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Wage Garnishment, Nuts and Bolts

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  • Wage Garnishment, Nuts and Bolts

    Members often post to this forum with wage garnishment questions, and many people seem unnecessarily fearful of garnishment, or at least are misinformed about how garnishment, here is a brief overview of wage garnishment.

    For purposes of context, this description is applicable to unsecured creditors, i.e. credit cards, etc.

    What is Wage Garnishment?

    Wage garnishment is a collection method whereby a creditor, with a judgment against you, is able to "directly" take a portion of your pay check to satisfy the debt you owe. Thus, your employer deducts the amount of the garnishment from your paycheck and sends that amount directly to the creditor.

    Am I subject to wage garnishment?

    Nearly all states have some sort of garnishment statute; the three notable exceptions are South Carolina, Pennsylvania and Texas (and maybe a few others); those states do not allow wage garnishment (except for Child Support and Tax issues). What will vary from state to state is the percentage of your pay a creditor can garnish (the average being 25%), the duration of the garnishment, and the mechanism by which garnishment occurs.

    And obviously, you must be employed for wage garnishment to apply.

    How does a creditor go about getting a wage garnishment?

    For whatever reason, this issue seems to be the least understood by debtors, but the answer is simple.
    A creditor "MUST SUE YOU" in court and receive a judgment in their favor BEFORE they can garnish your wages. Creditors have to go to court before they can garnish wages; as part of the rules of civil procedure, the creditor must comply with certain notice requirements etc. The ins-and-outs of judgments is beyond the scope of this article, but the bottom line is, the creditor must have a judgment against you, and odds are, you will know if you are getting sued. So, generally speaking, wage garnishments are rarely a "surprise."

    Once a creditor has a judgment, the creditor usually must seek a writ of garnishment from the court (which is simply a matter of completing paperwork). Once the creditor has the writ of garnishment, they employ the local sheriff or private process server to go down to your place of employment and serve the writ of garnishment...note, in many states, the writ can be served by mail. You will usually get a copy of the Writ, sometimes it is mailed to you by the creditor other times you will get a copy from your HR representative at work.

    Your employer is required to comply and in most states, if the employer does not comply, then the company can become liable for the money owed. From an employers perspective, wage garnishment is a fairly straightforward process (unless you work for a tiny company).

    Special Garnishments

    The notable exception to the "must sue you first" rule is tax related garnishments. The IRS, state taxing authorities, and certain federal administrative agencies can directly garnish your wages without suing you in state court. However, each agency has certain administrative and notice procedures they must comply with before they can garnish your wages.

    Can other income other than employment income be garnished?

    Generally, the answer is no; only employment income can be garnished under a state's wage garnishment law, but laws do vary. Keep in mind, we are only talking about "wage garnishment" in this thread, creditors have other collection alternatives to wage garnishment, creditors can go after assets (both hard assets and financial assets) etc. Wage garnishment laws tend to be specific to Employment Income.

    Moreover, many types of non-employment income are exempt, i.e. Social Security Benefits, Child Support, etc. A private creditor cannot directly garnish those checks (note, special class creditors, e.g. IRS, VA, can directly garnish those types of benefit checks).

    What if I live in one state, but work in another; or what if I no longer live and work in the state where the judgment was issued?

    If you no longer work in the state from which the judgment was issued, the creditor is not without recourse. For example, if a creditor has a judgment against the debtor in CA, but the debtor now lives and works in NV, the creditor has to get the judgment recognized in NV; that process is known as domesticating the judgment. Domesticating a judgment is an easy process; the creditor needs to only complete some paperwork, allow some time for objections, and pay a fee. Granted, a creditor doesn't want to have to do this, so if you no longer reside or work in the state where the judgment was issued, the odds of your wages being garnished decrease, but a motivated creditor can still garnish your wages. (assuming you didn't move to South Carolina or Texas )

    Can I be fired for wage garnishment

    Title III of the Consumer Credit Protection Act forbids employers from firing an individual because of wage garnishment, and frankly, most employers don't care that your wages are being garnished. But as with any employment related issue, nothing can really stop an employer from "manufacturing" a reason to fire you, and unless you are subject to the terms of an employment contract, you are as at-will employee, meaning your employer can fire you anytime they want with or without cause. Thus, then the burden is on you to enforce your rights and prove that you fired in violation of the law.

