Protect yourself from wage garnishment

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It is possible that a creditor could obtain a court order to garnish your wages.  In other words, they can take money right out of your paycheck to pay your debts.  In some cases, wage garnishments may take more than half of your paycheck.

Wage garnishment is a drastic step, often used by creditors that have no claim to any of your property. Without any property or collateral to back up your credit card purchases or medical bills, a creditor may file a lawsuit against you and ask the court to grant their motion for your wages to be garnished.  Depending on your debt, the court will assign a percentage of your paycheck to be automatically deducted and sent to the creditor. Oftentimes up to 25 percent of your disposable income could be taken away from you. In cases of tax debt, much more could be taken out.

Wage Garnishment Laws

It’s possible that your spouse’s wages be garnished because of your debts.  In California, married couple’s debts and assets are considered community property. In this case, your spouse’s wages might be at stake even if the credit card and the debts are under your name.

As required by law, your employer must comply with the court order, and will be unable to stop wage garnishment. However, you are also protected by the same law, which says that an employer may not fire you because your wages are being garnished.

Wages are often garnished for the following reasons:

  1. Credit card lawsuit – Once a credit card account goes into default, and the creditor decides it cannot collect, it may sell the debt to a debt collection company. If the credit card or debt collection company is unsuccessful in recovering the debt, then a lawsuit may be filed against the consumer in an attempt to recover its losses. If the ruling in the lawsuit goes against the consumer, a judgment may be issued to garnish property, bank accounts or wages. 
  • Tax liens: unpaid state and federal taxes – The IRS and State Taxing Authorities have the power to collect back taxes by levying on taxpayers’ property as a result of a tax lien. When a person owes back taxes, the IRS/State can collect a lien on a particular taxpayer’s assets after meeting certain statutory requirements, which attaches to all rights, title and interest of the taxpayer.

Once the IRS/State has a lien on all of a taxpayer’s assets, they may enforce it by administratively levying his/her assets.  As a collection tactic, the IRS/State often imposes a wage garnishment, which means that they literally take money out of every paycheck – often enough seriously jeopardizing an individual’s lifestyle and making it impossible to maintain the same standard of living.  

  • Delinquent child support – Pursuant to child support enforcement laws in the United States, statutes permit the use of a variety of types of garnishments to collect past due child support, according to Find Law. 
  • Delinquent spouse support (alimony) – There is numerous ways to enforce an order for spousal support or alimony, including entry of a money judgment and wage garnishment. However, the availability these enforcement tools and how they are used are controlled by state laws and/or the rules of the courts in your area

Wage garnishment will only stop if:

  1. Your debts are settled
  2. Automatic stay in bankruptcy stops the action

If you are already facing financial disaster, garnishment can make it harder for you to support yourself and your family. By filing either Chapter 7 or Chapter 13 bankruptcy, you have the power to stop the action.  Both Chapter 7 and Chapter 13 bankruptcy may stop wage garnishment.  In the case of a Chapter 13 bankruptcy, the garnishment will stop for several years as you work through your repayment plan. In a Chapter 7, each state’s exemptions provide protections against wage garnishment. 

Note: This is not a legal advice and you need to speak to an attorney.  The Law Offices of Crispin C. Lozano has 19 years of experience in bankruptcy cases.  

Bankruptcy Basics

  1. Bankruptcy will actually improve your credit within one year because your unsecured debts are discharged.  Although the bankruptcy will be in your records for 10 years, not filing bankruptcy will make your credit even worse until most of your debts are paid in full.
  2. If you are being sued by your creditors, most money judgment can be eliminated in bankruptcy.
  3. Collection actions continue and you can be sued if you are in debt settlement.
  4. Chapter 7 will eliminate all unsecured debts.  If you are near retirement age, you must eliminate most of your debts.
  5. Bankruptcy will stop foreclosure actions.  If your trustee sale date is 10 days before, you can still file for bankruptcy.
  6. If your salary is being garnished, you have a court case about debts or you are being harassed by creditors, bankruptcy can stop garnishment, court cases, harassing creditors and eliminate the debt.
  7. Bankruptcy is cheaper, faster and safer than debt settlement which has no guaranteed success. 
  8. Preserve your health, eliminate stress and live a happy life by eliminating your debts which is the root of all problems.

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