Refusing to pay your debts won't make them go away. If you ignore the demands for payment, your creditors--whether it's the Internal Revenue Service or a credit-card company--can file in court for a judgment against you, then use that as grounds to garnish your wages. That means your employer will start taking a portion of your wages out of each paycheck and sending it to your creditors until the debt is paid off.
Types
Garnishment works differently depending on the type of income and type of debt, according to the Bankruptcy Lawyers website. If you receive income from Social Security, public benefits, retirement benefits or disability, creditors usually can't touch it, no matter how big your debt. If the debt is for unpaid child or spousal support, however, creditors can garnish almost any kind of income.
Size
Federal law, according to the U.S. Department of Labor, limits how big a chunk of your "disposable earnings" creditors can claim. Disposable earnings means the money that remains after income tax, Social Security, unemployment insurance and other mandatory deductions are withheld; voluntary deductions such as health insurance premiums don't affect how disposable earnings are calculated. The law states that the most creditors can take is 25 percent of your disposable earnings or 30 times the minimum wage, whichever is smaller. In child support cases, however, you could legally lose as much as 60 percent of your paycheck.
Geography
Some states have different laws on how much creditors can take. Alaska, for example, protects the first $402.50 of your paycheck from garnishment, according to the Fair Debt Collection website; Mississippi protects the first 30 days after the creditor requests judgment, then 75 percent of your paycheck after that. Anywhere that state law differs from federal law, the courts will use the standard that results in the lowest possible garnishment.
Prevention/Solution
Your creditors--even the IRS--have to notify you before they file for a judgment and before they start garnishing your paycheck, according to the Bankrate website. One way to avoid garnishment is to work out a payment plan that may suit you better: Most creditors will go with that if they think you're sincere, according to Bankrate, rather than spend the time and money to file for garnishment. Make sure you get a paper copy of whatever deal you work out.
Warning
Federal labor law forbids your employer from firing you just because he has to take money out of your paycheck for a garnishment, according to the Department of Labor. If you have multiple debts and wind up with two or more garnishments, however, your employer can legally fire you rather than put up with the paperwork.
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