What is a Wage Garnishment?
“Wage garnishment” is the process through which a creditor garnishes your wages (takes part of your paycheck) to pay down debt. Most creditors must obtain a judgment against you before they can garnish your wages. Governments, however, are generally not required to obtain a judgment to garnish wages to collect on debt owed for unpaid taxes.
Typically, the Sheriff serves paperwork on your employer that forces your employer to withhold a portion of your wages that is then sent to the sheriff. The Sheriff then sends the money to a creditor, or creditors, who use(s) the money to pay down your debt.
Garnishments based on ordinary debt are generally limited to 25% of your pay (after taxes and after ‘mandatory’ deductions); but garnishments for some debt, such as unpaid child support, can be as high as 60%. In any case, though, a garnishment may not leave you with a weekly amount of less than 30 times the hourly minimum wage.
A wage garnishment can remain effective until the entire amount of the judgment is paid off.
Stopping Wage Garnishments
There are mainly three ways to stop wage garnishments. 1) You can pay the judgment debt in full (or pay an amount that the creditor agrees to accept as payment in full). 2) You can file an exemption claim with the Sheriff, in which you must show that your wages should not be garnished because you need your entire paycheck just to provide the necessities of life for you and for your family. However, if the judgment creditor objects to your claim, a hearing will be set and a judge will decide whether or not your wages should be garnished; and the garnishment will continue until your case is heard and the judge rules. 3) You can file for bankruptcy. Upon filing bankruptcy, you will serve the sheriff and the creditor with a notice of the bankruptcy filing. The sheriff will then issue a release to your employer, and the garnishment will stop. Then, provided you receive a discharge of the debt* in bankruptcy, the debt will be wiped out and the garnishment will not be re-instated.
(*Some debt, such as debt arising from unpaid child support, may not be discharged in bankruptcy. In this case, the garnishment may resume after your case is over or sooner if the court grants leave to the child support creditor.)
Like wages, bank accounts may be garnished by creditors. In most cases filing bankruptcy will also stop these actions. Bankruptcy will even stop garnishments by the IRS, the Franchise Tax Board, and student loan collectors. However, in addition to filing for bankruptcy, you must: file a Notice of Stay with the court that issued the garnishment order, and notify the creditor, the creditor’s lawyer, and the sheriff or other garnishing agency if applicable.
Getting Garnished Money Back
This is more difficult, especially if the money has already been given to the creditor. However, it is possible to get garnished money back by filing a motion asking the bankruptcy court to order the money returned to you. There are a few different ways to do this, but it is complicated and you will probably need the help of bankruptcy lawyer to insure your chances of success.
In a nut shell, if you qualify, filing bankruptcy can not only stop garnishments, but it can wipe clean your unsecured debt, giving you a fresh economical start.