According to a study conducted by the ADP Research Institute, around 13 million working adults in America have wage garnishments on their salaries. Reasons for regular deductions on one’s wages varied from unpaid credit card debt to missed payments on student loans.
A quick, simple way to stop wage garnishment would be filing for bankruptcy. However, it wouldn’t be beneficial for the average working adult to destroy their credit score just to clear their debt.
Contrary to popular belief, declaring bankruptcy isn’t the only way to absolve the garnishment amount. Exercise your rights as a debtor. There are multiple legal strategies you can follow to stop a wage garnishment that’s heavily affecting your personal finances. Only treat bankruptcy as an absolute last resort.
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What are wage garnishments? These are when an employer withholds a specific portion of their employee’s salary and directs it toward debt repayment. For salary garnishment to push through, a third-party creditor must appeal to the court regarding the said employee’s outstanding debt or loan.
Some reasons why a creditor may garnish your wages include unresolved child support duties, missed monthly car payments, outstanding student loans, and unpaid consumer debt. If you are subject to wage garnishment, expect debt payments to be automatically deducted from your bank account or salary every two to four weeks, depending on the set payment plan.
A common misconception about wage garnishments is that declaring bankruptcy and having the automatic stay clause take effect is the only way to halt wage deductions for debt payment.
Yes, an automatic stay might clear almost any type of debt from unpaid real estate property loans to missed car mortgages. However, bankruptcy will also ruin your credit score.
Working adults with a poor credit score will have a harder time finding a good property to lease, qualifying for various loans, and sometimes even applying for a job position. Before resorting to an automatic stay, opt for the other ways to stop a wage garnishment.
Before you consult with a bankruptcy attorney or start looking for a lawyer referral service, try to negotiate with your creditor first. These types of cases are costly on the creditor’s part as well. If you and the other parties involved can come up with a mutually beneficial deal that allows everyone to save money, there’s no reason for the creditor not to make an agreement with you without elevating the case/issue.
A creditor will only be able to order garnishment of your wage if they sue you in court and win the case. That means that if you fail to comply with court proceedings, the plaintiff will be granted the case through default judgment and you, the debtor, will automatically be subject to salary deductions.
It’s important for debtors with multiple sources of income to file for a claim of exemption. Bear in mind that your creditor can take up to 25% of your monthly income, so if you do not protect miscellaneous profit streams (freelancing gigs, contractual projects, online stores), the court might make deductions on these as well.
Bear in mind that creditors are only forced to sue debtors for wage garnishments if the latter has outstanding loans and is consistently missing payments. If you have sufficient savings, consider paying the entire debt amount in one go. This is perhaps the fastest, best way to get rid of wage garnishments without hurting your credit history or attending time-consuming court proceedings.
Salary or bank account garnishment is mandated by the court when a creditor sues a debtor for outstanding loans and multiple missed payments on the following:
The court takes unpaid child support payments very seriously. In most states, parents who willingly forego making the necessary child or domestic support charges for the expenses of their former spouse and child automatically get a garnishment notice after a few months of missed payments.
Struggling to pay off monthly car loan payments but don’t want to surrender your vehicle to the bank? Expect the creditor to file a garnishment notice. If you don’t really need the vehicle or have absolutely no means of maintaining one, consider surrendering the vehicle to your creditor before your debt piles up.
Unlike unpaid car loans or consumer debt, the court is quite lenient when it comes to missed student loan debts. Some states don’t even allow student loan creditors to garnish their clients’ wages. If you’re facing an insanely high amount of student loans with steep interest rates, you might be able to convince the court to stop a wage garnishment or work out a better payment plan.
The IRS is very strict with unpaid taxes. There’s no doubt that their creditor can have a court sentence you to comply with garnishment if you repeatedly fail to file and pay your taxes on time.
No matter how high your existing debt is, no creditor can have the county garnish more than a quarter of what the employee receives every payday.
The ADP Research Institute reports that more than 13 million working Americans aged 35 to 44 had some type of debt that required wage garnishment.
Getting a court order for garnishment can be very confusing for anyone. Fortunately, you don’t have to go through the process alone. A garnishment order is not 100% absolute or irrevocable. Every debtor has the right to contest deductions on their wages—whether the garnishment is for unpaid car loans or ongoing child support.
For a more accurate, personalized strategy on how to effectively stop a garnishment order, talk to a bankruptcy lawyer or debt/credit counselor. Professional legal advice is a must for these types of cases. A licensed expert can help you assess the details of the order and determine if the creditor actually has the legal right to garnish your wages based on state law.
Do you need more information on how to stop the garnishment of your wages to meet living expenses? AnyCredit provides free resources on how the average American can achieve financial freedom without having to shell out a large amount of money. Get debt relief tips at AnyCredit!
