If you are experiencing financial difficulty, you may find yourself unsure what to do if a creditor tries to obtain a wage garnishment from you. A wage garnishment exemption could apply in some cases. If applicable, it can work to protect some or even all of your wages from garnishment. This happens if you take the steps to file bankruptcy. It’s important to recognize that state exemptions like this can be hard to obtain. Working with your attorney is critical.
What Is a Wage Garnishment and How Can It Impact You?
A wage garnishment occurs when a creditor files a lawsuit against you in a court of law. The court must approve and issue a money judgment against you in order for a garnishment to proceed. In the event the court approves the garnishment, the creditor is then able to send information to your employer about the garnishment. This will legally force your employer to take the court-approved amount out of your paycheck and pay it to your creditor.
If a garnishment occurs, the court will determine the proper amount for the garnishment. In some cases, this may be 25 percent of your income. Percentages vary. It depends on the amount you owe and the amount you earn.
Most often, individuals do not know much about a wage garnishment until they receive a court order or notice that the garnishment will occur. This can create a bit of a panic, but you can stop the garnishment from occurring. To do so, you may need to file bankruptcy. When you file, it automatically freezes all legal action against you. This action can be very powerful when it comes to giving you the freedom to get your debts in order.
Some Creditors Do Not Have to Go to Court
Most credit card and personal loan creditors must go through the court system to garnish your wages. However, some types of debts do not require garnishment orders to come from the court system. This includes creditors that you owe taxes to, such as the local, state, and federal government. It also includes student loan debt, child support debt, and alimony debt. As a result, you should act quickly on these types of accounts to minimize your losses.
What About Exemptions?
Under state and federal law, individuals have some form of protection against the garnishments themselves. These protections are called wage garnishment exemptions, which help protect some of your earnings from garnishment. More specifically, the exemptions protect specific types of income you have.
Though state laws differ, most of the time, states will have protections in place to protect some or all of your income from garnishment if your income comes from any of the following sources:
- Social Security income, such as Social Security Disability
- Child support income
- Alimony income
- Retirement income
- Disability income
- Unemployment insurance
Factors such as the amount of money you have in your bank accounts and pay stubs detailing your income are used to verify how much you should pay in garnishments. Do not assume your wages are protected.
What Should You Do?
Whenever possible, pay your debts on time. If you have the ability to make lump sums on your debts, do so. If you cannot, work with the creditor or collection agency to make payments that fit your disposable income. The key here is that you remain in charge of what happens. You may wish to make a claim of exemption. If your income comes from a source listed above, this may be all you need to do.
However, if you cannot secure the wage garnishment exemption, or you are earning minimum wage and simply unable to pay off your debts, it may be time to consider bankruptcy. You may find this is one of the best ways to freeze all of your debts immediately. Then, the court can determine if you should repay your debts after the bankruptcy discharge occurs.
Ready to Get Some Additional Help?
Learning about all federal bankruptcy exemptions and what you can expect in terms of wage garnishment takes time. Our team can help you gather the information so you can learn what to expect. If you are facing debt collection, tax debts you cannot pay, or other financial difficulties, contact The Law Offices of John B. Kelly about your options. Call us at 770-809-3099.