Ever wondered what is more painful than having a sore throat in a winter morning? It’s wage garnishment.
When creditors garnish your wage every month for clearing your credit card debt, you feel like someone has punched your face badly. Suffice to say that wage garnishment is a stressful experience.
What is a wage garnishment?
Wage garnishment is a legal process where creditors can take away a portion of your wage for debt repayments. Usually, creditors can garnish your wage by following these 4 steps:
- Filing a lawsuit against you in the county where the debt originated
- Showing enough evidence to prove that you have not paid off a valid debt
- Requesting the court to issue a judgment against you
- Informing your employer about the wage garnishment order
Wage garnishment laws – How much can creditors garnish?
As per the wage garnishment laws, creditors can either garnish only 25% of your disposable income or the amount of your disposable income, which is higher than 30 times the federal minimum wage. This normally equates to $7.25 per hour.
How much can creditors garnish – A brief snapshot
Weekly garnishment | Biweekly garnishment | Semimonthly garnishment | Monthly garnishment |
$217.50 | $435 | $471 | $942.50 |
Between $217.50 and $290 | Between $435 and $580 | Between $471 and $628.33 | Between $942.50 and $1256.66 |
More than $290 | More than $580 | More than $628.33 | More than $1255.66 |
What are your options to stop wage garnishment?
Once a wage garnishment order is issued, it becomes difficult to stop it. Still, you can take a few steps to stop the garnishment process and save money simultaneously.
(i) Give a reply to the demand letter: Even after winning a judgment against you, several states require that creditors/debt collectors send you the last warning letter. This is the final warning letter that creditors are required to send before garnishing your wages. It’s known as the demand letter.
When you receive the demand letter from your creditor, give a prompt reply to it. Don’t waste any more time.
Wage garnishment is a time-consuming process since a lot of paperwork is involved in it. Several creditors prefer to receive voluntary payments from debtors due to this reason. Plus, wage garnishment is an expensive process. They want to avoid those expenses.
Negotiate with your creditors for an alternative repayment plan before the garnishment process begins. You might be able to stop wage garnishment and save money as well.
(ii) Take advantage of state protections: Many states have additional protections against wage garnishment.
For example, in Ohio, you can use a trick to stop wage garnishment. You can appoint a trustee and send payments directly to him. The trustee will disburse the amount amongst your creditors. All you need to do is, submit a written request in the court for appointing a trustee.
In California, you can stop wage garnishment by showing to the court that you’re in economic hardship. You need to prove that you need the money to cover your family expenses.
Contact a local attorney or clerk of a county court to know about your available options.
(iii) You can try to settle your debts: Debt settlement companies can help you avoid judgment and wage garnishment before a lawsuit has been filed in the court. Try settling credit card debt when you’re lagging behind your payments for several months. You can even go for out of court settlement when creditors have just served summons to you. This would help you avoid legal hassles and court fees, which are quite expensive.
Remember, once the judgment order is issued, the debt settlement companies can’t help you. So it’s better to take action before it’s too late.
Sometimes, it becomes tough to get a good settlement deal. In that case, you can hire a good law firm or a settlement company to do the negotiation part. Debt settlement fee is a matter of concern. I agree. And, for that, you need to find out a firm which charges reasonable fees for settling credit card debt.
(iv) You can file bankruptcy: This is your last choice. Rather, this should be your last choice. Bankruptcy can help you stop wage garnishment immediately. It can help you eliminate a portion of your unsecured debts and secured debts. But the catch is, you shouldn’t file bankruptcy just for the sake of getting rid of wage garnishment. Bankruptcy is a complex legal process and is an expensive affair. Plus, bankruptcy stays on the credit report for 10 years. Judgment stays on credit report for 7 years only. So it’s better you think about the consequences beforehand. Discuss your matter with a bankruptcy attorney and then make a decision.
(v) Consolidate your debts: Like debt settlement, you can’t consolidate debts when the wage garnishment order is active. Debt consolidation can help you when:
- Your wages have not yet been garnished.
- Your credit cards have been assigned to debt collection agencies.
- You’re unable to pay high-interest rates on your unsecured debts.
- Your credit cards have been charged-off.
Debt consolidation makes your payment affordable by lowering your interest rate. It brings together your multiple bills into a single and affordable repayment plan. This helps you stay current on your payments and avoid lawsuits.
A word of wisdom
Usually, state wage garnishment laws are more liberal than federal laws. When you’re claiming for exemptions, you can request the court to apply the state laws so that you can reduce the garnishment amount.
Conclusion
When you don’t take any step after receiving the demand letter, creditors can take the following steps:
- They can mail a copy of the garnishment order to your employer.
- The employer will send you the garnishment notice.
- The employer will begin the garnishment process.
In that scenario, you can raise an objection in writing. An experienced attorney can help you in this case. He can help you to file an objection at the court and request a hearing. Check out your garnishment papers minutely. You’ll get the forms from there only. Fill out the forms and object to the garnishment.
