Wage garnishment is when an employer must withhold money from your paycheck to pay your creditors. This can occur because of missed child support payments, late student loan payments, court judgments, or delinquent taxes. If you’re worried you might face a wage garnishment or you’re already having your wages withheld, there are steps you can take to stop it. Learn how to stop wage garnishment and get on the path to debt repayment.
Taxes, child support, alimony, and student loan debts usually don’t have to go through the court system to obtain a wage garnishment. For all other types of debt, most creditors must sue you in court and win a money judgment against you to garnish your wages.
Once the creditor gets the judgment, it sends the wage garnishment order to your employer. The order tells the employer how much money to withhold from your paycheck and where to send that money. At this point, your wages will be withheld until your debt is fully paid or you take certain steps to stop the garnishment. Your employer is required by law to withhold your wages, so you won’t be able to negotiate with them to stop the garnishment.
Keep in mind that for most creditors, wage garnishment is a last resort. The fastest and easiest way to stop a garnishment is to pay off your debt. The majority of creditors would rather pursue repayment options than deal with the hassle of wage garnishment.
However, if it’s not possible to completely pay off your debt, you still have other options. Most creditors are open to arranging a settlement or repayment plan. It’s best to work out a plan before the garnishment begins, but it’s possible to come to an agreement on an installment plan after the garnishment is in effect.
After your creditor has obtained a judgment against you, you’ll likely get one last warning before your wages are withheld. This warning is usually called a “demand letter.” It’s important that you don’t ignore this letter because, at this point, you still have a chance to stop the garnishment before it begins. Most creditors would rather get voluntary payments from you than deal with the time and cost of filing paperwork to start the garnishment. If you receive a demand letter, take this opportunity to set up a payment plan with your creditor and avoid the wage garnishment process.
If your creditor won its wage garnishment case or got a default judgment because you didn’t respond to the lawsuit, you do have a short window of opportunity where you can object to the judgment. When you receive the paperwork that details the judgment, make note of how long you have before the wage garnishment begins. This is the time limit you have for challenging the judgment. Every case is different, and the time frame could be as short as five days or as long as a month.
This paperwork should also include information about how you can submit your objection. If you don’t see these details, you can contact the clerk of the court to get it. You have several grounds for objection, such as:
Arguing the details of your objection is one of the most important parts of your case. You’ll need proof or paperwork to back up your claim. This is why it’s important to submit your objection as soon as possible. If you wait too long or your paperwork is incorrect, the garnishment could proceed as ordered.
If you can prove that the garnishment amount is too high and would prevent you from buying basic necessities, you can object because of financial hardship. The process for this objection depends on the type of debt that led to the garnishment.
In the case of back taxes, you’ll usually receive a letter from the IRS stating that it intends to withhold your wages. This letter should allow you to claim an exemption based on your household size and income. If you’re dealing with state taxes, you can reach out to your state’s franchise tax board to set up an alternative payment plan if the garnishment would be a financial hardship.
Although not common, you can also object to wage garnishment if you believe the judgment was incorrect. This can occur if the debt was discharged because of bankruptcy or the debt was a result of mistaken identity or identity theft. Since these cases can get complicated, you might want to consider getting legal help to assist you with this objection.
Your first step should be writing a letter to the creditor to explain why you’re not responsible for the debt. You’ll need to include copies of all the evidence you have and ask the wage garnishment proceedings to stop. Also, keep in mind that it’s important to solve the underlying issue that resulted in the incorrect judgment, especially if it was because of identity theft.
Another way you can object to the wage garnishment is if the creditor didn’t follow proper procedures when submitting the case against you. For example, the court might stop the garnishment if you can prove the creditor didn’t give you timely notice about the garnishment.
If you already paid your debt, or if your creditor received a full or partial payment from another source, such as voluntary payments or bank attachments, you can object to the wage garnishment. This is an important objection to ensure you’re not paying more than you legally have to, and it also shows why it’s important to keep detailed notes and paperwork about everything regarding your case.
If the court decides to issue a hearing for your objection, it’s important you attend to protect your money. The hearing day and time will either be given to you during the initial notice or set up after you’ve filed the objection. If you don’t receive information about the hearing date, be sure to contact the clerk of the court right away so you can find out the hearing date.