    Does Bankruptcy Stop Wage Garnishment

    Yes. When you file Bankruptcy, that act creates the "automatic stay" which forbids all creditors from doing anything to collect a debt. However, unless you take steps to notify your employer and the garnishing creditor of your BK, there will be a delay between the time you file BK and the time the garnishment actually stops. Thus, if you need the garnishment to stop ASAP, you need to take your file stamped petition directly to the garnishing creditor and your employer.

    If a check is garnished after BK, you can get that money back and most creditors will simply issue a refund once they see the BK paperwork

    Bottom line, wage garnishment is something that happens near the end of the collection cycle. Reason being, creditors would rather not go to the trouble to go to court; generally creditors do not consider lawsuits until about 6-18 months after your first default.
    Last edited by HHM; 02-09-2008, 01:14 PM.

  • #2
    Excellent post!

    There are many reasons for wage garnishment and that is why they are not that big of a deal for large companies. Wages are constantly garnished for child support, alimony, taxes, and student loans. If your wages are garnished, you are definitely not alone.

    In many states, you will receive a copy of the garnishment writ. Sometimes you might receive this prior to the garnishment (a head's up) or you might receive a copy after your wages have been garnished. It all depends upon where you are in the pay cycle. Some states allow 10 or more days to mail a copy of the writ to you after the writ has been served on the employer.

    Again, a very good and useful post!


    • #3
      Thank you for this excellent, informative post/sticky.
      One other item that would be informative is the issue of bank account levies,in general and especially regarding to fixed income deposits like SS, SDI, other govt. assistance payments.


      • #4
        Wage Garnishment - Question

        I am being threatned with a wage garnishment. The law firm has obtained a judgement against me but it was only signed by the court clerk. I was never scheduled to appear before a judge and the judge has not signed the judgement. Is this possible to garnish my wages without even appearing before a judge to explain my situation. I am not disputing the debt, I can only make mininmal payments right now because I am trying to deal with several creditors. I am in Nassau county of New York.



        • #5
          Originally posted by john55155 View Post
          I am being threatned with a wage garnishment. The law firm has obtained a judgement against me but it was only signed by the court clerk. I was never scheduled to appear before a judge and the judge has not signed the judgement. Is this possible to garnish my wages without even appearing before a judge to explain my situation. I am not disputing the debt, I can only make minimal payments right now because I am trying to deal with several creditors. I am in Nassau county of New York.


          Your's is a service of process question. Also, your question is specific to your states civil procedure. I suspect having the clerk sign the form is not a problem.

          But, in the big picture, if you really wanted to pursue it, you would have to file a motion in that court to vacate the judgment.

          What you really need is an end-game to deal with the debt. Are you going to file BK, are you going to pay it, etc. Since the creditor already has the judgment, and apparently a garnishment order, you are pretty much at their mercy. Filing the motion to vacate only buys you some time, but does not solve the problem.


          • #6
            Wage Garnishment

            What I do not understand is how a creditor can get a judgement against me without me being aware of the hearing? I had no way of having my side heard because I was never notified. Also, how can a clerk sign a judgment? Why was I not going before a judge?


            • #7
              Originally posted by john55155 View Post
              What I do not understand is how a creditor can get a judgement against me without me being aware of the hearing? I had no way of having my side heard because I was never notified. Also, how can a clerk sign a judgment? Why was I not going before a judge?
              Probably because it was a default judgment.

