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Wage Garnishment | Your Rights

5 garnishment wage orderAlmost everyone borrows money in some point of time or the other, in their life. Many take out student loans and other loans, small or big, to help them financially.

All of us are aware of the loan terms and APR. But, do you know what happens when you default on your debt payments? If you fail to repay despite the mounting charges or fees? Your creditor can seek the help of the court and make you pay.

The creditor can collect his money directly from your employer. Yes, this is called wage garnishment. Read on to know more about wage garnishment and how you can avoid such a situation.

What Is Wage Garnishment?

When a person defaults on his debt payments such as taxes, child support or even defaulted student loans, the court passes an order to collect these debts.

The court order enables the employer of the payee to with hold a part of the earnings for the payment of the debt. This amount is then paid by the employer to the levying authority, till the debt is paid off

Wage garnishment is a last resort for creditors. Creditors generally approach the court seeking a wage garnishment against the payee, only when you default your loan payments. If the creditors get no response from you even after giving you a considerable amount of time, they seek wage garnishment to recollect their money.

Who Can Garnish Wages?

  • When you have to pay child support, your wages can be garnished without any additional court order.
  • When you do not pay the child support as directed by the court, a wage garnishment order can be obtained against you.
  • The limit on such an order can range from 50% to 65% of your gross income, depending on how many children or spouse you have to support and how behind you are on your payments.
  • When you have unpaid taxes, the federal government can garnish your wages even without a court order.
  • The US Department of Education can garnish your wages if you are falling behind on the repayment of your student loans.
  • For other types of debts, your creditors can garnish your wages. They have to first sue you and then get a court order to garnish your wages.

How Are Your Earnings Garnished?

When the court passes a garnishment order against you, your employer will have to deduct the given amount from you disposable income. A disposable income is your gross pay minus the various taxes and other legal deductions. The garnished amount cannot be more than 25% of your disposable income.

The court ensures all your dues to the state are met and only the remaining amount is considered when your earnings are garnished. This ensures the order by the court does not affect your other liabilities.

Who Is A Garnishee Defendant?

When a wage garnishment order is passed against you, your employer is required to collect or withhold your earnings, in order to pay your debts. Your employer is the garnishee defendant here, while you are just the defendant. The garnishee defendant, though not actively involved in your payment defaults, will now be forced to be part of your repayment process.

Every state has a different set of laws for wage garnishment. Your employer will have to fill in and submit all the necessary forms to avoid any actions against him. The garnishee defendant has to with hold your earnings and make the payments to the levying officer. You employer cannot terminate you from your employment until the necessary payments have been made.

How To Stop Wage Garnishment?

If you have been served with a wage garnishment court order and if you feel you are not entitled to pay that particular debt, or if you feel the garnishment amount is too high, you can file against the garnishment.

You can seek the help of a wage garnishment lawyer. Your lawyer will discuss with you to understand your financial situation. They will also try to get in touch with your creditor and work out a suitable payment plan, so that your earnings are not garnished. However, if your debt situation is in a bad state and creditors cannot be convinced, your lawyer may even advice filing for bankruptcy.

[PDF]chapter 7 petition package – United States Bankruptcy Court

Wage Garnishment ConceptWage Garnishment Form

A wage garnishment form needs to be filed with your circuit court or the district court, depending on where the judgement has been passed. There are various forms for each party in the wage garnishment.

  1. When a creditor applies to the court, he has to fill out a form giving all the details required. Details such as whose wages have to be garnished, the debt amount, the reason, etc, have to be filled out by the creditor. This form will then have to be filed in the court
  2. When the order is passed, the court provides the garnishee defendant (employer) with a form with details. This form will include the details of the employee whose earnings have to be garnished, the amount and to whom it should be paid. Once the employer is presented with this order, he has to give a copy of the order and another form with instructions to the specified employee.
  3. The third form is the instructions which will be presented to the employee. Through this form, he will be notified about the reason for garnishment, amount to be garnished monthly, the creditor and the garnishment period. If the employee is not satisfied or has any disputes, he has to file for an exemption.
  4. There is also an employer’s return form, which should be duly filled and mailed to the levying officer, by the employer. Failure to do this will entitle the employer to pay the attorney fees and civil penalties.

There are a whole set of forms when it comes to filing for exemption. Every step has a form, which ropes in the employee, employer and the creditor.

Student Loan Wage Garnishment

Have you taken out one or multiple student loans to fund your education? Having difficulties paying it up? You have many options to help you in such a situation. However, defaulting on your loan repayments is not one of them.

