If you’ve hit a financial rough patch and are struggling to keep up with your payments, it’s easy for your accounts to fall behind. Eventually, your debts may be sent to collections, and you might face a legal situation. This could lead to a summons, and soon, you’ll find yourself being sued by your creditors. If they win, a significant portion of your paycheck may start going directly to them.
Chances are, this all began because your finances were already under pressure. This process—known as wage garnishment or wage attachment—can make things even more difficult. But don’t worry, you still have rights and there may be ways to reduce or stop the garnishment.
The Law Firm of Higbee & Associates has helped tens of thousands of financially distressed clients and has the expertise to help with this difficult situation. Attorney Mathew Higbee says the worst thing people do when they get a garnishment is “nothing.” “Unfortunately, garnishments are real and ignoring them does not make them go away,” said Higbee. “Garnishments can greatly increase a person’s financial pressure and stress, as well as cause significant embarrassment.”
“One of the best things a person can do is to get Infront of the problem by attempting to negotiate with creditors before things get to a garnishment,” said attorney Naomi Sarega, who helps people settle their debts. “Our law firm can get a typical client out of several years faster than they would otherwise and, more importantly, keep the client from ending up with a garnishment.”
When Can Wages Be Garnished?
Creditors usually will not immediately start garnishing your wages if you miss a payment. They typically try other methods of collection first, and wage garnishment may only happen if those efforts fail, or if your debt is nearing its statute of limitations (the period after which debt collection can no longer be enforced).
If you have secured loans, like a mortgage or auto loan, creditors may first attempt to repossess or foreclose on your property to sell it and recoup their money. If the sale doesn’t cover the full debt, they could move to garnish your wages to recover the remaining balance.
Before they can garnish your wages, creditors must usually sue you and get a court judgment. This judgment will detail how much you owe, including the original debt, interest, and any fees. With the court order, the creditor can then ask your employer to withhold part of your pay.
However, certain debts like unpaid student loans, back taxes, child support, or alimony can trigger administrative wage garnishment (AWG), which do not require a court order.
Options for Reducing or Stopping Wage Garnishment
If your wages are being garnished, there are several options to either prevent it from happening or reduce the amount taken. Before taking any action, it’s a good idea to consult with a lawyer to understand your rights and options. Higbee & Associates offers free consultations. If you’re
unsure where to start, the Legal Services Corporation, a nonprofit, can help you find low-cost or free legal aid.
1. Negotiate with the Creditor One of the first steps to take is to contact the creditor trying to garnish your wages. You may be able to negotiate a lower monthly payment or settle the debt for a smaller amount than you owe. Lawyers who are skilled in this can typically handle this on contingency, meaning, they do not get paid unless they are able to negotiate a settlement that you want to accept.
2. File a Claim of Exemption Many states allow you to file a claim of exemption, which could either reduce or stop the wage garnishment based on your personal and financial situation. For example, if you’re the head of a household with dependents, you might be exempt from garnishment under certain circumstances.
3. Challenge the Garnishment You can challenge the wage garnishment on various grounds. For instance, if your employer is withholding more than the legally allowed amount, or if the creditor didn’t follow the correct procedure, you may have a case. Make sure to review any court documents carefully to confirm that the debt is actually yours. If the creditor is trying to collect on a debt you’ve already paid or that was discharged in bankruptcy, this could be a valid reason to stop the garnishment.
4. Consolidate or Refinance Your Debt Consolidating or refinancing your debt involves taking out a new loan to pay off existing debts. While this may be difficult if your wages are already being garnished, it’s still possible. You might be able to get a secured loan, such as a home equity loan, to pay off your creditors. Be cautious, though—using your home as collateral comes with significant risks if you’re unable to repay the loan.
5. Speak with a lawyer about other options. Sometimes it is possible to overturn the judgment that led to the garnishment on the basis of improper service or equitable reasons. Some people choose to hire an attorney to construct a financial relief plan that involves working with all of the person’s creditors to accept reduced payments (debt settlement), which assures that all creditor’s get paid something while keeping the person able to live and pay bills.
Limits on Wage Garnishment
Federal law places limits on how much of your income can be garnished. In general, the following types of income are protected from garnishment:
· Social Security disability, retirement, and dependent/survivor benefits
· Supplemental Security Income (SSI)
· Temporary Assistance for Needy Families (TANF)
· General assistance
· SNAP (food stamps)
· Unemployment insurance benefits
· Veterans’ benefits
· Child support
· Alimony/maintenance
Some forms of federal aid may also be exempt from garnishment, and your state may have additional protections.
For income that can be garnished, the amount is typically based on a percentage of your disposable income, which is the amount you take home after taxes and other required deductions. The limits depend on the type of debt:
· Consumer debt: Garnishment is limited to 25% of your disposable income, or the amount by which your disposable income exceeds $217.51 (30 times the federal minimum wage). This amount may change if the minimum wage is adjusted.
· Child support or alimony: Up to 60% of your disposable income (50% if you’re supporting another spouse or child). If you’re more than 12 weeks behind, the limit could increase by an additional 5%.
· Federal student loans: Up to 15% of your disposable income.
· Back taxes: Up to 15% of your disposable income.
Keep in mind that these are federal limits. States may have stricter rules or additional protections, so it’s important to know your local laws as well.
