Stopping Wage Garnishment

What is Wage Garnishment?
Creditors may file a suit, in a court of law, in a bid to recover bad debts. If the creditor receives a judgment in his/her favor, the clerk will issue a writ of garnishment that will enable the petitioner to intercept up to 25% of the debtor's salary in lieu of unpaid amount. Debtors, who receive a paycheck from the employer or whose income is above poverty line, stand to lose on account of garnishment provided their earnings are not currently subject to multiple garnishments that constitute 25% of their disposable salary. Wage garnishment may be on account of unpaid taxes and students loans and other dues including payment for child support.

Rights of the Consumer
All states allow garnishments, for tax debts and unpaid child support, although several states have imposed a ceiling on garnishment, in lieu of taxes, to less than 25% of the employee's disposable income. A few states like North Carolina, Pennsylvania, South Carolina and Texas do not allow wage garnishments for money owed to creditors. Income, that is derived from Social Security, retirement plans and public assistance benefits, is not subject to garnishment provided the money is not used for further investment. Moreover, workers' compensation awards and unemployment or disability benefits can be garnished only if the writ is for unpaid child support. Federal law prohibits the employer from terminating an individual on account of a single wage garnishment. The law cannot protect the the employee from being dismissed on account of multiple garnishments. The following tips may be helpful in stopping wage garnishments.

How to Stop Wage Garnishment?
Filing Bankruptcy: Filing bankruptcy can stop wage garnishment since it results in an automatic stay on any lawsuit filed against the debtor by creditors, debt collection agencies and government entities. Filing bankruptcy may be advised in case of multiple wage garnishments since Federal law does not prohibit the employer from dismissing the garnishee.

Paying or Appealing: Student loan defaults, that result in garnishing up to 15% of the student's disposable pay, may be stopped by negotiating repayment terms that are acceptable to the US Department of Education or Private Collection Agency (PCA) and making the first payment within 30 days of receiving the garnishment notice.

One may also request a hearing, in writing, within 30 days of receiving the garnishment notice. Claiming financial hardship or disputing the existence or the enforceability of the debt may result in stopping wage garnishment provided one has adequate proof. Appealing against the order and winning, can result in the court setting aside the original writ and preventing garnishment or issuing a new writ for a smaller amount of garnishment.

Negotiating: In case of unpaid taxes, one should not ignore the Intent to Levy or Notice of Levy document dispatched by the IRS (Internal Revenue Service). It would be best to hire a tax specialist who can contact the IRS and negotiate to stop proposed wage garnishments. Failing to do so will result in the employer receiving an order to withhold 25% of the employee’s disposable income assuming that the earnings exceed 30 times the federal minimum wage.

Every employer, who receives a writ of garnishment, has to comply with court orders. Hence, one cannot hope that the employer will ignore the writ and not resort to garnishing wages.