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How to Stop Wage Garnishment
By Shelby Bennett MONEY RESEARCH COLLECTIVE
Are your wages being garnished due to outstanding debt? If so, you’re likely feeling overwhelmed, confused and frustrated. Wage garnishment is a significant financial burden that can cause immense stress – but it doesn’t have to be this way.
In this article, we’ll discuss what is wage garnishment, how the wage garnishment process works, and how to stop wage garnishment. We will also try to answer some frequently asked questions, like how to check a wage garnishment balance, who can garnish wages and when a creditor can garnish your wages. Read on for more information about understanding wage garnishment and taking steps toward regaining control of your finances.
What is wage garnishment?
With tough economic times, wage garnishment is becoming an increasingly common way for creditors to get their money back. According to a report by the National Consumer Law Center, wage garnishment affected more than 4.5 million workers in 2020. Wage garnishment is a legal process by which part of your wages is withheld from your paycheck to pay off creditors, debts or taxes owed.
The Federal Consumer Credit Protection Act legally limits the amount creditors can take from your paycheck and prohibits employers from firing you because of wage garnishment. The law stipulates the maximum amount deductible, which varies by state. This amount is usually determined by the type of debt and how much money you make.
How the wage garnishment process works
In most cases, wage garnishment is a last-resort attempt resort by creditors looking to get their money back. They usually will have tried other means, such as negotiations, structured loan repayments and collection agencies. If these have failed, the creditor may then petition the court to garnish your wages.
Once the creditor has requested a garnishment, the court must approve it and send it to your employer for processing and compliance. The employer must deduct the amount from your paycheck and remit it to the creditor. Your employer is then obligated to comply with a wage garnishment order or risk liability for the repayment of the debt.
The most common sources of wage garnishment include:
- IRS taxes
- Student loan debt
- Alimony
- Child support payments
- Credit card debt
- Personal loans
- Consumer debt
- Credit card debt
- Unpaid medical bills
Once the garnishment has begun, it will continue until the debt is paid off or you take legal action to stop it.
Who can garnish your wages?
While creditors usually start the process, there are several other entities that also have the right to garnish your wages. The IRS can garnish your wages for unpaid taxes without obtaining a court order. The holder of your federal student loan can also request a student loan wage garnishment without filing a lawsuit if your student loans are in default. Child support orders and alimony payments are also grounds for wage garnishment.
Creditors, on the other hand, cannot garnish your wages without a court order. The creditor must notify you of their intent to garnish your wages before they can begin. The creditor must also provide documentation that proves the debt is yours and must adhere to the regulations of the Fair Debt Collection Practices Act.
If your wages are subject to garnishment, you will receive a notice of the amount and frequency of the deductions so that you can plan accordingly. In most cases, collection agencies cannot garnish more than 25% of your wages.
How to stop wage garnishment
If you’ve been served with a wage garnishment order, it’s vital to act quickly. When looking to stop the garnishment process, you should first determine whether there are legal or financial options that could halt the process. The following are some common ways to stop wage garnishment.
Pay off the debt in full
One of the most common ways to stop wage garnishment is to pay off the debt in full. This will immediately cease wage garnishment and can provide you with peace of mind that the wage garnishment will not be deducted from your paycheck. But before taking this course of action, understand the repayment terms and potential financial implications. Evaluate your expenses to decide if you can afford the debt in a single payment. If so, paying off the debt in full may be the best solution to stop wage garnishment.
Agree on a payment plan
If your current financial situation doesn’t allow you to pay off the debt in full, you may be able to negotiate a more manageable payment plan with your creditor. This could include negotiating a lower monthly payment or interest rate, extending the loan term or negotiating a lump-sum settlement. If successful, you could stop wage garnishment and make the debt more manageable.
Having a plan in place should help you avoid further collections or legal action while reducing the interest you have to pay. Keep in mind that creditors may be willing to work with you if they think it will benefit them, so don’t be afraid to negotiate. Doing your research beforehand and understanding what you can realistically afford should help make the process smoother.
Challenge the judgment in court
If the wage garnishment is due to a judgment, it may be possible to challenge that judgment in court. Depending on the circumstances and evidence available, a wage garnishment lawyer may be able to help you. Challenging the judgment can be time-consuming and complex, but it may be your best option if you have a valid legal argument.
A hearing will be necessary to present your case in court. If you’re successful, the judgment may be entirely overturned or modified. If this occurs, it could stop the wage garnishment process altogether. Remember, though, that you must demonstrate that your case has merit under the laws of the state where you live.
File a claim of exemption
If you believe any portion of your wages is exempt from garnishment, you must file a claim of exemption. For example, if you are the head of a household, have dependents or have low income, you might file a claim of exemption. Also, if another creditor is already garnishing your income, you could file a claim to limit the amount taken.
