A garnishment -- when your employer withholds a portion of your wages to pay off a debt -- indicates that you failed to honor previous financial agreements. Not paying your creditors negatively affects your credit scores. Federal law gives you the right to dispute incorrect information on your credit report, but a successful dispute is no guarantee that the garnishment will not continue until you pay off what you owe.
Garnishment's Impact
A garnishment does not appear on your credit report. Because of this, it cannot directly impact your credit rating. Before a creditor can begin garnishing your wages, however, it must hold a legal judgment against you. The legal judgment permitting the garnishment does appear on your credit report and has a significant negative impact on your credit. The Fair Credit Reporting Act notes that a legal judgment remains a part of your credit history for a minimum of seven years and possibly longer, depending on your states laws.
Defaulted Debt
The defaulted debt that preceded the legal judgment and garnishment also appears as a negative entry on your credit report. Derogatory credit entries regarding the debt must be removed from your credit report seven years and 180 days from the date of your most recent payment -- regardless of whether the entry is from the debts original creditor or a collection agency.
Amending Your Reports
The FCRA awards you the legal right to dispute any information on your credit report that is inaccurate. When you dispute information with the credit bureaus, the bureaus will attempt to verify the data. If verification isnt possible, the FCRA requires that the bureaus immediately remove the item from your record. If your credit records contain errors, it is possible to dispute both a legal judgment and the creditors original entry and have those entries removed before the reporting period expires. Doing so, however, does not stop the garnishment from occurring.
Overturning a Garnishment
Even if you successfully eliminate all evidence of the debt from your credit report, either through a legitimate dispute or simply because the reporting period for the derogatory information expired, the garnishment can continue until you pay off the debt. In order to overturn a garnishment you must overturn the legal judgment that gave the creditor the right to seize your wages. This requires that you return to court and contest the judgment. Each state has different regulations regarding how much time consumers have to vacate a judgment and the grounds under which they may do so. If you vacate a judgment and subsequently stop the garnishment, the credit bureaus will remove the judgment from your credit report upon request.
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