Wage garnishment usually occurs when your employer is ordered by the court to divert part of your salary to the party to whom you owe cash. You'll have your earnings garnished until your debt is fully cleared or resolved. Some of the wage garnishment sources include student loans, consumer debts, and child support. With your legal rights on the amount of cash that can be deducted, you have the chance to lessen the garnishment or stop it entirely.

How the United States Department of Labor (USDL) Defines Wage Garnishments

According to the USDL, a wage garnishment refers to any equitable or legal procedure through which part of an individual’s earnings is supposed to be diverted to paying a debt. Majority of garnishments are as a result of court orders. Wage garnishments don’t constitute voluntary wage assignments, which make employees to voluntarily allow their employers to turn over a specified portion of their earnings to creditors.

Earnings, in this context, may include wages, bonuses, commissions and salaries. They may also include compensation from a disability payment program that’s program based or a retirement/pension program. The earnings are defined as compensation for certain personal services.

What Determines the Amount of Wages for Garnishing?

Your “disposable earnings” determine the amount of money that’s subject to wage garnishment. Disposable earnings refer to the amount of cash you’re left with after creditors and other agencies make legal deductions. The statutory deductions may include State Unemployment Insurance tax, Medicate, Social Security share and federal/state/local taxes. They may also constitute the amount withheld for employee retirement as mandated by the law.

Deductions that aren’t covered by the law include health and life insurance, voluntary wage assignments and charitable donations. They also include retirement plan payments (that aren’t required by law), merchandise purchases, payroll advances and purchases of savings bonds. Such deductions won’t be subtracted from your gross earnings in the process of calculating your disposable earnings.

What Portion of Your Earnings is Subject to Garnishment?

The USDL administered Title III of the CCPA (Consumer Credit Protection Act), to limit the amount of a person's wages that can be garnished. The law applies to the District of Columbia, all the 50 US States and US territories and possessions. Title III covers you provided that you receive personal earnings from your employer.

Ordinary weekly garnishments shouldn’t exceed 25 percent of your disposable earnings. They shouldn’t also exceed the amount of your disposable earnings that are 30 times greater than the federal minimum wage ($7.25/hour). Ordinary garnishments, in this case, don’t include state/federal taxes, bankruptcy or support payments.

The CCPA prohibits your employer from firing you if you currently have any wage garnishment. This rule is still applicable regardless of the amount of dues you owe or the court proceedings filed to collect a debt. The CCPA doesn't limit you from getting a garnishment discharge since your wages will be garnished separately to repay two or more levies.

Example:

If you choose weekly garnishments and your disposable earnings equal to $217.50 (i.e., $7.25 x 30), your salary won't be garnished. However, if your disposable earnings are over $217.50 but less than $290 (S7.25 x 40), you’ll have the amount above $217.50 garnished. A 25-percent garnishment rate will apply to you if your disposable earnings equal to $290 or more. Such rates don’t apply to court orders for alimony/child support, back state/federal taxes or bankruptcy.

What are the Common Forms of Wage Garnishments?

Creditors and other parties may garnish your earnings to pay back taxes, student loans or child support money that you owe. Some court judgments entered against you may lead to you having your wages garnished. Discussed below are the common instances for wage garnishment.

Court Judgments

The entity or individual that won a lawsuit against you can have your earnings garnished if the court enters a money judgment against you. The party will claim your money by submitting a court order to a marshal or local sheriff, who'll present it to your employer. Before withholding a portion of your salary and sending it to your creditor, your employer will alert you about the wage garnishment. You’ll also get information from the court order on how to protest the salary deductions.

Back Taxes

IRS officials usually take large portions of money from wages of people owing back taxes without requiring a court order. The amount subtracted from your paycheck depends on the deduction amount and the number of dependents you have. Your employer will present you a copy of a wage levy notice sent by the IRS to show that the garnishment is yet to take effect. Local and state tax agencies in different states have jurisdiction on your wages if you owe back taxes.

