How much of your income is exempt from garnishment?
For the sake of this blog, let's walk through a hypothetical example of how a wage garnishment is calculated by your employer.
Let's say you had financial problems (layoff, divorce, illness, etc.) and could not make the required minimum payments.
- The account becomes delinquent
- After numerous calls from the creditor (HOW TO STOP CREDITOR CALLS)
- Account is charged off and sent to a DEBT COLLECTOR
- Process repeats (Need to STOP THESE CALLS ALSO)
If an agreement cannot be reached between you and your creditor/collector, the creditor may instruct the collector to retain an attorney (many collectors are attorneys) to file a CLAIM or LAWSUIT for the debt you owe.
You would then receive a SUMMONS.
Again, if an agreement (usually called a STIPULATED AGREEMENT), cannot be reached, then a court date is set and the PLAINTIFF or CREDITOR would be awarded a JUDGMENT.
Now the plaintiff can apply for a WRIT OF WAGE GARNISHMENT.
Your employer is legally bound to honor the WRIT and uses a WAGE EXEMPTION or CALCULATION GUIDE to determine how much of your wages must be sent to the court.
In Oregon, ORS 18.385 says basically that the MAXIMUM subject to GARNISHMENT is 25% of an employee's DISPOSABLE INCOME (AFTER-TAX, TAKE-HOME).
Unless the employee is left is less than $218 per week!
So, if your net, disposable income is $218 x 4.2 weeks or $915.60 per month, you would not be subject to garnishment.
But, let's say you are earning $15/hour and working 40 hours x 4.2 weeks per month or $2,520 GROSS (BEFORE DEDUCTIONS).
Again, let's say your net deductions are 27% of your gross income, leaving you with a net take-home income of $1,839.60.
In Oregon, 25% of the net take-home (most states are 25%, but be sure to check your state's code) must be garnished.
$1,839.60 x 25% = $459.90 per month!
For most people, that would be financially devastating!
Before you let your delinquent accounts go this far, give us a call or contact us right away!
We may be able to arrange a repayment or settlement plan to avoid wage garnishment.