With most Americans living paycheck to paycheck, not getting the regular payment can devastate your financial situation. So what is a garnishment, and are there ways to work around it?
What is a Garnishment?
A garnishment is a type of legal procedure obtained in a court of law. While there are multiple types of garnishments, wage garnishment is the most common that the average consumer could end up facing. A wage garnishment results in a portion of your wages being withheld by your employer and, instead, being diverted towards paying off your debt.
Who Can Get a Garnishment Against You?
While garnishment can occur due to various debts, the most common cause of wage garnishment is unpaid or overdue child support. This type of garnishment also takes priority over all other classes, except for federal tax levies. That means the garnishment for child support would take precedence in the case of multiple garnishments against your wages.
You can also face garnishment due to unpaid consumer debt, like credit card balances, personal loans, or even medical debt. The state also has the ability to utilise bank garnishments and can take money from your bank account, even without a court order against you, in the case of unpaid taxes or other state fees.
Another federal entity that can engage in such practices is the Department of Education. In the case that you become late on your student loan payments, the U.S. Department of Education has the ability to garnish up to 15% of your disposable income.
How Do You Avoid Garnishment?
One of the best ways to avoid a garnishment against your wages is to not fall behind on a debt in the first place, although if you’re reading this, it’s probably a little late for that. But for those who are in debt and are currently only worrying about the possibility of garnishment, there are a few things you can do to make that outcome less likely.
Firstly, if you find yourself receiving a court summons, you should always show up. This gives you a chance to fight the debt, and both make sure there are no incorrect charges and that you owe the deficit in the first place. It also prevents a default judgement from being made against you, as the court will almost always rule in the plaintiff’s favour if you don’t show up.
If it hasn’t gotten that far quite yet, you still likely have time to speak with your creditor before it gets to that point. Their main goal is to recoup the debt owed, and they’d much rather take the path of least resistance if you’re willing to negotiate a payment plan with them.
Is There Any Way to Get Out of a Garnishment?
While it’s challenging to get out of garnishment after one has been applied, there are a few things you can try. One such option is known as a “Claim of Exemption” a successful claim of exemption can either reduce or eliminate the garnishment and allow you some breathing room to get your financial life back in order. So what are the exemptions you can receive?
Garnishment Exempt Income
Some types of income are automatically exempt from garnishment. Worker’s compensation, annuities, life insurance, and retirement income are a few examples. Money from child support and alimony is also generally exempted from these garnishments. Under Federal law, consumers also have several protections when dealing with garnishments.
Exemptions For Low-Income Earners
Your income can’t be garnished for those who earn less than 30 times the Federal minimum wage. That means their income is protected from garnishment for those making $217.50 a week or less.
Exemptions For Head of Household
Another potential exemption exists for low-income earners operating as the household head. Normally, under federal law, a maximum of 25% of your earnings can be garnished, although this depends on both your state and the type of garnishment applied against you.
Child-support garnishments allow up to 50% of your earnings to be garnished. If, instead, you are supporting a child or spouse, you can apply for a head of household exemption, which could either reduce or eliminate the garnishment being applied to your wages.
Filing For Bankruptcy
Something that should be considered a last resort, filing for bankruptcy, can alleviate the burdens a garnishment can place on you. In general, after filing for bankruptcy, you’ll receive something called an “Automatic Stay,” which should put a halt to any attempts by collectors to collect on your debt, including garnishments.
This, however, might not stop all garnishments, and it might not stop them for good. Depending on the type of bankruptcy you declare, the garnishment in place, and whether your claim is accepted, the garnishments may or may not continue. Child support garnishments, for example, generally won’t be stopped by declaring bankruptcy.
Know Your Rights When it Comes to Garnishment
When it comes to any legal procedure, knowing your rights is always recommended. And like any other procedure, it can be incredibly complex. Your rights regarding garnishment can differ depending on quite a few variables, from your state and local municipality’s laws, to who you are and where you get your income. But unfortunately, your rights won’t matter if you fail to assert yourself.
Even if the law protects your income, if you don’t show up to court, a judgement could be granted against you in absentia, and your payment could be withheld. That’s why it’s always important to show up to court. And after receiving your summons, you should answer that summons by ensuring they know that either you or your income meets the criteria for exemption.
You should not only do this when answering the summons, but you should also file a notice of exemption with the court clerk. But whichever method you go about claiming your immunity, you’ll be glad you asked, “What is a garnishment?”