Garnishment provides creditors with a collection method that does not depend on debtors submitting voluntary payments. Through garnishment, a creditor seizes funds from your wages or bank balances in order to satisfy your delinquent debt. Although federal regulations exist governing both wage and bank garnishment, Pennsylvania state law places even greater restrictions on creditors using this debt recovery method.
Wage Garnishment
Through wage garnishment, your creditor petitions the court to issue a writ of garnishment that the creditor serves to your employer. Your employer must then withhold a portion of your unpaid wages and pay that portion directly to your creditor.
Pennsylvania only grants certain creditors permission to garnish your wages. If you owe back child support, alimony, student loans, taxes, criminal restitution or unpaid rent, your creditor can garnish your wages. If, however, you owe an unpaid credit card debt, hospital debt or collection account, your creditor cannot use garnishment as its collection tool of choice.
Bank Account Seizure
Although wage garnishment is only available to certain creditors, any creditor may garnish your bank account balances. Like wage garnishment, bank account garnishment requires that the creditor have a writ of garnishment against you which it can only obtain via a lawsuit.
Pennsylvania law may prohibit direct wage garnishment for private debts, such as credit debts, but it does not prohibit creditors from garnishing your wages from your bank accounts after you deposit your paychecks. A creditor that serves a garnishment order on your bank is legally entitled to all nonexempt funds within the account.
Garnishment Exemptions
Your "take-home pay," or the amount left after taxes and other federal and state deductions, constitutes your disposable income under federal garnishment law. Those creditors who are permitted to garnish your wages may do so provided they garnish no more than 25 percent of your disposable income or the amount by which your weekly pay exceeds the current minimum wage by 30. If you owe back child support or taxes, your creditor may garnish up to 50 percent of your disposable earnings.
Bank account garnishment provides you with additional protection. Provided you file an exemption claim with your bank upon receiving notification of the impending garnishment, your creditor cannot seize your Social Security, retirement pension, alimony, child support or unemployment.
Collection Limitations
Rather than collecting debt directly, private creditors often sell their overdue accounts to collection agencies. The Fair Debt Collection Practices Act governs the actions any third-party creditor can legally take when recovering debt. The FDCPA notes that it is illegal for a debt collector to threaten you with wage garnishment if the company cannot legally garnish your wages. Should this occur, you have the right to sue the collection agency for violating your consumer rights under the FDCPA.
0 comments:
Post a Comment