Wage garnishment occurs when your employer is legally required to withhold a portion of your paycheck and send it directly to your creditor. This can happen as a result of a court order, and it usually means you have an outstanding debt that needs to be resolved.
There are a few things that can result in wage garnishments, such as owing money for child support, consumer debts, or student loans. This means that your employer is legally allowed to withhold a portion of your earnings until the debt is paid off or otherwise resolved. Although it can be difficult to deal with, there are some rights you have, like limits on how much can be taken at once.
Wage Garnishment: Types
Garnishing wages is more common than many people realize. In 2016, the ADP Research Institute found that 7% of the 12 million employees it assessed had their wages garnished. For workers ages 35 to 44, the number was even higher at 10.2%. The most common reasons for garnishment were child support, consumer debts and student loans, and tax levies.
There are two types of garnishment:
- Creditors can legally require your employer to garnish your wages to pay off your debts. This process is called wage garnishment.
- Creditors may be able to tap your bank account through a process called nonwage garnishment, also known as a bank levy.
If you owe money to a creditor, they may take legal action to get the money from you. This is called garnishment. In most cases, the creditor will sue you in court and get a court order to garnish your wages. But in some cases, the creditor can force garnishment without a court order. For example, if you owe child support, back taxes, or a balance on federal student loans.
The court will send notices to you and your bank or employer. The garnishment will start within 5 to 30 days, depending on your creditor and state laws. The garnishment will continue until the debt is paid off, including any interest and fees charged by the court.
Wage Garnishment: General Rights
As an employee, it’s important to know your rights when it comes to wage garnishment. Although the process varies from state to state, there are some general rights that all workers have.
- If your wages are going to be garnished, the law requires that your employer must notify you in advance.
- If the information in the notice is inaccurate or if you believe that debt isn’t yours, then it’s possible to file a dispute.
- Certain types of income cannot be garnished, such as Social Security or veterans benefits. However, this money can still be seized if it is in your bank account.
- If your wages are being garnished, it’s important to know that federal law protects workers from being fired because of one wage garnishment. However, this protection is lost if a worker has more than one garnishment.
You can challenge a garnishment order if you believe it was made in error, or if it is causing undue hardship to your finances.
Garnishment Judgments: What To Do
If you have been served with a judgment, it is important to take the time to verify that all of the information is accurate. Make sure that the debt is actually yours and that you have not already paid it. If it is your debt, think about how much money will be taken and what that will mean for your financial situation.
After carefully considering all of this information, you will need to decide what to do next. If you haven’t done so before, you may want to consult with a consumer law attorney or local legal aid to determine what would be best for your particular situation.
Try A Different Deal
Call your creditors as soon as possible. Having a conversation with them can be very powerful. By looking at your budget and seeing how much you owe, you may be able to work out a payment plan that works for both you and your creditor.
Fight The Judgment
You can object to a garnishment ruling in court within a few business days after it is made, if you believe it was made in error, will cause undue harm, or is being executed improperly.
If you are already facing a garnishment, you have the option to pay it off in installments according to the judgment, or in one lump sum. Taking out a personal loan or borrowing money from a family can give you the funds to pay off the judgment quickly and relieve the stress of making prolonged payments.
Being sued for a debt can be embarrassing, but honesty is the best policy when speaking to your manager or human resources department.
When you are facing wage garnishment and don’t see a way out, reach out to a nonprofit credit counseling service. They can help you explore options like repayment plans or bankruptcy.
If you are facing wage garnishment, there are still ways that you can improve your credit score. Although the judgment will stay on your credit report for up to seven years, there are steps you can take to help improve your credit both during and after the garnishment period. With some effort, you can still maintain good credit despite wage garnishment.
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