According to the NPR, one in ten working Americans between the ages of 35 and 44, and about 3 percent of all employees, are dealing with a wage garnishment. If wage garnishment is affecting you, you are not alone, and we can help.
What Is Wage Garnishment?
- Wage garnishment occurs when a court issues an order requiring your employer to withhold a portion of your paycheck, and send it directly to the person or institution to whom you owe money (aka creditor). Creditors that have no claim to property often use wage garnishments to get their money back.
- Each state has a limit on how much of your paycheck can be garnished, but often up to 25% of your disposable income can be taken before you even see it. Garnishment can continue until the entire debt is paid off or other arrangements are made.
How Does Garnishment Affect My Job?
- Your employer will know that your wages are being garnished, but federal law restricts your employer from firing you because of it– unless more than one creditor has a judgement to garnish your wages.
- What’s A Judgement? In most cases, wage garnishment cannot occur without creditors filing a lawsuit against you and obtaining a judgment first. However, in cases of federally guaranteed student loans, child support/alimony, or taxes, creditors may garnish your wages without a judgement.
- If you change jobs, wage garnishment may not follow to the next job. Each garnishment is a seperate court order and must name a specific employer. However, severance and bonus pay will likely be affected.
How Can I Avoid Wage Garnishment?
Filing Chapter 7 bankruptcy and Chapter 13 bankruptcy can help you prevent or put a stop to wage garnishment. When you file Chapter 7 bankruptcy, you’re telling the government that there’s no way you can repay all your debts based on your income. When you file Chapter 13 bankruptcy, you set a court-controlled debt payment plan for 3-5 years. Both options discharge any debts you can’t pay, and the law will impose an automatic stay on your wage garnishments.
What Is an Automatic Stay?
- An automatic stay stops wage garnishments and protects you from creditors during your bankruptcy case. The automatic stay can put a stop to a current garnishment or prevent one that has not yet been implemented.
- If a creditor wants to lift the automatic stay, they would have to go through the courts and have a valid reason for wanting to do so. This means that credit card companies generally don’t have valid reason for lifting stay. However, garnishment for causes such as child support or alimony will not stop with an automatic stay. Thankfully, by federal law, the amount that can be garnished by these obligations is still regulated.
What Can I Do to Stop My Wage Garnishment Quickly?
- In order to quickly stop your wage garnishments, you will need to notify the payroll department of your employment about your bankruptcy case as soon as possible. Then, you can notify the local sheriff’s office or levying officer in your area of your bankruptcy case. They handle wage garnishments, so this will allow them to get the garnishments stopped as quickly as possible.
Can I Recover Wages Garnished Prior to Filing Bankruptcy?
Yes, you can generally recover garnished wages!
- Must be garnished within the 90 days prior to your bankruptcy filing.
- Wages must equal $600 or more total.
- Must be able to exempt the funds
In order to recover these wages, you must file a complaint in your bankruptcy and ask the creditor to return the garnished wages.
Talk to your attorney about this option before proceeding.
What Happens When Your Bankruptcy Case Ends?
- When your bankruptcy case ends, the automatic stay ends. However, if the bankruptcy pardons the debt that was the subject of the garnishment, which is very likely, then the creditor cannot continue the wage garnishment.
With the right lawyer by your side, you can successfully put a stop to wage garnishment, or avoid it completely. At Hall & Navarro our attorneys are well versed in the bankruptcy process and can help you get the absolute best outcome. Take the first step towards financial peace today, and complete a case evaluation. Our legal team will contact you for a consultation to see if filing bankruptcy is the right decision for you.