Finding that your paycheck is less than usual due to wage garnishment is a stressful event. Although employees are protected from losing their wages completely, as well as their jobs, creditors with a court order or legal authority can require employers to withhold up to 25 percent of an employee’s disposable earnings. In some cases, such as unpaid child support or tax payments, an employer may have to withhold up to 60 percent of disposable income. Settling a debt becomes difficult once a creditor is granted a court order for wage garnishment, as there is little incentive for the creditor to agree to take less.
Wage Garnishment
There are warning signs before your wages are garnished. Deciphering the real threats can nonetheless be difficult since creditors often make threats long before they take any real action. Since most wage garnishments are court ordered, you can expect legal action to precede the garnishment. Generally, creditors must obtain a judgment to garnish your wages. By aggressively contesting the creditor before a judgment is entered, you may be able to avoid wage garnishment. But many debtors have judgments entered against them by default because they ignore the summons. Unpaid taxes or child support are likely to result in wage garnishment without legal proceedings.
Settling Debts
Settling a debt requires that you have some leverage. The creditor must believe that by settling the debt, you will pay them back money you otherwise might not. Once a judgment is issued and the creditor is able to receive payment through wage garnishment, you have little leverage for negotiating a settlement. At this point, the creditor has sufficiently proven the debt is valid and the court has ordered you to repay it. Of course, it doesn't hurt to try -- especially if you are considering bankruptcy.
Contesting Wage Garnishment
Simply complaining to your employer about your wage garnishment is a waste of time. Once your employer is ordered to garnish your wages, he doesn’t have the option to stop. If you feel the wage garnishment is in violation of the law, you can file a complaint with the Wage and Hour Division by calling their toll-free number 866-4US WAGE. In cases where your state's wage garnishment law differs from the federal law, the smaller garnishment is applied. If you feel there is an error in the court order mandating the wage garnishment, you can file a motion to vacate the judgment or consult an attorney for legal assistance.
Getting Out of Debt
One wage garnishment is bad enough, so do what you can to take care of other debts before they make their way to your paycheck, too. If you have more than one outstanding debt with the same creditor or collector, they may pursue additional wage garnishment. If you cannot afford to pay your debt in full, or are unable to negotiate a settlement you can afford, willingly make payment arrangements with the creditor. For some individuals, bankruptcy may provide a fresh start.
References
- United States Department of Labor: Wages and Hours Worked - Wage Garnishment
- US Department of Labor: The Federal Wage Garnishment Law
- US Department of Labor: Fact Sheet #30 - The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title 3
- AllLaw.com: Using Chapter 7 Bankruptcy to Stop Wage Garnishment
- CEFCU: CU Home Front Page Glossary Ask the Editor RSS Feed [?] About Us Tough Times Series: You Can Avoid Wage Garnishment
Writer Bio
Sara Mahuron specializes in adult/higher education, parenting, budget travel and personal finance. She earned an M.S. in adult/organizational learning and leadership, as well as an Ed.S. in educational leadership, both from the University of Idaho. Mahuron also holds a B.S. in psychology and a B.A. in international studies-business and economics.