During the hearing, you’re not allowed to argue about the wage garnishment judgment. Instead, you’re only able to state why you think the garnishment is improper or why you believe you deserve an exemption. You’ll want to make sure you bring copies of any documents you have that support your claim. For example, if you’re claiming a financial hardship objection, you should bring recent paystubs to show your income can’t provide for necessities after the wage garnishment.
While wages are always subject to garnishment, you do have some exemptions that protect certain kinds of income from wage garnishment. The idea behind these exemptions is that you should be able to protect some of your earnings from creditors so that you can pay for normal living expenses. While each state has different laws detailing what exemptions you have available to protect your wages, most creditors can’t withhold money from:
Depending on the situation you’re in, you might be able to seek partial or full protection of your income. However, it’s important to keep in mind that exceptions do apply, and this can include garnishment because of delinquent student loans or federal taxes.
Another exemption available is called the “head of household” exemption. This is a special type of protection that can secure some or all earnings from wage garnishment if you can prove that 50% or more of your financial support goes toward taking care of a child or other dependent. It’s important to remember that not every state has this exemption.
The following is an example of how you might be able to apply for an exemption to protect some of your wages if your state has the head of household exemption. You receive your paycheck and notice that it’s 25% lower than what you typically make, and you find out your wages have been garnished. However, you provide more than half the support for a dependent under your care.
You fill out a form stating your claim for exemption and note why you believe the head of household exemption applies to you. You file it with the same court that issued the wage garnishment in the first place. At this point, a judge will look at your case to determine if you qualify. If so, the garnishment will either be reduced or eliminated depending on your state’s laws.
If you feel you qualify for any of your state’s exemptions, you need to file a claim of exemption. This document will require your name, the name of your creditor, and your case number. You’ll also need to note the exemption you believe applies to your situation. In most states, a hearing will be scheduled once the court receives your claim of exemption.
You’ll get a notice of the hearing in the mail. You’ll need to attend the hearing because the judge will ask you to explain why you believe the exemption applies to you. If the judge agrees with your argument, he or she will make the creditor stop or reduce your wage garnishment. However, if the judge disagrees, your wage garnishment will continue.
Even after wage garnishment has started, you should still try to negotiate with your creditor to come up with a solution to pay off your debt. This is especially true if your financial circumstance changes and you find you can pay off a large portion of the debt. For example, if you get a bonus at work or an income tax refund, you might be able to reach an agreement with your creditor where you make a lump sum payment to settle the debt.
As mentioned earlier, certain types of debt, such as taxes, don’t require the creditor to go to court to get a wage garnishment. However, you still have some rights in these cases. If the IRS is seeking to garnish your wages to pay your tax debt, you should receive a written notice of this intent. At this point, you’ll be allowed to claim exemptions depending on your income and household size. Your state and local authorities may also be able to withhold wages to pay off your tax debt, but they have caps on the amount they’re allowed to take from your wages.
Another option that can stop wage garnishment is filing for Chapter 7 or Chapter 13 bankruptcy. Filing for bankruptcy immediately puts a stop to any wage garnishments. However, you should consider bankruptcy a last resort since it can have a long-term effect on your credit and make it difficult to get loans and mortgages.
If you have to file for bankruptcy, you’ll get to exempt some property to maintain a household and employment, such as one car, clothing, and furniture. However, selecting these exemptions isn’t of your choosing. Every state has a list of what it allows exempted during bankruptcy, and any property not on this list is nonexempt.
In a Chapter 7 bankruptcy case, the court selects an official to oversee your case. This official is in charge of selling all your nonexempt property and distributing the proceeds to your creditors. For Chapter 13 bankruptcy cases, you’re allowed to keep your nonexempt property, but you must pay your creditors its value or more during a repayment plan that will span between three and five years.
While wage garnishment feels like an overwhelming and stressful prospect, we’re here to help you navigate your way through the process and possibly even stop wage garnishment before it starts. Contact us today to see how we can provide the assistance you need in your wage garnishment case.