Wage garnishment is a process by which a court order is issued to require your employer to withhold a portion of your wages to repay a debt. Wage garnishment can be harmful to employees who are struggling to get by, and it may have implications at work as creditors and collectors call to get what they’re owed. In fact, if you have two or more garnishments, you could be legally fired.
It is normal to see wage garnishment after a court makes a decision against you over a debt. You can usually avoid garnishments by addressing debts before the creditor takes you to court. If you do not appear in court or ignore the debt, then you may be surprised to find a garnishment on your check.
How much of your money can be garnished?
Usually, no more than 25% of your weekly disposable income can be taken by creditors such as banks or credit card lenders. Alternatively no more than your weekly income exceeds the federal minimum by 30 times or more. Whichever is less is the amount you may have garnished from your wages. For back taxes being garnished, the Internal Revenue Service may take up to 15%.
Wage garnishment and bankruptcy
Although wage garnishments can continue through bankruptcy in some cases, most cases of wage garnishment can be resolved once you enter into bankruptcy thanks to the automatic stay. This allows you the time needed to resolve the debt so that no further garnishments are necessary.
Will you know about a potential garnishment?
You should be informed before a wage garnishment occurs. You do need to be legally notified and given a chance to dispute the findings of the court.
If you receive a notice that your wages will be garnished, it’s time to take action. You may be able to stop the garnishment if you do. You should always make sure that the debt was not previously paid and then look into how the garnishment may impact your wages. After that, if you find that you will struggle financially, you may want to consider bankruptcy as a potential option.