If you have a wage garnishment, there are ways to stop it. One way is to talk to a credit counselor. They may be able to negotiate with your creditors.
Another option is to file for bankruptcy. This stops all collection action, including wage garnishment. However, bankruptcy is a last resort as it has long-term effects on your credit score and financial future.
Filing for Bankruptcy
If your wages are currently being garnished, it is essential to seek legal help immediately. A skilled bankruptcy attorney can file for bankruptcy on your behalf and halt the garnishment. They can also help you reclaim any garnished money that has already been taken from your paychecks.
Bankruptcy may seem like a drastic option, but it can be the best way to eliminate or significantly reduce your debts. It can also stop creditors from foreclosing on your home or repossessing your car. Additionally, it can temporarily prevent wage garnishment, creditor harassment and disconnection of utilities.
Filing for Chapter 7 bankruptcy will stop the garnishment, but it will not necessarily put a halt to all forms of debt collection. Some debts, such as alimony or child support, can’t be affected by bankruptcy, and others, such as income tax debt or student loans, are still eligible to be garnished.
Another simple and effective solution for stopping garnishment is to pay off the debt outright. If the creditor agrees, this will satiate your obligation and eliminate any remaining debt garnishment. You can borrow from family members or use emergency savings to accomplish this.
Alternatively, you may be able to negotiate a debt settlement with the creditor that results in a lump sum payment of a smaller amount of your outstanding balance.
Negotiating with Creditors
The best way to avoid wage garnishment is to work with creditors on a payment plan before wage garnishment begins. As soon as you start missing payments, it’s important to reach out to your creditors for a solution before they begin wage garnishment or take other collection action like calling your employer or filing a lawsuit. Depending on your situation, you may be able to come up with an arrangement for a lump-sum payment or one that includes monthly installments.
Once a creditor gets a judgment against you, they can ask your employer to withhold a percentage of your paycheck to help pay back what you owe. The amount that can be taken varies by state, but you can still try to negotiate a repayment plan or work with a debt relief agency.
If you can’t get a deal with your creditor or you have other financial problems, you can also try to file for bankruptcy. However, filing for bankruptcy can impact your credit scores and it’s not a good option for everyone.
Even if you don’t qualify for bankruptcy, you may be able to challenge the wage garnishment order based on legal grounds. If you can prove that the amount being taken from your paycheck is too much, the court can reduce or remove it. Contact a qualified attorney to discuss your options.
Filing a Claim of Exemption
Most creditors and debt collectors have to go through the court system to garnish your wages, but if they win, they can send your employer a legal document telling them to take a percentage of each paycheck for payment of what you owe.
Some kinds of income are exempt from garnishment, including Social Security benefits, alimony or child support and federal student loans. The IRS can also withhold money from your paychecks for unpaid taxes.
Wage garnishment exemptions vary by state, but typically include laws that prevent the creditor from taking certain types of income or more than a set amount of your wages. These exemptions often help lower-income debtors, while people who earn more might lose a larger portion of their paychecks.
If you receive a garnishment notice or order, consider filing a claim of exemption as soon as possible, even before your paycheck has been garnished. You may be required to fill out paperwork and submit supporting evidence, such as copies of your bills and receipts. If you file a claim of exemption, the judgment creditor or debt collection agency will have the opportunity to respond by sending in arguments against your claim.
The judge will review the evidence and make a ruling on the validity of your claim. Once your claim of exemption is approved, the judgment creditor or debt collection agency must stop garnishing your wages and must return any amounts withheld. If the claim is rejected, the judgment creditor or debt collection agency can continue garnishing your wages and levying funds from your bank account until the court issues a new ruling.
Contacting Your Employer
Creditors usually only resort to wage garnishment after they have tried other collection methods and negotiated a debt repayment plan with the debtor. Wage garnishment is a legal process that requires a court ruling and must obey state and federal laws.
Once a creditor obtains a judgment, they send the order to your employer and your employer is legally obligated to follow it. Depending on the type of debt, different rules apply. Some types of income are protected from garnishment, including federal student loans, alimony, child support and certain types of Social Security payments.
You can also fight the judgment in court, although this is often a complicated and time-consuming process. Generally, you will have a short window to respond to the garnishment notice. You can argue that more than the appropriate amount of your paycheck is being withheld, that a garnishment is taking money you don’t owe or that it violates the law in other ways.
If you do decide to contest a wage garnishment, make sure to consult with a lawyer who specializes in consumer protection or debt collection law. It’s also a good idea to talk with a credit counselor. They can help you get back on track and find solutions to pay your debts, such as negotiating a lower monthly payment or interest rate, extending the loan term or working out a lump-sum settlement.