According to the US Department of Labor, wage garnishment is a legal procedure whereby an employer is required by a court order to deduct some of an individual’s earnings to pay a debt. The National Consumer Law Center’s November 2020 report estimated that about 3% of the national workforce had their wages garnished that year. Wage garnishment can hurt your finances significantly since finding yourself in that position means you are already financially strained. Therefore, it is prudent to do whatever you can to halt the garnishment. Here are some top tips to prevent your paychecks from being garnished.
- Consider debt counseling
Many people ultimately struggle financially despite their best efforts to get out of debt. Debt counseling can be the best option for you if you wish to stop a wage garnishment without declaring bankruptcy. However, you will need a consumer credit counseling service’s assistance since they can halt wage garnishments through creditor negotiations and drawing up a repayment plan. Your creditor will not be able to garnish your wages if you follow the agreed-upon repayment plan.
Many people view bankruptcy as a last-ditch solution when faced with debt issues. Investopedia reports that 529,106 Americans had filed for bankruptcy by the end of 2020. However, it could be your best option if you are buried under a huge pile of debt and are experiencing wage garnishment as a result. Bankruptcy immediately stops the wage garnishments, halting all collection efforts for starters. The two types of personal bankruptcy you can file for are the Chapter 7 or Chapter 13 bankruptcy plan. The Chapter 7 plan, also known as the Fresh Start, is a straightforward debt elimination plan that brings fast resolution and total debt relief those who are bankrupt. The Fresh Start eliminates personal loans, garnishments, credit card debt, medical bills, judgments, and unsecured debt obligations. On the other hand, the Chapter 13 program, also known as the Reorganization plan, is designed to halt creditor actions and offer suitable repayment terms so you can get back on track.
Pay your creditors in full
Creditors who receive what they are owed in full, including their court costs, have no option but to reverse the judgment and stop wage garnishment. However, many debtors lack the cash to make full payments, and their creditors will likely not be willing to accept anything less than a lump sum compensation if they have obtained a judgment and garnishment. Therefore, consider working something out with the creditor intent on garnishing your wages. If you are lucky, you may be able to negotiate a lesser monthly payment than what would be deducted from your paycheck. Also, you might succeed at negotiating a debt settlement that allows you to repay what you owe with a lump sum. These two options are generally more advisable than gathering the funds to pay off your debts in ways that jeopardize other aspects of your finances, like draining your retirement savings.
File an objection with the court
You can also end wage garnishment by filing an objection in court, so keep this in mind. Your creditor(s) cannot garnish your wages until the court rules the case. However, you need a valid reason for filing an objection to the wage garnishment to increase your chances of a favorable income. Some of these reasons include the garnishment not being issued properly or the judgment being paid in full already. You can also file an objection if you are under bankruptcy protection or your property and funds are immune to garnishment. Furthermore, you object against garnishment notices if a high-priority creditor is already garnishing you for the maximum amount. Legal experts recommend filing your objection with the court within two weeks after receiving the writ by delivery or mail. This recommendation is because the tax garnishment will occur if you do not file your objection within 14 days.
File a claim of exemption
A Claim of Exemption is a wage protection form you must file to outline why some or all of your wages your creditor wants to garnish should not be taken. Exemptions also prevent your creditor from taking more than a fixed amount of your wages. The fundamental idea behind wage exemptions is that citizens should be able to hang on to some of their money for daily living expenses instead of losing all to debt payments. Each state has its exemption laws you can use to preserve your wages or property, and you might be able to fully or partially secure your income depending on your circumstances. However, creditors generally cannot garnish your disability benefits, social security, retirement cash, child support, and alimony payments.