One in ten Americans are having their wages garnished according to Automatic Data Process Inc. Originally reported by MSN http://on-msn.com/1vbfT5F
While the MSN story is troubling to say the least. It’s even worse than MSN reported. Wages can be garnished up to a whopping 60% of a person’s disposable earnings. The highest percentage allowed (50-60%) applies to child support. Other types of debt can range from 15%-25% of disposable earnings.
The Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title 3 (CCPA) www.dol.gov/whd/garnishment dictates what percentage can be garnished from an individual’s paycheck. The restrictions of “15%-60%” do not apply in all cases. Certain bankruptcy court orders and Federal or State tax debts have NO RESTRICTIONS!!
Before I go thru the specifics of ‘garnishments”, let me preface this by saying I am not an attorney. I am not giving you legal advice. This article is not intended in anyway to be “in lieu of” obtaining advice from an attorney. If you are being sued, speak with an attorney. If you believe that you are at risk for being garnished or you already have been garnished, my advice is “speak with an attorney” The information you find here is accurate, and you can rely on it as a “guideline” or “rule of thumb” However when it comes to the law there can be “exceptions, or exemptions or other things in the law that an experienced attorney can use to help an individual in ways this article does not cover. Use common sense people.
Wage Garnishments ABC’s
What is a garnishment?
A garnishment is a court or legal order that used to collect money or property from a judgment entered against a “defendant” (person being sued)
When a “lawsuit” is filed against an individual they are officially “sued” in a court of law. If they “lose” the case a judgment is entered against them. The judgment can than be used by the “plaintiff” (the person or entity that filed and won the lawsuit) to obtain a garnishment. The garnishment is placed against the individual’s paycheck.
How Much of your paycheck can be garnished?
You can be garnished on “disposable” income. That’s your “after tax” income. Which includes federal, state, and local taxes, Unemployment Insurance and Social Security and employee retirement if required by law.
The percentage you can be garnished depends on what you are being garnished for and in many cases what state you live in. The percentage also varies on whether you are being garnished from judgment (you have been sued) in state court or owe state tax or if the Federal Government is garnishing you for non-payment of student loans or tax debt.
The chart below breaks down the garnishment restrictions by state
How To Stop Garnishment
First things first, don’t panic. You can handle this. You already know the worst-case scenario, “your wages may be garnished” Now decide, are you going to fight it or just let it happen? Fear can be debilitating, stop the madness. If the garnishment can be stopped, then you CAN STOP IT. So put your fear aside, learn the steps to stop garnishment. This is not rocket science folks, it takes some work and there is a learning curve, but you can do this!
1st File Objection In Writing With Court
You should receive paper work from the Court that outlines what you must do if you wish to challenge the garnishment. However don’t wait to receive paper work from the court. If you know you have been sued and you know you have a judgment against you “assume the worst” Expect the creditor to try and garnish your paycheck. DO NOT WAIT FOR IT TO HAPPEN! That means you have to do your own homework. The legal system allows you to act on you own behalf. Some simple research and filing of forms (usually supplied by the court) may help stop garnishment. The things you need to know are;
- Deadline to file objection
- Are you required to use forms from the Court or can you write own objection
- Exactly what information must be included in the objection
- Location Objection must be filed
- Do you have to send a copy of the objection to the creditor or anyone else besides the Court
- Date & Time of hearing court will set to hear objection.
You may contact the Clerk of the Court where the lawsuit was held. They will be able to give you all the information listed above. They will provide you with or tell you how to obtain a form to file an objection. If the court does not provide a specific form then write the details of your objection the best you can.
Here is a list of the Garnishment Objection Forms by state – Click Here.
Word Of Advice About Writing To The Court And Speaking In Front Of A Judge
You maybe angry at the lawsuit or at the attempt to garnish your paycheck. You may think the whole thing is unfair and maybe you’re right. My advice is, get past it. DO NOT write some rambling nonsense about the unfairness of it all, and certainly do not go in front of a judge and go into a diatribe about how unfair it all is, and how the judgment is not fair or how the creditor took advantage of you, etc etc etc. Again, you maybe you’re absolutely right, but THE COURT DOES NOT CARE. THE JUDGE DOES NOT WANT TO HEAR IT. The case has already won, the judgment has already happened. Give them the facts and the information as required by the “objection to garnishment” process. Follow the rules. Don’t go to court emotional or angry. If you are emotional or angry, then don’t show it. Be s “matter of fact” as you can be. If you are going to object to the garnishment you need to convince the court that your objection is legally correct based on the law. Remember it’s not whether it’s right or wrong, it’s not whether it’s fair or unfair. It’s only what the law says. So find something in the list of Federal or State rules, guidelines, or laws that exempts you from garnishment.
