Wage garnishment is the process by which creditors collect debts owed by taking a portion of your paycheck until the debt is paid. Wage garnishment is an extreme measure taken by creditors as a last resort to collect a debt. Fortunately, there are laws regulating wage garnishments and ways to avoid having your wages garnished.
Can Creditors Garnish My Wages?
Creditors can garnish your wages by suing you in court for the amount of the debt. If the creditor wins in court and you still do not pay, the court issues the creditor a Writ of Garnishment. Papers are sent to your employer with instructions to withhold a portion of your pay until the judgment against you is satisfied.
Consumer Credit Protection Act
The Consumer Credit Protection Act protects employees who have wage garnishment judgments against them from being fired for that reason. There is also a limit to the amount that can be garnished from your paycheck. This law does not protect employees from termination for a second garnishment. Normally, a creditor cannot garnish more than 25 percent of your disposable earnings. Under Title III of the act, 50 percent of your disposable earning may be garnished for child support and federal and state tax payments. If you feel your rights have been violated by a wage garnishment, you can file a complaint with the United States Department of Labor, Wage and Hour Division.
Avoiding Wage Garnishments
The best way of avoiding wage garnishments is by talking to your creditors before they decide to file suit against you. Creditors may be willing to lower your payment amounts to avoid legal proceedings. If your creditors do agree to a payment arrangement, make it a priority to make all scheduled payments on time. Creditors will sometimes postpone garnishment proceedings while you are participating in a debt management plan. Credit counseling services offer debt management plans where you pay a monthly payment to the agency, who then distributes the payment to your creditors. The agency may be able to negotiate with creditors to reduce interest and late penalties.
Contesting Wage Garnishments
If your creditors go through with filing a judgment against you, you have the option of contesting the garnishment. In most states, contesting a garnishment is called a claim of exemption. If you claim hardship as a reason for exemption, you must provide proof of your expenses, such as transportation, housing, utilities, food and any other monthly bills. The court also has the option of lowering the garnishment amount. If the court upholds the garnishment, you should try to adjust to living with a lower wage until the judgment is satisfied. Quitting your job may temporarily stop garnishments, but it will not solve your debt problems. Filing for bankruptcy may seem like a solution, in that it will stop wage garnishments; but bankruptcy can also have long-term consequences, such as not being able to secure a loan to purchase a home or vehicle.
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