When you stop repaying your student loans, they keep growing and accumulating interest and penalties on them. When it crosses a period of 270 days, your student loans will go into default. This will not only have an adverse impact on your credit score, but your loan is also sent to a collection agency.

Once it reaches a collection agency, your loan will start accumulating all fees and charges on it, thus making your debt bigger. If no action is taken, the court can pass a wage garnishment against you. 15% of your earnings will be directly taken from your employer and paid towards your outstanding student loans.

Administrative Wage Garnishment

Administrative wage garnishment (AWG) is a debt collection process that is governed by the federal agency and not by the state court. Here the state laws do not apply as it is governed by the federal laws.

Under AWG, the treasury will issue the wage garnishment order. The employer will have to collect the stipulated amount and pay the treasury. Under AWG, up to 15% of your disposable income can be garnished by the federal agency.

5 Uncle Sam taking your moneyWhat Can You Do?

Since the AWG is governed by the state laws, you cannot file any forms with the court to change the terms of your wage garnishment order.

If you are the debtor against whom the AWG has been passed, you can oppose the order and file for a hearing. The hearing has to be filed for within 15 days of receiving the notice. If the request is received within 15 days, a hearing must be conducted before a wage garnishment order can be passed. However, if the request for hearing is received only after 15 days, the garnishment order can be issued before the conclusion of the hearing.

It is up to the federal agency to have the hearing in oral or written. If it is decided as an oral hearing, the federal agency will decide when and where the hearing should be conducted. The debtor can decide if the hearing will be in person or telephonic i.e. the debtor can either appear in person or attend the hearing over the telephone.

Social Security Garnishment

When the Social Security Association (SSA) over pays you, it can seek a return of these over payments through wage garnishment. Your social security payments can also be garnished to collect your outstanding debts on government taxes and federal student loans.

When a social security garnishment order has been passed against you, your bank will have to check the activity in your account. The bank has the right to freeze your account fully or partly, to meet your debt requirements.

If you have your social security amount directly deposited into your account, the bank will have to protect two months worth of benefits and remaining amount can be frozen. However, if you are receiving a cheque for these benefits, and are depositing it into your account, your entire account can be frozen.

How To Prevent Social Security Garnishment?

Before a garnishment order is passed, you will be sent a written notice, notifying you about the possible garnishment. You will be given a period of 60 days, and if you don’t take any action within this time period, a social security garnishment order will be passed.

When you receive an order to garnish your social security benefits, you can file for a request of reconsideration. While this review is still pending, the SSA will not garnish any of your payments.

You can make arrangements to pay off the entire debt amount using a new loan or negotiate for a new plan.

5 process court GarnishmentWage Garnishment Title III

According to Title III of CCPA (Consumer Credit Protection Act):

  • The maximum amount of wage garnishment cannot exceed 25% of your disposable income.
  • Your employer cannot terminate you from your employment until the total debt amount has been collected from you.
  • If there is a conflict between your local state law and the CCPA, the lesser garnishment or prohibition of termination of employment must be followed.

Wage Garnishment California

Each state has a different set of laws or rules when it comes to wage garnishment.

  • If you owe child support, as much as 65% of your disposable income can be garnished in the state of California. 60% of your wages can be garnished for child support and an additional 5% is applicable if you have defaulted payment for more than 12 weeks.
  • If you have unpaid taxes, a maximum of 25% of your disposable income can be garnished.
  • If you have outstanding private education loans or multiple federal student loans, up to 25% of your disposable income can be garnished.

If you have multiple garnishment orders against you, child or spouse support gets prioritised over all other debts. This means, your payable amount for child support is deducted from your wages, before any other debts can be reduced.

How Much Can Be Garnished?

Want to know how much of your pay check can be with held by your employer for your various wage garnishments? You can use the calculators available for free on the treasury’s website.

These calculators or sheets will enable you to enter your weekly or monthly earnings and the garnish amount will be calculated after various taxes are deducted. This will give you an idea about how much money you will receive after your earnings have been garnished.

How To Get Out Of It?

Ok, now that your earnings are garnished by the court, what can you do? If you feel the income you are left with after garnishment, is not sufficient or you want to stop the garnishment, you can consolidate your debts.

Debts consolidation, be it your bills or student loans, will not only help you track your debts more easily, but will also buy you some time. When you consolidate your loans and pay it off with a single new loan, you get more time to repay the new loan. This in turn can prevent your earnings from being garnished by the court.

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