A wage garnishment is a legal request from a creditor to take money directly from your paycheck before you get paid˳ If you owe taxes or fall behind on your federal student loans, the government can make such a request without a court order˳ All other creditors must obtain a judgment in a court of law before they can legally order your wages taken to repay a debt˳
The good news is that you’ll usually get a notice first and depending upon when your employer calls in to order payroll, (known as the “payroll cutoff date”), you will have a limited amount of time to take action that might stop your wages from being taken˳ The amount of your wages that can be taken also depends on who is garnishing˳ The IRS can take up to 50% of your wages to pay back taxes, so a wage garnishment is going to hurt you financially if you don’t take action to stop it˳ The amount that creditors can take ranges from 15% up to 50%˳
The easiest way to stop a wage garnishment from happening is to make a payment arrangement with the creditor immediately and start making payments˳ Unfortunately, this priceless information is only helpful when you have money to pay them˳ If you don’t have the money to pay them, then the next best alternative to stopping the wage garnishment is to file for bankruptcy protection˳
You see, the filing of a bankruptcy case raises what is called the Automatic Stay, which is a court order to stop all collections against the person filing for bankruptcy protection, including foreclosures and wage garnishments˳ This makes for a powerful tool against those aggressive debt collectors who have taken the trouble of suing you, obtaining a judgment and exercising their legal debt collection efforts by finding your employer and requesting to be paid from your paycheck˳
Depending upon your income and financial status, you could file under Chapter 7 of the Bankruptcy Code for a liquidation bankruptcy where you stop the garnishment without making a single payment on the debt˳ Otherwise, if you income is above average for your household size (using IRS median household income standards), or, if you have assets to protect like home equity, then you can propose a repayment plan under Chapter 13 of the Code˳
Whichever direction you choose to take, you need to act fast or the garnishment will go forward˳ It’s important to consult with an attorney to explore all of your options for getting out of debt and it’s worth exploring a bankruptcy case because it’s a powerful tool that puts you back in control of your paycheck and gives you breathing room to get back on your feet financially˳ Dump the debt and move on quickly toward your financial goals˳ Most attorneys provide free consultations, so take advantage of their advice even if you don’t hire them˳ We’ve helped hundreds of families avoid wage garnishments˳ Let us know if we can help you too˳
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