Non-tax Debts You Owe to Federal Agencies

Federal agencies or debt collectors working with them can garnish up to 15 percent of your disposable earnings to settle debts you owe the US government as authorized by the Debt Collection Improvement Act. The Department of Education in association with its guaranty agencies can take up to 10 percent of your disposable wages to settle federal student loans you defaulted. The debt collector won’t need any court order or lawsuit to garnish your cash. However, expect to receive a notification on the amount you owe and how to get reports related to the loan 30 days before garnishments commence.

Alimony and Child Support

As of 1988, all child support orders are required to include an automatic order for withholding wages. The wage withholding order is still applicable to the total owned amount if alimony and child support are merged into a single family support payment. The exception is that alimony orders don’t qualify for automatic wage withholding.

After the court orders you to make child support payments, the child’s other parent or the court will send a copy of this order to your respective employer. Upon receipt of the request, your employer will withhold and send the agreed amount to the other parent. Your child’s health insurance coverage will also be subtracted from your earnings if you’re mandated to make this payment.

Which Creditors Don’t Need a Court Order to Garnish Your Earnings?

Creditors such as student loan lenders and tax creditors don't need a court order for them to garnish your earnings. Regardless of their ways of recovering the debt, you're still entitled to particular rights. You'll be required to present a written objection while claiming the exemptions you would like to apply. Here's how to stop the garnishments for student loans and taxes.

Wage Garnishments for Student Loans

Your student loan lender should give you a garnishment written notice at least 30 days before deducting part of your income. The 30-day period allows you to seek hardship assistance, which may include a new payment plan. You can also request a hearing or submit a written objection to prevent the written notice from taking effect.

Wage Garnishments for Back Taxes

Expect to receive a written notice stating that the IRS would like to have your salary garnished. You can fill an IRS form claiming exemptions based on your income and household size. Note that these exemptions differ from those you would take under federal and state exemption laws. Consider researching the state laws to know the exceptions you have on state taxes.

Can Bankruptcy Stop Wage Garnishments?

A court order, also known as "the automatic stay," takes effect once you file a bankruptcy case. Such an injunction prohibits some creditors from continuing or taking actions to fetch their debts. The automatic stay can also prevent/stop garnishment and erase out any underlying levy. If you filed for bankruptcy repeatedly, the injunction may only last for 30 days or may not take effect at all.

The automatic stay doesn't apply to certain creditors and certain kinds of debts. The order can't stop a wage garnishment if your dues are meant to pay domestic support obligations such as alimony or child support. Unlike filing a Chapter 7 case that doesn't stop all garnishments, filing a Chapter 7 case can stop all your garnishments inclusive of domestic support obligations. However, you’ll have to pay these obligations in full within three or five years if you file for a Chapter 13 bankruptcy.

How Filing for Bankruptcy Helps Stop Wage Garnishments Quickly

After filing a bankruptcy case, the court takes at least a week to send your creditors an official case notification. You and your bankruptcy lawyer should give your garnishment creditor and employer the bankruptcy filing date, court location and case number to ensure for your garnishment to stop quickly. The creditor shouldn’t deduct any portion of your earnings after being updated about the bankruptcy even if your employer hasn’t gotten a court notification.

How to Recover Garnished Wages Before Filing for Bankruptcy

You have the opportunity to reclaim some of your garnished earnings before filing for bankruptcy. However, the garnishment must have taken place 90 days before your bankruptcy filing date. The garnished wages should exceed a certain amount for an exemption law to apply to your case. You’ll also need to file a lawsuit against your garnishment creditor in a bankruptcy court.

Once your bankruptcy case is complete, your creditors don’t have any legal jurisdiction to garnish discharged debts like medical bills, personal loans, and credit card balances. However, they can garnish non-dischargeable debts since your responsibility to pay them remains the same even after the bankrupt. If the court drops your bankruptcy case without any discharge, the automatic stay won't take effect making your creditors resume garnishing your earnings.

Can Objections Help Challenge Wage garnishments?

Raising an objection can help you challenge a creditor that's trying to have your earnings garnished. The procedures to follow when making the complaint depend on the kind of debt you owe the creditor and your state laws. Discussed below are the conventional methods for objecting to wage garnishments.

