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What is Wage Garnishment and How to Cope with It?

If you have stopped paying your creditors, they can sue you for not paying back the loan. The court can issue a wage garnishment, i.e. order your employer to keep a portion of your paycheck aside and use it to clear your debts. This amount is transferred directly to your creditors. Your income will be withheld until the debt is paid in full.

Understanding the Process of Wage Garnishment

Wage garnishment is conducted with a court’s order, although some creditors can forcefully implement it and take your income from your employer. The debtor, however, has legal rights, such as determining the amount withheld every month. You can also take steps to reduce the withheld amount or avoid it.

Initiation of Wage Garnishment

A debtor has many financial obligations, one of which is the debt repayment. However, if you are the sole breadwinner of the family and are unable to pay the debt due to urgent financial requirements, you can be sued for non-payment of your dues. Child support, unpaid taxes, auto loans, and other types of debts can result in wage garnishment.

Notification of Wage Garnishment

As soon as the creditor’s case is approved, the court will send a formal notice to your bank or the employer to withhold your income (either full or a portion of it). The process begins within a month of the court’s order (usually within 5-10 days). It will be effective until the debt is paid in full.

Determining the Garnishment Amount

The amount varies depending on the type of loan and how much is due. For a student loan, the wage garnishment is 15% of your disposable income and up to 50% for child support. For credit card bills and other types of loans, the garnishment amount is up to 25% of your income.

Legal Rights and Protections for the Garnishee

You have certain legal rights against wage garnishment. Here are a few:

  • You must be notified about the garnishment process
  • The employer can’t fire you
  • You are allowed to file a dispute if the case seems inaccurate

Ways to Cope with Wage Garnishment

Check the authenticity of the wage garnishment before taking any action. See if there’s any error, such as being accused of the debt you already paid. See the garnishment amount and calculate how it will affect your financial situation.

Tips to Prevent Future Wage Garnishments

Here’s what to do to avoid wage garnishment.

Maintaining Open Communication with Creditors

Talk to your creditors. Proper communication will help you come up with a payment deal that works for both of you. A simple conversation can prevent wage garnishment.

Creating and Adhering to a Budget

Before you talk to the creditor, have a proper budget in place. Your creditors will want to know how you plan on paying them back. It’s equally important to adhere to the budget to avoid getting sued for late or non-payment.

Seeking Legal Advice Before Matters Escalate

Hiring an attorney is your best choice if you are concerned about wage garnishment. The creditor can sue you for non-repayment of the loan, which can cost you legal fees on top of the credit amount and interest. Having an attorney represent you in court is the best way to prevent wage garnishment.

Monitoring Credit Report Regularly

A soft credit check won’t hurt your credit score. If you think your credit bills are unpaid or you have delayed them for longer than the standard period, check your credit report immediately. It will also help you ensure there’s no error in your credit bills.