You're already having a very hard time paying your bills and keeping up the rent! Now you get the bad news that your wages are going to be garnished! Now what?
I"ve been helping people deal with the stress of managing debt for a long time.
It's one thing to be so tight in your budget that you are barely making ends meet and only able to pay the minimum payments on your credit cards and/or other debts you owe.
Today happens to be a Friday and for a lot of normal, hard working people, they are looking forward to getting their pay check and having a couple of days off from work!
But, when you open your payroll envelope, you get a shock!
After all of the taxes and other deductions are withheld from your check, the net/take home amount was going to barely cover the bills that are due (or over-due)!
Now, 25% (average amount that can be garnished) more is deducted.
What can you do?
OK....take a breath...and let's go back a little while and see what happened.
We get calls almost every week from someone who has either been garnished or has just received a notice that they are going to be garnished.
We often hear,
"I had no idea this could happen!" or....
"I never received anything about this!" or....
"I thought this bill was paid a long time ago because I haven't received anything in the mail or had any calls for over a year or so."
Well, I realize that is some rare cases, some of the above comments may be true, but most often, it is basically that the person had their 'head-in-the-sand" type of an belief as things were just so bad they didn't want to think about it!
I understand....been there...done that.
Here's what happened and why this garnishment happened:
When an account (just talking about normal, unsecured credit card type accounts) becomes delinquent, a process begins by the original creditor:
The next statement you get will show the PAST DUE amount and the "late fee charges" that have now been added to your balance.
Somewhere on the statement it will tell you that you need to get caught up and to call the customer service number if you need help.....or something like that.
Let's say you just cannot make any payment and don't want to talk to them about it.
CALLS AND LETTERS
Now you will start getting letters saying something like:
"Your account is SERIOUSLY past due and you need to do...... "
The letter may state that if you don't do "this or that", they may close and send your account to a debt collector or attorney for collection.
Now, 4 or 5 months have gone by and although you get a call and letter from the original creditor now and then, nothing really has happened.
When the original creditor is unable to get you to pay on the account, they will usually either "charge off" the account and transfer or sell to a debt collector.
I'm not going to get into how difficult it is to work with some debt collectors in this blog. I've written numerous articles and blogs about "Dealing with Debt Collectors" that may be very helpful for you.
The debt collectors job is simple....Get you to pay them money!
The Fair Debt Collection Practices Act is to protect consumers from illegal debt collection tactics.
Everyone should have a general knowledge about your rights, so take some time to check out a very good article:
The Fair Trade Commission, Debt Collectors and your Rights
Now that your account has been turned over to a debt collector, you can put a stop to the annoying and often harassing phone calls:
But, just because you get them to stop calling doesn't mean that your debt problem has gone away!
If the debt collector cannot get you to pay up, they may decide to file a claim in your local county court.
If this happens, you are going to receive a....
The summons will state that a "claim" has been filed against you for the debt you owe with "so-in-so" creditor and that you have 20 (or 30) days in which to give an "ANSWER" in court......
NO, YOU DON'T HAVE TO GO TO COURT! (unless you want to)
An "answer" is a legal response from you stating and explaining why you do not owe that debt and therefore are not subject to this claim/summons.
It is a legal document and not only will you need to hire an attorney, there is also a fee for filing the "answer", so make sure you can prove that you don't owe the debt first!
Most of the time an "answer" is not necessary, so now the "PLAINTIFF" (the debt collector or the party filing the claim) will wait a while (varies) before taking the next step.
If you don't respond to the summons, the plaintiff/debt collector may decide to send one of their legal representatives to court in order to awarded a judgment.
This is usually called a "default judgment" since you didn't contest the "claim", the debt collector/plaintiff wins by default.
WAGE GARNISHMENT, BANK LEVY OR PROPERTY LIEN
OK, now things are serious....
With the default judgment, the plaintiff can now apply for of several options for getting something from you:
- a writ of wage garnishment
- a writ of garnishment/levy on your bank account(s)
- Lien placed on your property (usually your home)
Writ of wage garnishment
A legal document is sent to your employer. The employer (by law) must withhold an average of 25% of your "after-tax" payroll check until the entire judgment awarded is paid! There are exemptions, but unless you are making very little income, your in trouble!
Writ of garnishment/bank levy
Yes, with that default judgment, the plaintiff can find your bank or bank accounts and send the writ of garnishment/levy to the bank.
The bank is supposed to go back a couple of months and make sure that your account does not have funds that are from "exempt" sources like:
- Social Security
- Retirement income
- Disability income
Again, I'm not going to get into all of the exemptions in this blog, but you might want to check out:
Are Social Security benefits Protected From a Bank Levy?
But for this blog, you are employed (W-2 Income) and so they have the legal right to go after your income, bank account or other property (not exempt).
Although a plaintiff can apply for a lien against certain property (not exempt), most often they will apply for a lien against your home, paid for or not.
This DOES NOT mean that you have to sell your house to pay the debt/judgment.
It means that when you sell or transfer the property (death or gift), this judgment must be paid!
Sure, this may make the plaintiff many years to collect, but that is an option for them.
I think you can start to see that the best way to put a stop to a wage garnishment is to make every attempt at not letting your delinquent account become a judgment!
There are many OPTIONS that you can take advantage of to stop your account from every becoming a "judgment"!
But, since you have the wage garnishment happening (or about to happen), here's what you (or with help) need to do:
Contact the attorney who filed the writ of garnishment
In most cases, they are usually willing to set up some kind of repayment plan and stop the garnishment.
You will need to be able to show your financial hardship and make a "reasonable" payment each month!
They may want you to sign a "Stipulated Agreement" that will be filed with the court.
It basically says that as long as you make the payments agreed upon, they will not pursue further legal action.
If you have a very large amount of funds available, you may be able to make a SETTLEMENT OFFER to have the judgment satisfied and the writ of garnishment removed.
This offer will most likely need to be much larger than the normal settlements we negotiate for our clients, because they have leverage on you!
If you are unsuccessful at putting a stop to your garnishment (wage or bank), you may be forced to seek protection through bankruptcy.
Bankruptcy is a legal "tool", so to speak, that allows a person an avenue to get their lives back on track.
Make sure to contact an attorney whose practice deals with all aspects of bankruptcy!
It should be obvious that the way to stop a wage garnishment is to not let your accounts/debts ever get to that point!
We can show you various options of how to deal with your specific debt situation.