How to Handle a Garnishment Notice

The federal government uses the term "levy" when referring to a garnishment. A garnishment gives a creditor, debt collector or legal entity, such as the state or the Internal Revenue Service, the legal right to seize your property, or rights to property, to satisfy a debt you owe. A debt collector or creditor must obtain a court-ordered judgment to garnishee, and the court sends you notice of the lawsuit filed against you. The federal and state government can impose a levy without a court order but must send you a notice before doing so. There are several ways to handle a garnishment notice.

Instructions

1

File an appeal within the appropriate time frame. The garnishment/levy notice includes instructions on how to file an appeal. In most cases, you have 45 days in which to file an answer with the court. For IRS and state tax levies, and federal student loans, you have 30 days from the notice date to respond to the notice. Appeal if you object to any aspects of the garnishment or wish to discuss payment options, such as an installment plan.

2

Pay off the debt in a lump-sum payment if you can afford to. If you need some time to gather the funds, let the garnishment-issuing agency know. For example, the IRS may be willing to stop collection on your wages to give you the time you need to gather the funds.

3

Make a hardship claim with the issuing agency if the garnishment would cause you financial hardship. You have the right to a hearing, for example, if a student loan wage garnishment would cause you financial duress. Complete a Request for Hearing form and submit it to the U.S. Department of Education's Hearing Branch. If the issuing agency agrees with your claim, it can temporarily stop collection or offer you a reduced payment.

4

Settle the debt for less than you owe. Before agreeing to a settlement, the issuing agency will look at your ability to pay, assets, income, expenses and whether the settlement is in the agency's best interest. For IRS and state tax levies, a nonrefundable deposit may be required when you make the offer. Consult a tax expert if you decide to take this route.