Many Americans face the problem of wage garnishment. It can be upsetting for someone to experience their wages being taken from them, however, there are ways for people to protect themselves. This post outlines some tips on how to stop wage garnishment and get out of debt.
What is Wage Garnishment?
Wage garnishment is a legal procedure in which a portion of someone’s earnings are withheld by an employer and diverted to pay off that person’s debt. This is a common tool for debt collection. In most cases, wage garnishments are made by court order.
How The Process Works
Getting a wage garnishment in place begins with a creditor filing a lawsuit in court. It could be a bank, credit card company, or another creditor suing someone for nonpayment. If a creditor is successful, they will get a judgment against the person they are suing. This judgment will allow them to obtain a garnishment order. This garnishment order will then be sent to a person's place of employment.
Should a wage garnishment be in place for a person, the department that processes their paycheck must withhold a specified amount of wages. There is a limit on the amount a creditor can garnish an individual's wages. According to federal law, the amount of a wage garnishment can't exceed 25 percent of a person's take-home pay. It could also be the amount of take-home pay that is over 30 times the federal minimum wage. The lesser amount is what a creditor can take from a paycheck.
How to Stop Wage Garnishment
A collection agency or creditor must obtain a judgment from a court before they can be given a garnishment order. Of course, the collection agency must first win its lawsuit against a debtor in court. Here are a few tips to know about stopping wage garnishment:
6 Tips on stopping wage garnishment:
Exceptions
Never Ignore the Lawsuit
Avoid Default Judgments
Challenging Garnishment
Debt Counseling
File Bankruptcy
#1 Exceptions
A person's social security benefits, as well as wages, can be garnished without court involvement. This is the case with student loan debt or back taxes. The IRS or Department of Education can garnish a person's wages without the requirement of filing a lawsuit or obtaining a judgment.
#2 Never Ignore The Lawsuit
Should someone ignore the lawsuit filed against them by a creditor, they will just be avoiding the inevitable. Should a creditor not receive a response, they can ask a court to award them a judgment by default. This is known as a “default judgment”.
#3 Avoiding Default Judgments
Answering the lawsuit is the best way for a person to avoid having a default judgment made against them. This will require filing a document known as an answer, which is a legal response to a lawsuit filed with the court. There is a filing fee to submit this document to the court. Once a person has successfully filed their answer, the court cannot render a default judgment. This will provide some time for a person to create a repayment plan with the creditor. A person should always be willing to try to negotiate wage garnishment.
#4 Challenging Garnishment
It is possible to dispute wage garnishment. A person will get a copy of the court order for garnishment after a judgment is made. A person will also be given instructions on how they can go to court and challenge the garnishment order. It is important to act quickly. A person may have only five days to file the paperwork for an exemption claim or similar documents. If a person misses this filing date, their employer will be legally required to garnish their paycheck.
#5 Debt Counseling
It is possible to participate in a free credit counseling session offered by a nonprofit organization known as a credit counseling service or CCS. After reviewing a person's situation, these organizations may be able to provide advice on avoiding wage garnishment. It is also possible they may create a payment plan for creditors.
#6 Filing Bankruptcy
A person could have more than one creditor filing a lawsuit against them. People in this situation may want to consider the fresh financial start provided by filing bankruptcy. Once a person has filed for bankruptcy protection, the wage garnishment must stop. Their creditors will be given notice the person is protected under bankruptcy law. If the debt to the creditors is dischargeable from bankruptcy, the garnishment permanently ends. The exceptions to bankruptcy protection are alimony and child support.
In Closing
Knowing how to stop wage garnishment is essential. There are several strategies to avoid wage garnishment. This may require negotiating a payment plan with a creditor, challenging a judgment from a court, or even filing bankruptcy. It Is essential for everyone who is facing wage garnishment to realize they have options.
If you need help stopping wage garnishment in Michigan, contact Moran Law - we can provide you with a fresh start by filing for bankruptcy. Our team of Michigan bankruptcy lawyers is here to help you through this tough time. We offer free no-obligation consultations.
