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What is a Wage Garnishment? Why is it the preferred method of debt collection?
A wage garnishment is a deduction, usually 25%, automatically taken out of your paycheck to satisfy a debt. While 25% is the most common amount, it is also the legal maximum. If you work overtime to make up for the decreased earnings, 25% of your overtime pay will be garnished as well.
Wage garnishments are creditors’ preferred method of debt collection because it ensures they will receive as much payment per pay period as possible. The garnishment is automatic and doesn’t require much more effort on their end to collect. The creditor can also add legal fees and interest to the balance for a garnishment, which makes it take much longer to pay off.
Who can garnish my wages?
Any creditor who has secured a judgment against you may then get an order to garnish your wages. If you received a summons and didn’t answer or show up to your court date, the creditor likely got a default judgment against you. They will take that to the court to get the garnishment order. Your employer will be notified of the garnishment and it will start being deducted from your paycheck. You can fight this wage garnishment by filing Chapter 7 bankruptcy, Mesa Chapter 13 bankruptcy, $0 Down Bankruptcy, Emergency bankruptcy, Bankruptcy by Phone, or by contacting your Mesa garnishment lawyer for assistance.
How can I use Chapter 7 Bankruptcy to stop a Wage Garnishment?
Once you file your Chapter 7 bankruptcy, an automatic stay of protection goes into effect. The automatic stay protects you from various forms of debt collection, including a wage garnishment. As long as you file before your payroll period ends, the garnishment shouldn’t be taken out of your next paycheck. If you were being garnished for a dischargeable debt, such as credit cards or medical bills, the garnishment will be stopped permanently. If the garnishment was for a non-dischargeable debt, such as student loans or back taxes, the garnishment will resume once your bankruptcy is discharged if you don’t make arrangements with the creditor.
Can I stop a garnishment without filing Bankruptcy?
There are limited options on how to deal with a garnishment without filing bankruptcy. The first is to pay off the debt. If you only have Social Security or a related type of income, your income will be exempt from garnishment. You can also petition the court to reduce the amount the garnishment takes from 25% to 15%. However, 15% is the absolute lowest the court is allowed to go. If none of these options are viable for you, you should consider scheduling a consultation with a bankruptcy attorney.
Does a Chapter 13 Bankruptcy stop a garnishment too, or just Chapter 7?
The main difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy is that a Chapter 7 liquidates your debts, while a Chapter 13 is a 3-5 year reorganization and repayment plan. Both Chapters provide the automatic stay of protection, which remains in effect until the case is discharged or dismissed. Since a Chapter 13 has a much longer lifespan than a Chapter 7, Chapter 13 filers will be shielded longer from wage garnishment.