to keep the wage garnishment from being renewed. The creditor will also have to send you a statement about how much they got from your employer within 15 days of the end of every month that a garnishment is active. The creditor must then keep a copy of this statement until 90 days after the garnishment ends.
Creditors Get a Notice of Garnishment
Creditors can garnish your wages if you owe them money, such as on debt for loans, credit cards, medical bills or mortgages. The amount of salary that can be garnished depends on the type of debt and the state where you live.
In most cases, creditors get a garnishment by filing a lawsuit against you and securing a court judgment. Depending on the creditor and the amount owed, the procedure might take months or even years.
After the lawsuit is filed, the creditor sends you a Notice of Garnishment (often called an Income Execution). This notice tells you that your earnings will be set aside to pay your judgment.
It also tells you you have a limited time to object to the garnishment. You can file a motion to quash, answer, or plead in the case.
You must show that you are eligible for an exemption from garnishment or that you owe more than the creditor asks. If you need more clarification about whether your income is exempt, contact a lawyer to help determine your legal options.
If your debt is not too large, you can stop the wage garnishment by filing for bankruptcy. Many debts can be eliminated through bankruptcy, which will also help protect you from future wage garnishments.