by Hale Andrew Antico, Esq.

One of the more common ways people come to us is when they realize that their wages are being garnished. That startling usually is just the kick-in-the-pants of motivation that is needed to take care of something that has been put off for far too long.

How the Debt Got to a Garnishment

People think that only taxes can turn into a wage garnishing situation. That's not true. Any judgment holder -- someone that has sued you for something and won -- can garnish your wages if they choose to.

This means that any credit card debt , any tax debt, an old landlord that didn't get paid, a small claims court matter that you lost as judgment, or even a major lawsuit about a car accident or something else. People are often surprised that a credit card debt can turn into a wage garnishment. It's true. All that has to happen is that the credit card company needs to decide to sue you, which they'll easily win (you promised to pay and then you didn't pay). They take that judgement to the Sheriff and ask them to take money from your paycheck. It's a done deal.

The Emotions Over Debt Are No Longer a Barrier

Certainly, it is understandable to put off confronting something A garnishment is something that takes credit card debt or a judgment not just out of the deep freeze, but throws it on the front burner. as murky as a debt problem. There are many emotions swirling around the entire topic. These range from feelings of guilt regarding the over-spending to inadequacy about one's talents as a money manager or income earner. Of course, it's usually topped off by the frustration and anxiety brought on by telemarketers and the ultimate: helplessness over a situation that is regarded as having no perfect solution. As a result, most people do what many of us do when an unpleasant and emotion-filled situation is calling out for our attention: we put it off for another day and move on to something that is less trying.

Only when circumstances come to a head do they demand an immediate response. A wage garnishment is something that takes credit card debt or a judgment not just out of the deep freeze, but throws it on the front burner. Not many people can survive on 25% removed from their take-home pay.

What to Expect With a When they Garnish your Wages

So, what happens once some creditor or collection agency has decided they want to collect from you? Well, first, they have to sue you in a lawsuit. You may or may not know about this going on, depending on how much you've moved around, or how low of a profile you've kept. They win the lawsuit, since you promised to pay, and you haven't paid the creditor yet. With this new victory -- a judgment -- they can now get your money. This can include but is not limited to seizing your bank accounts, intercepting your tax refund, and of course, cutting into your paycheck . . . the garnishment of your wages.

Once they've found out where you work and decided to garnish you, they have to take their judgment against you to the local police department or sheriff. This unit then contacts your employer and tells them that they must deduct one-fourth of your pay income (up to half if the debt is over a support issue) and hand it over. This will continue until the judgment is paid in full or you break the process which is now in motion.

Stopping the Wage Garnishment: Options

There are a number of ways to stop the garnishing of your wages. First, you can quit your job. This is very effective for the short-term, but doesn't really solve the problem. Of course, you are no longer giving them one-quarter of your pay check, but on the other hand, you are now missing the other 75% of it. Even if you quickly get another job, it's just a matter of time until the collecting creditor finds you and the garnish process starts all over again.

Another possible solution is to pay the judgment. This takes a phone call to the creditor and offer to give them the money they want. You can maybe negotiate, but this entire approach is complicated by two major factors: 1) emotions are very high when you call the people who've been haunting you, often attorneys; and 2) they want a huge lump sum payment, usually more than you'll have available. You can hire an attorney to negotiate the debt, but again, this is helpful only if you have the funds to really settle the matter once and for all.

Finally, a bankruptcy will stop their taking of your pay checks. This may be helpful if you have other debts that may try the same route, or your credit is not otherwise pristine and perfect. If your credit is already shot, filing bankruptcy is a quick, powerful solution that is cheaper than trying to settle the judgment for the lump sum they'll demand, saving you thousands of dollars.

What to Expect: Bankruptcy to Stop the Wage Garnishing

The first thing to understand is the concept of the "automatic stay" in US Bankruptcy law. It is the legal mechanism that kicks in the moment your bankruptcy petition and paperwork is filed with the bankruptcy court. As of that moment, no creditor to whom you owe money can contact you Also at that moment, no one can collect. They cannot garnish your checks and take your money.

 

Don't 

Take action!

But, how will they know what you've done? The people who are garnishing will need to find out about your filing bankruptcy. Normally, this would take over a week. You will need to let your Human Resources or Payroll Department know about your bankruptcy filing. You can mail or fax a copy of page one of the voluntary petition. This will include the filing stamp is on the page as proof of its filing. While you're at it, let the creditor's attorney know (he or she will be on the Earnings Withholding Order paperwork that started the garnishment). Finally, it would be wise to provide a copy of your petition as proof of filing to the local law enforcement who also will be on the EWO.

What Happens Next?

Once you have let HR and the others (above) know, you will go back to getting your full pay check. The case then proceeds as a usual Chapter 7 or Chapter 13 bankruptcy would.

There is even a possibility that you can recover the funds that were garnished.

 

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Don't Delay

| 15.05.2006 | Print |