There are many reasons for wage garnishment to happen to anyone. Therefore, it is important to understand what it means and which outstanding dues can expose you to the risk of wage garnishment.
Creditors will garnish your wages as the last resort to recoup their losses from the debtors who are seriously behind on their payments. The process involves taking a portion of their paycheck to pay the outstanding dues. In most cases, a court order is mandatory to begin the process of wage garnishment that involves using the borrower, getting a judgment, and then obtaining the order from the court.
Once all the steps are completed, the employer is obliged to obey the order and pay a portion of your salary to the creditor. The amount that is permissible for garnishment varies from state to state and only applicable to certain types of debt.
In most cases, any debt that remains unpaid can give creditors the power to garnish your earnings. However, they must first obtain a judgment and a court order before garnishing your salary. But not all debts require a court order, some unpaid debts can result in direct garnishment. Some of them include:
- Child Support Payments and Alimony: Child support orders, if unpaid, are exempt from court action to initiate the garnishment procedure. According to federal law, up to 50% of your wages can be garnished to clear unpaid child support payments. This portion is taken from the defaulter’s disposable earnings.
- Overdue Income Taxes: The IRS can garnish your salary if you have not cleared your back taxes, without obtaining a court order. The permissible amount that IRS can garnish depends on a number of factors such as the number of dependents, deductions, and your filing status. The local and state governments are also allowed to garnish your income if you fail to meet your tax obligations. However, this amount is determined as per state law.
- Unpaid Student Loans: Even though student loans are eligible for forbearance or deferment for up to a year, the Department of Education can garnish your salary without the court order if your account has been long past due. This type of garnishment is between 15-25% of your disposable income.
Garnishments that Need Court Order
While there are some debts that do not require a court order, others such as credit card debt or unpaid medical bills do. The creditor can reclaim their payments by garnishing your wages but first, they must obtain a judgment from the court before the process can begin. According to federal law, the amount that can be garnished in these cases cannot exceed 25% of your disposable income.
It is very common for medical bills or credit card debts to become eligible for wage garnishment. However, in most cases, these accounts are first sold to debt collection agencies. If these collection agents also fail to recover the payments, the company can sue the debtor and a judgment may be issued for wage garnishment.
Tips to Avoid Garnishment
The best way to prevent wage garnishment is to maintain the timeliness of your payments and to preserve your credit scores. However, in case your paycheck is being garnished, then you can speak to an Attorney for wage garnishment who can take appropriate action on your behalf that can stop the garnishment process. In some cases, you may also be able to request the court to reduce the garnishment amount so that you can support yourself and your family. Since garnishment laws in some states differ from federal law, the court is obligated to reduce the amount as per state law.
The most crucial step to avoid garnishment is to prevent the situation in the first place. If you have fallen behind on a few payments due to unforeseen circumstances such as financial hardships or loss of job, then consider hiring a credit repair expert to get back on your feet before things escalate.
A credit repair service provider will check your credit and help you evaluate your situation in terms of financial liabilities and debts. It can also help you in looking for available options that can allow you to consolidate your debt and get things back on track.
Did you know that you can keep a track of your scores by checking your credit report? You are allowed to get a free copy from each bureau once every year. Experts advise that you can request a copy once every four months to closely monitor your scores each year.