What is Wage Garnishment?
How Wage Garnishment Works
Garnishment is a tool that creditors use as a last resort to get the money owed to them for outstanding debt. This is actually a legal remedy that the courts may authorize and grant as a court order. Wage garnishment is when they contact your employer and have them take a certain amount out of money out of your paycheck or your salary. This can be an embarrassing notion because now your employer is made known of your financial situation and is now going out of his way to alter the amount of your pay each month. Some employers even go as far to take out a percentage for themselves because of the inconvenience of wage garnishment. While you will be informed of the amount taken and you legally cannot be fired because of this, under the Consumer Credit Protection ACT, that protection is no longer valid after the second or third wage garnishment judgment.
Some Exceptions to the Rule
When you receive notice of the judgment that the court has ordered garnishment of you wages, remember that they are only permitted to take a certain percentage out of your pay. According to the U.S. Department of Labor, the creditors are only able to garnish no more than 25% of your disposable income in any given workweek period. There are also some funds that not be withheld from employees and are exempt for garnishment such as: federal taxes, state taxes, local taxes, employee retirement, social security payments, and unemployment insurance. Union dues and health insurance on the other hand, are not protected and are eligible for garnishment.
There is also such thing as non-wage garnishment where they are permitted to go into your bank account directly and take the necessary funds. The garnishment policies may vary from state to state, in fact some states prohibit garnishment, so be sure to contact a bankruptcy to learn how you may be affected.
How to Avoid it
Wage garnishment may make it very difficult to pay your bills, feed your family or fill up your gas tank because now your paycheck is being compromised. It is always best to bring forth your hardships and make them apparent to the creditors as soon as possible because if you go to them ahead of time and tell them you are having difficulty, you may be able to arrange a new repayment plan that is more manageable for you. Once your situation is dire and your wages are being garnished you should contact a bankruptcy attorney immediately because you really only have two options. You can either negotiate with the creditors, try to work out an agreement and stick to it, or you file for bankruptcy and then the creditors will have no choice but to stop garnishing your wages. You can also fight to get the amount that is garnished reduced, so you can still manage to provide and have enough left to live off of.
Hold Onto Your Hard-Earned Money
Now is the time to start making informed decisions. Gail Cunningham, Senior director of PR at the National Foundation for Credit Counseling (NFCC), states that "the smart consumer will reach out for help before he digs too deep of a financial hole. Judgments and garnishments can often be avoided if the problem is addressed early on." So when you feel overwhelmed with debt, don't ignore the problem and avoid it until last minute. Face your debt head on with the help of a qualified Oakland bankruptcy attorney at Price Law Group. The attorneys at the firm will do everything in their power to prevent garnishment and help you get your finances back on track.