Types of Garnishments (Wage & Non-Wage)
There are two types of garnishments. Wage & non-wage garnishments. A “wage” garnishment is when your “paycheck” has funds taken to pay a judgment by creditor or judgment holder. A “non wage” garnishment is when a creditor or judgement holder takes funds from your bank account.
A judgment holder can have your account “frozen”, meaning that the funds in your account (up to the total amount of the judgment are frozen or not available to you. Even though there are exemptions from certain funds being garnished (SSI, Disability as two examples) Do not fool yourself into thinking that you are protected just because your income is from SSI, Disability or any other “exempt” source. You are not. Your account can still be frozen. Then you have to go to court and prove that your funds are “exempt”.
One way to protect yourself from SSI or Disability income from being frozen is to have the funds electronically deposited by the Federal Government into your account. In 2011 the United States Treasury Department passed a rule that prohibits certain types of income from being frozen. Keep in mind that the only way the bank knows that your income is from a protected source is if your funds are deposited by the Federal Government into your bank account. YOU HAVE NO PROTECTION FROM AN ACCOUNT FREEZE IF YOU DEPOSIT AN SSI OR DISABILITY OR OTHER “EXEMPT’ INCOME BY CHECK!
Confidentiality & Job Termination
A garnishment is not “confidential” When an employee is garnished the employer is notified (typically by certified mail) the best-case scenario is that only the payroll manger knows an employee is being garnished, however don’t expect that to be the case. At a minimum management will likely know when an employee is being garnished. There is nothing “private” about it. As a matter of fact not only is the garnishment not “confidential” the lawsuits that lead to the garnishment is not “confidential” either. It’s all a matter of public record. Anyone that wants to find out if you have been sued can find out.
What Can You Do
If you know the garnishment is coming, talk to your employer privately and make them aware of what is happening. You don’t owe your employer an explanation, but it might be a good idea to give one anyway. The more sensitive your job is, the more concern an employer may have if you are having financial problems. Government employees and members of the military for example can find their security clearance at risk due to financial problems.
Legally you can’t be terminated from your job or disciplined due to a garnishment. (That’s according to the United States Department of Labor) That may be true in theory, however a garnishment may seriously diminish the trust an employer has in an employee, so make sure you are the one that tells your employer. Don’t allow your employer to “assume” what’s going with you. Better it comes from you, and explain in your words as much as you feel appropriate. (Probably best not to over-explain) Reassure your employer that the garnishment will not affect your job performance in any way.
How To Avoid Wage Garnishment
The way to avoid wage garnishment is simple. Pay your bills on time and you won’t get sued in the first place. That being said life is not always that simple. The most important thing when it comes to avoiding wage garnishment is not burying your head in the sand. If you are unable to keep up with current monthly payments, you need to address that now. Don’t just let things go. Deal with it the best you can.
If you have fallen behind on credit card payments you want to consider debt consolidation, offered by non-profit agencies. If you have fallen behind on your car payment contact your lender and work out a payment plan. Many auto loan lenders will defer payments if you ask.
For a judgment that is already in affect, don’t just assume it’s going to end up in garnishment. Even after you have been sued and judgment placed against you, a creditor will work out a payment plan with you. Make sure you have the “temperament” to work out a payment arrangement on your own before calling. Many times it’s better to get professional help thru credit counselor, legal aid. Sometimes even a friend or family member that has the talent to “negotiate” on your behalf is better than you doing it on your own if your to emotional about it.
The most important thing is that you know what you can pay, and be prepared to pay something when you contact the creditor. DO NOT contact a creditor to make re-payment arrangements if your not prepared to pay something “today” You have no creditability if you do that.
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