In the world of debt collection, wage garnishment is the equivalent of bringing in the “big guns.” It’s a regular payment to a creditor, taken directly from your paycheck by your employer. This is a powerful tool used by creditors to get repaid on outstanding debts, but it also requires that they initiate a lawsuit – something many are reluctant to do until they’ve tried other methods. There are, however, state and federal laws that govern the process that restrict how much can be taken from a person’s paycheck.
When Does A Wage Garnishment Apply
Wage garnishment begins with a court issuing a judgment finding that the debtor actually owes the money. Before going to court, the creditor (which might be a bank or another company that is owed money) usually makes its own debt collection efforts. If that fails, then the creditor either turns the debt over to a collection agency (who gets to keep a percentage of the debts they recover) or a debt buyer, who buys the debt for pennies on the dollar and gets to keep all the money they recover. Only after these efforts are unsuccessful do companies take the final step of going to court.
Unfortunately, people with a lot of debt may become used to receiving threatening-looking letters in the mail from their creditors, and not pay attention when they receive notice of a court date. When the court date comes, if the debtor does not appear in court, the creditor will receive a default judgment, which means they “win” by default and the court will generally approve an order to garnish the person’s wages. Thus it’s always best to talk to an attorney if you receive notice of a lawsuit.
Wage Garnishment Limits
Even if wage garnishment is set up, there are limits to how much can be withdrawn. According to federal law, no more than 25% of the employee’s disposable earnings (the money that is left after any federal, state and local taxes and other similar deductions are taken out) can be garnished. New Jersey law goes even further, limiting the deduction to 10% of the person’s gross income, but stipulating that the court may order a larger percentage, taking into account the size of the debt, the person’s financial circ*mstances, how long the debt has remained unpaid, and other circ*mstances. That makes appearing in court – with an experienced attorney who can best present the case to the judge – even more important for anyone wishing to avoid wage garnishment.
How To Stop Wage Garnishment
Filing for either Chapter 7 or Chapter 13 bankruptcy is the easiest way to stop a wage garnishment. The moment you file a bankruptcy, an automatic stay, which is an injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Even if you owe the debt and a judgment is entered against you, a wage garnishment can be stopped by filing for bankruptcy.
If your wages have been taken from you within the past 90 days, our lawyers may be able to get your money back. However, if the money was taken more than 90 days ago, you won’t be able to get it back. It is important to seek the advice of a qualified consumer bankruptcy attorney who can inform you of your rights, exceptions and limitations.
Other Way to Stop a Wage Garnishment
Filing for either Chapter 7 or Chapter 13 bankruptcy is the easiest way to stop a wage garnishment. The moment you file a bankruptcy, an automatic stay, which is an injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Even if you owe the debt and a judgment is entered against you, a wage garnishment can be stopped by filing for bankruptcy. If your wages have been taken from you within the past 90 days, our lawyers may be able to get your money back. However, if the money was taken more than 90 days ago, you won’t be able to get it back. It is important to seek the advice of a qualified consumer bankruptcy attorney who can inform you of your rights, exceptions and limitations.
Another way to stop a wage garnishment is by negotiating with your creditor. Many creditors are reluctant to settle debts once they have a garnishment. However, an attorney can help you negotiate the best settlement by offering a lump sum amount or payment terms.
A third way to stop a wage garnishment includesbecoming current with your debt obligations.
The Law Office of Joel R. Spivack focuses on helping clients get through challenging financial times. If you need guidance and support, reach out today.
We are happy to help you regain control of your financial situation. We offer a free, face-to-face consultation at our Cherry Hill, NJ office. Mr. Spivack will provide honest answers to your questions and let you know what he can do to make this process go as smoothly as possible.
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