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Gail Elfert

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Aug 3, 2024, 10:11:42 PM8/3/24

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What You Need to Know About Garnishments

Garnishments are a legal process that allows a creditor to take money or property from a debtor who owes them money. This can happen when the debtor fails to pay back their debt, such as unpaid taxes, child support, student loans, or fines. The creditor can obtain a court order that instructs a third party, such as the debtor's employer or bank, to withhold a portion of the debtor's income or assets and send it to the creditor. This third party is called the garnishee.

Garnishments can have a negative impact on the debtor's credit rating and financial situation. Therefore, it is important to understand how garnishments work, what are the legal limits and exceptions, and what are the possible ways to avoid or stop them.

How Garnishments Work

To start a garnishment, the creditor must typically file a lawsuit against the debtor and obtain a judgment from the court that proves that the debtor owes money and has defaulted on payment. The creditor can then request the court to issue a writ of garnishment, which is a document that orders the garnishee to withhold money or property from the debtor and send it to the creditor. The garnishee must comply with the writ of garnishment unless they have a valid reason to challenge it.

The amount of money that can be garnished from the debtor's income depends on the type of debt and the federal and state laws that apply. The Consumer Credit Protection Act (CCPA) sets the maximum amount that can be garnished from most types of debts, such as credit cards, medical bills, or personal loans. The CCPA limits the garnishment amount to 25% of the debtor's disposable income (gross income minus legally required deductions) or any amount above 30 times the federal minimum wage ($7.25 x 30 = $217.50), whichever is lower. However, some debts are exempt from these limits, such as unpaid taxes, child support, bankruptcy orders, student loans, or voluntary wage assignments. These debts may have higher or lower garnishment limits depending on the federal and state laws that apply.

How to Avoid or Stop Garnishments

The best way to avoid garnishments is to pay off your debts on time and in full. However, if you are facing financial difficulties and cannot afford to pay your debts, you may have some options to prevent or stop garnishments. Some of these options are:

Negotiate with your creditor: You may be able to work out a payment plan or a settlement with your creditor that allows you to pay off your debt in smaller installments or for a reduced amount. This may stop or prevent your creditor from pursuing garnishment.

Challenge the garnishment: You may be able to contest the validity of the garnishment order or claim exemptions based on your income, expenses, dependents, or type of property. You may need to file a written objection with the court or request a hearing within a certain time frame after receiving the garnishment notice.

File for bankruptcy: Bankruptcy may stop most types of garnishments by imposing an automatic stay that prevents creditors from taking any collection actions against you. However, bankruptcy may not stop some types of garnishments, such as child support or tax debts. Bankruptcy also has serious consequences for your credit score and financial future.

If you are facing garnishment, you may want to consult with a qualified attorney who can advise you on your rights and options.