Dealing with Wage Garnishment

A wage garnishment is a legal procedure, by which the employer withholds a portion of an employee's earnings as per the court order. It is regarded as the last option for a creditor to recover money from the debtor. Thus, in a wage garnishment process, three parties are involved, namely, the employee (debtor), the creditor (who lends money) and the employer (garnishee). Wage garnishment is also known as administrative wage garnishment.

Wage garnishment is permitted in almost all the states. The maximum amount that should be garnished from the employee's wages is decided by the law. In United States, the federal law protects the debtor by setting the garnishment amount to about 25 percent of the disposable earnings (total income minus income tax). Wage garnishment can be issued for any type of debts. However, the common debt problems that may result in wage garnishment are tax, child support, alimony, defaulted student loans and credit cards. It is to be noted that wage garnishment continues, until all the debts are cleared.

Dealing with Wage Garnishment

If a debtor does not repay owed money in time, then he/she can expect wage garnishment. In such a case, the creditor will first notify the debtor by sending a wage garnishment package that contains the wage garnishment order, wage garnishment spreadsheet and letter, and certification form for the employer. The employer has to complete the employer certification form and return it to the creditor for further procedure. The employer is also responsible for calculating the correct garnishment amounts. In case, garnishment is to be done for more than one creditor, the employer decides according to priority basis.

Wage garnishment affects a debtor in many ways; he/she faces problems while applying for credit cards, loans, and even for opening a bank account. The debtor may also suffer from emotional stress, as the employer becomes aware of his/her financial condition. However, one important aspect of wage garnishment is that an employer cannot terminate an employee on the ground that his/her wage is subject to garnishment for debt recovery. Here are some options to help a debtor deal with a wage garnishment.

The most effective way to deal with wage garnishment is to negotiate with the creditor. The debtor should get in touch with the creditor and make them aware about his/her current financial condition. As the debtor receives the wage garnishment order, he/she can discuss with the creditor for a debt settlement. The debtor can make a deal regarding reduced monthly payment arrangement and also request to extend the payment period. If you are facing difficulty in settling the debt, you can take help of a debt management professional. For both creditor and debtor, it is always better to communicate properly and find an amicable solution, instead of facing a lawsuit.

Filing for personal bankruptcy, is often regarded as a good option to avoid wage garnishment. When a debtor declares bankruptcy, an automatic stay comes into effect that stops wage garnishment, until the bankruptcy is discharged. In such a condition, the creditor may appeal for a lift of stay, which if successful, will allow them to collect the wage garnishment.

A debtor can seek legal help for a smaller garnished amount, if he/she finds it very difficult to support his/her dependents after being subjected to the decided wage garnishment. The debtor can also file for claim of exemption by showing salary documents and monthly living expenses. If the debtor succeeds in convincing the court, he/she may receive a new garnishment order with a reduced garnishment amount. It is always advisable to consult a lawyer, to avoid facing lawsuit and wage garnishment.