Garnishment Solutions

Garnishment is often a creditor's last resort when trying to collect a debt from a consumer who is unwilling to pay. In order to obtain a court order allowing it to garnish an individual's wages or bank accounts, the creditor must win a lawsuit against the debtor in a state that gives garnishment rights to private creditors. While a garnishment order is beneficial to a creditor, it may leave a debtor struggling financially and searching for garnishment solutions.

Significance

The Consumer Credit Protection Act limits garnishments to 25 percent of a debtor's disposable weekly pay or 30 times the minimum wage, whichever is less. Unfortunately for consumers, more than one garnishment can be in effect simultaneously. This can leave an individual unable to pay his current bills. The inability to make payments to his creditors can result in further lawsuits and additional garnishments--making it vital for a debtor to do whatever he can to solve his garnishment problem quickly.

Considerations

The whole purpose of garnishment is to collect an unpaid debt. Should a debtor be able to pay off the debt in its entirety, the creditor will be forced to immediately release the individual from the garnishment. Some consumers choose to liquidate retirement funds, stocks or savings accounts in order to pay the overdue debt and stop the garnishment. For those who need time to accumulate the funds to pay the debt, changing employers can often stall a wage garnishment, since the creditor is forced to track down the new employer and return to court to obtain a new garnishment order.

Facts

Although most creditors prefer to negotiate with debtors rather than seek a garnishment, a creditor is unlikely to negotiate with an individual after a garnishment order is in place. A debtor who files for bankruptcy, however, is protected by the automatic stay. A bankruptcy automatic stay prevents creditors from taking legal action against a debtor until the court evaluates the debtor's income and assets and decides upon the appropriate course of action. Legal action includes garnishment. Thus, bankruptcy is a viable garnishment solution.

Prevention/Solution

If an individual's creditor obtained a judgment against him without properly notifying him of the initial lawsuit, the debtor may be able to have the judgment overturned. If the judgment that permits the creditor to garnish the debtor's wages or bank account is overturned by the court, the garnishment will immediately stop. In some cases, debtors may also contest a judgment because of a debt being too old to collect or if the lawsuit was filed in the wrong courthouse.

Warning

Ending a wage garnishment does not mean that a debtor is free to ignore the debt or that the debt disappears entirely. Unless the debtor makes arrangements with his creditor to pay the debt, the creditor may use other methods, such as a property lien, to attempt to recover the unpaid amount. In addition, a creditor may return to court at any time to obtain a new garnishment order.