Garnishment Of Wages
Garnishment of wages is a nasty legal order issued by a state or federal court to satisfy unpaid debt. You'll know when wage garnishment happens because your employer will withhold part of your wages. How much will be according to what is specified in the order.
This money is taken out before you get your paycheck. Earnings from bonuses, salaries, commissions, and hourly wages are all examples of earnings that can be garnished. Exceptions from garnishment; worker's compensation, disability, and unemployment.
Usually before this takes place, the creditor would start with phone calls before sending a letter asking for either full payment or for a payment arrangement. If you do not make the arrangement or make the payment requested, the creditor will probably send you one last notice. These are all usually threats that cannot be backed up until a case is won in court.
If you fail to pay the amount requested by the deadline given, most creditors will file the lawsuit. Afterwards, you will receive another written notification (this time you'll be served). If you wish to contest any part of the lawsuit such as the owed amount or the debt itself, you will have to answer the complaint and meet court.
If the creditor wins the case even with a default judgment (default – means you didn't show in court), garnishment of wages will take place thereafter. However, if you did not receive collection notices, there’s a good chance the garnishment case will be thrown out and the creditor will have to start over.
There's a federally mandated law called the consumer credit protection act and it regulates the handling of garnishments protecting you from employment loss due to lawsuits and garnishments. This law also stipulates the amount that they can collect from each pay period.
The amount a creditor can collect from each paycheck is twenty-five percent of your disposable income. Disposable income is what you have after taxes (FICA, state, federal) are taken out. It can be less if you are paying for things such as child support.
Wage Garnishments
Rather than having your wages garnished or having judgments hit your credit reports, call your creditors, and make payment arrangements. This is the best way to stop wage garnishment beyond bankruptcy.
If you are afraid of payment arrangements, insist that you will make a payment next month and in good faith make some type of payment that same day. The following month, make another payment or ask for the lowest amount possible in a payment arrangement. You know what you can afford.
If your wages were garnished after a payment arrangement was made, it could have been the arrangement wasn’t made in writing or you did not follow through with the payment requested. Something went wrong with the arrangement, so if the garnishment of wages is causing you finance hardship, contact the creditor with proof. Don't give up after the first call.
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