What is Wage Garnishment?

Salary Deduction for Repayment

It can be a shock to look at your paycheck and realize that your wages are now being garnished. While it is a commonly held belief that wages only get garnished as a result of tax troubles, this is far from the truth. Any lawsuit or small claims judgment that went against you can result in your hard-earned wages being docked. Failure to pay off a credit card debt or make your mortgage payment may end up in your wages being garnished.

If your pay is being taken outside your control, it frequently is a sign of underlying financial difficulties that demand resolution. The firm has worked for 2 decades, assisting over 100,000 people to eliminate their debts and gain a fresh start financially. One of the primary tools to achieve these goals is through the filing of bankruptcy.

Title III, Consumer Credit Protection Act (CCPA)

In some instances, in order to collect a debt you may have part of your salary taken away. How does this happen? First of all, your employer may receive a notice to withhold earnings until a debt is paid. This typically occurs by court order. Individuals are also protected from being fired simply on the basis that part of their salary is being deducted for debt repayment. What Title III does not protect an individual from is being fired if their earnings were garnished for a second or additional debt. Only a certain percentage of your wages may be garnished, according to the CCPA. Earnings may not be garnished (per week/pay period) to either 25 percent of the disposable earnings or any amount of earnings that exceeds 30 times the federal minimum hourly wage of $7.25 per hour.

Preventing Wage Garnishment Through Bankruptcy

A routine aspect of bankruptcy is that once it has started, your creditors are no longer permitted to take any actions to collect from you. This means that wage garnishments along with repossessions, attempts to shut off your utilities, debt lawsuits and collection phone calls and letters must all cease. Bankruptcy can also be a method of foreclosure prevention so that you can retain your home. The firm works to get your petition quickly and correctly filed and to enforce the "automatic stay" that will be issued by the court on your behalf.

Chapter 7 bankruptcy allows you to liquidate specific assets to pay off debts while forgiving others. In Chapter 13, a court-approved and realistic payment plan is utilized to pay off your debts over a 3-5 year period. The end goal of any bankruptcy is that you are debt free and able to start anew. In the meantime, you can have the full paycheck that you have earned.

Bankruptcy is a court-based process through which your debts can be discharged, allowing you to begin a new chapter in your life. One of its most immediate advantages, however, is the effect that filing your petition has on preventing or halting wage garnishment. Price Law Group is ready to meet with you to explain how bankruptcy works, its benefits and to establish your eligibility for the process.