When you fail to make payments to your creditors, they may eventually pursue other options to collect the money you owe. One of the tools creditors can use is a wage garnishment. This process involves taking money directly out of your paycheck. Creditors can sometimes pursue a wage garnishment even if you are making payments.
Wage Garnishment Basics
Once you get behind on your payments, your creditors can file a civil lawsuit against you. After filing the lawsuit, you and the creditor will need to appear in court. Unless you can prove that the debt is not valid, the creditor will win a judgment in the case. After the judgment is issued, the creditor can use that judgment to get a writ of execution. A writ of execution can be used to set up a wage garnishment with your employer.
Making Payments
If you are making regular payments to your creditor, your wages could still be garnished. Simply making a payment typically is not enough to keep a garnishment at bay. Instead, you have to make a payment that is agreed upon between you and the lender. If you do not make an adequate payment, the creditor can still move forward with the garnishment. For example, if your minimum payment requirement is $500 per month on your credit card and you only pay $10 per month, the credit card company could still pursue a wage garnishment.
Working Out a Plan
If a creditor gets a judgment against you from a civil lawsuit, you may be able to work out a payment agreement before you have a wage garnishment set up. The creditor does not necessarily have to pursue a garnishment as long as you agree to satisfactory payment terms. As soon as a judgment is issued in the case, contact the lawyer of the creditor to set up the payment plan before the garnishment is arranged.
Garnishment Rules
If a creditor does set up a wage garnishment, a maximum of 25 percent of your disposable income can be taken through this process. The 25 percent maximum is a federal guideline. Some states have their own guidelines when it comes to how much money can be taken out of your paycheck. In some states, the maximum paycheck garnishment is less than 25 percent of disposable income.
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