Certain types of income are exempt from garnishment:
- Child support
- Social Security
- Alimony
- Veterans’ disability benefits
- Unemployment benefits
- Public assistance
If you believe your income falls into this category, you can file a claim for exemption. When you present your claim, you must prove your wages are exempt from garnishment under your state’s exemptions.
File for bankruptcy
Despite the stigma associated with a bankruptcy filing, it can be an effective way to stop wage garnishment and regain control of your finances. When you file for bankruptcy, the court will issue an automatic stay that stops all wage garnishments and other debt collection activities. Certain types of debt, such as credit card balances and medical bills, may be discharged entirely or reduced through a bankruptcy filing.
When considering filing for bankruptcy, understand that it will hurt your credit score and remain on your credit report for up to 10 years, depending on the type of bankruptcy. Certain debts, such as student loans and child support payments, are not dischargeable through a bankruptcy filing.
How to check your wage garnishment balance
Keep track of your wage garnishment balance and check on it periodically. This way, you’ll know when the garnishment is completely paid off – and you’ll also be able to determine whether your creditor has improperly continued to garnish your wages even after the debt has been paid. Here are some tips on how to check your wage garnishment balance.
Contact the creditor
The best way to find out how much of your wages can be garnished is to contact the creditor directly. Get in touch with them directly using the contact information from the court order or the state or federal agency that issued the garnishment order. The creditor should be able to provide an up-to-date report of how much of your wages have been garnished and how much you still owe.
Review the garnishment order
The garnishment order will have important information about how much is being taken from your wages, how long the garnishment is in effect and other details. Carefully review the garnishment order and ensure all deductions have been adequately stated. You may be able to dispute any discrepancies if you believe that the amounts are incorrect.
Wage garnishment calculator
You can check your wage garnishment balance with a wage garnishment calculator. This user-friendly tool allows you to supply information, such as your gross income, deductions and allowable exemptions, and calculates the amount of your wages that’s subject to garnishment. The calculator also supplies valuable information about how long a garnishment will last and how much money is still owed after the garnishment ends. This can help you plan your budget accordingly and determine whether getting out of the wage garnishment is possible.
How much of your wages can legally be garnished?
Under the Consumer Credit Protection Act (CCPA), most creditors cannot garnish more than 25% of your wages. Additionally, if you receive payments weekly or biweekly, the total garnished amount cannot exceed 30 times the federal minimum wage (currently $7.25/hour). For example, the garnished amount from a weekly paycheck can’t exceed $217.75 (30 × $7.25). It is important to note that if you have multiple garnishments, the total amount cannot exceed 25% of your wages.
Child support payments are exempt from the CCPA regulations and can be automatically removed from your paycheck to cover overdue payments. In some cases, more than 25% of your wages is available for garnishment for child support payments, depending on state laws.
How long before a creditor can initiate a wage garnishment action?
Typically, a creditor must wait until the debtor has failed to make payments for a certain period before initiating wage garnishment. Depending on the type of debt and wage garnishment laws in a particular state, this period can range from two to six months. Once this time has passed, the creditor may take legal action to garnish the debtor’s wages. But the creditor must inform the debtor of their intention to pursue wage garnishment before taking legal action.
Should you get professional help if your wages are being garnished?
If your wages are being garnished, seek professional help. Depending on the debt you owe, an experienced advisor can provide you with tailored strategies to address your debt and help you resolve it promptly. Whoever you consult should help you access the right legal advice, understand the garnishment laws in your state and develop a plan to regain control of your finances.
If you’re facing IRS wage garnishment, consultation with the best tax relief companies can be invaluable in understanding the rights and responsibilities of all parties involved. They will provide you with options, such as understanding what is tax relief and how to file back taxes. They will also help you identify the best tax software and familiarize you with the current 2023 tax brackets. Additionally, they will provide you with tactics to negotiate with the IRS.
Professional help can also help you understand wage garnishment laws by state. Different states have different wage garnishment regulations and procedures, which can be difficult to understand. Their expertise and experience are essential in helping you understand how to deal with debt collectors.
Carefully consider your options
When you’re facing financial hardship, wage garnishment can be incredibly difficult and stressful. Figuring out the best option for stopping wage garnishment requires insight into your financial situation. While filing for bankruptcy might be necessary in some cases, alternatives (such as negotiating with creditors or appealing the court judgment against you) may be available. Getting help from a professional who can provide guidance and support is crucial. With the right help, taking control of your financial situation and stopping wage garnishment is possible.
Shelby Bennett is a veteran freelance writer with eight years of experience. She has a name for herself in the publishing industry, and her byline appears under some of the most well-respected authorities in the space. Shelby is a Guest Contributor for Capterra, Software Advice, GetApp, EC-COUNCIL, and many more.