Getting Sued by the Creditor

The creditor must sue you and acquire a court order before garnishing your wages. The garnishment process may begin once the creditor gets the court order. You can file a written notice and request a hearing before the employer diverts part of your earnings to the debt. You only have 30 days to object the garnishments before the creditor starts receiving the dues.

Filing the Written Objection

You'll need to prepare and submit paperwork for you to start objecting a garnishment. The court will hand you instructions on how to proceed with this process. The instructions can include:

  • The due date for having the objection filed

  • The format of the complaint

  • Whether to draft an originally written objection or use a court-provided form

  • The kind of information the document should contain

  • Where to submit the written objection

  • Whether to give your creditor and other interested parties a copy of the complaint

  • Date, time or place of the scheduled hearing

Contact the court clerk if the garnishment paperwork you got doesn’t include these instructions. In most cases, the court offers a separate form for writing an objection and requesting a hearing. Ask the clerk for this form it's missing in the paperwork. If the court doesn't offer this form, draft an original one and have it filed on time.

What the Written Objection Should Include

  • Your case caption and case number

  • Date of your garnishment objection

  • Your full names and contact details

  • Your grounds for objecting the wage garnishments

  • Your official signature

Stating Your Grounds for Objecting Wage Garnishments

You can state in your written objection that you believe your wages qualify for exemptions as stipulated under the state or federal laws. Describe the exceptions in details and support them by providing calculations. You may write down additional reasons for opposing the garnishment. They may include having a bankruptcy discharge or having paid the creditor some money.

Is There Need for a Hearing When Making Objections for Wage Garnishments?

Courts tend to offer garnishment hearings to help individuals protect their wages. You must attend such trials on the date and time provided once you file your objection. You can also reach out to the court clerk to inquire about the status of your application and the possible hearing dates. The hearing is usually limited to your claims of having the garnishments stopped.

What to Carry During the Garnishment Hearing

Bring clear copies of documents such as pay slips to back up your objection in court. The magistrate or judge will interpret your exemption claim as defined in the state/federal exemption laws. You may have the garnishment terminated or modified if the magistrate/judge sustains (accepts) your objection. Consequently, the court may overrule your objection and allow the wage garnishment to take effect as planned if your complaint isn't substantial enough.

Should You Involve a Lawyer to Stop Wage Garnishments?

You should consult a law specialist that's familiar with your local laws since regulation on making garnishment objections Vary from one US state to the other. Seek legal advice as soon as your earnings are garnished, or funds are frozen. Work with a legal expert that's experienced in debt collection practices as well as consumer law. You're limited to the objection period highlighted in your court order.

With legal advice, you can decide whether making a garnishment objection is the best course of action. Your attorney will explore different routes you can take to have the wage garnishments stopped. Expect the legal expert to choose one or two that apply to your case for the best outcomes.

The lawyer will prove your legal eligibility for changing or reversing a garnishment judgment. Failing to have your attorney challenge the verdict within the period stated in your court order will result in the creditors taking part of your income. Regardless of how busy your schedule is, spare time to discuss your options with your legal expert.

Can a Lawyer Help Object Incorrect Judgments?

You’ll find it almost impossible to challenge a judgment (stating that your earnings should be garnished) with a firm belief that an error was made. Your attorney is the right person for this job. Your lawyer can prove to the court that the wage garnishments are as a result of identity theft or mistaken identity. Such a defense has to be backed with adequate evidence for the court to find it convincing.

Have Wage Garnishments Stopped by a Bankruptcy Attorney Near Me

With the current high costs of living, your income deductions should be at a minimum for you to live comfortably. Deductions such as credit card debts, child support, and student loans can take a massive toll on your personal finances. Through a lawyer’s help, you can object to or alter the terms and conditions of your wage garnishments. You also get an opportunity to reclaim and secure your financial future.

At San Diego Bankruptcy Attorney, we understand that people’s financial situations are different and require unique methods for dealing with them. We help clients like you across San Diego, CA understand their options and the process involved in stopping wage garnishments. We take great pride in providing you optimum results regardless of your situation. Kindly call our San Diego Bankruptcy Lawyer at 619-488-6168 for a free consultation for all bankruptcy-related cases.