              As for not knowing about it, who can say (maybe you moved, they couldn't find you, etc). Like I said, if you want to do anything about it, you need to file a motion to set-aside default judgment at the court where the judgment was issued.


              • #8
                Some states will still allow the garnishment to be processed even though you contest it. What happens is the employer makes the garnishment payments to your local court until the matter is resolved. And, in the end, the matter might quite possibly be resolved in the creditor/CA's favor. You might want to read up on your state statutes, especially if you owe the debt, and the creditor/CA has ample evidence you were properly warned (served.)


                • #9
                  Originally posted by magyar123 View Post
                  Thank you for this excellent, informative post/sticky.
                  One other item that would be informative is the issue of bank account levies,in general and especially regarding to fixed income deposits like SS, SDI, other govt. assistance payments.


                  • #10
                    Originally Posted by magyar123
                    One other item that would be informative is the issue of bank account levies,in general and especially regarding to fixed income deposits like SS, SDI, other govt. assistance payments.

                    And here are the public comments to the docket:

                    Section III (D) of this report from the National Consumer Law Center
                    and the National Association of Consumer Advocates is also good reading:

                    No surprise that the banks claim they can do nothing - it's way "too much work" to check if funds are direct deposit exempt, or anything else except collect their $150 legal fee for freezing the account plus the NSF fees for any bounced checks, etc. IF you ever had any idea that the banks give a damn about their customers, reading their lame responses to this docket should remove all doubt.

                    The letters from the legal aid groups, AARP, and consumer rights attorneys all tell it like it is. Sadly nothing has been done to correct the illegal bank seizure of exempt funds yet - and if as usual the Banks have their way, nothing will happen anytime soon. Another reason to Change this Administration and Congress in November! We need Federal Laws to specifically prevent the illegal seizure of exempt bank account funds - something that will never happen with the present Administration and Congress and their money masters, the all powerful bank lobby.
                    “When fascism comes to America, it’ll be wrapped in a flag and carrying a cross” — Sinclair Lewis


                    • #11
                      In some cases would it be better for a judgment for wage garnishment to happen first & then file for their BK? Would that help to stop a creditor from filing an objection during the BK or would they just go thru the whole process twice to get back at garnishing wages when the BK is over and (all other debt is discharged)?

                      My thought is, if a creditor is going to garnish wages once before a BK, would they go to the 341 or make an objection during the BK, as this would be their second attempt to collect debt and would that be costly/worth the effort for them?

                      iT would be like being sued twice by the same creditor for the same debt. This is just hypotheical and not sure if it even makes any sense or has ever happened, but is something I have wondered.


                      • #12
                        In the big picture, I don't think it matters either way.

                        You have to realize, it really does not cost them that much. Collection attorney's are not paid by the hour, they work off of contingency. So, aside from filing fee, there are no significant up front costs for a CA or Creditor in filing a suit or pursuing an objection.

                        But, as to your specific question, it is more time consuming for the creditor to have to get the judgment first (assuming you put up a tacit fight and do not allow a default judgment), then have the debtor file BK, and then object to the BK. If you file BK before a state court judgment is entered, then the creditor still has to object to the BK, and they will still have to sue in court, but the BK acts as an acknowledgment of the debt so your case, in state court, would likely be resolved by summary judgment rather quickly.


                        • #13
                          Does anyone know what the rule in Tennessee is for wage garnishment
                          A debtor may obtain relief from garnishment by filing a "slow pay" motion, supported by an affidavit of his or her existing debts.
                          While no specific statutory provision so requires, most judges require that a debtor pay an amount sufficient to pay post-judgment interest and some portion of the principal.
                          A debtor's wages may be attached before judgment is rendered if the debtor attempts to evade service of process

                          This is what I found, but I really do not understand. I am planning on stopping payment to my credit cards, to obtain a BK lawyer, but I dont need a garnishment.
                          Can anyone help me with what this means?


                          • #14
                            Hi, I'm just wondering if someone with a judgement another state (state A) moved and resided to a state like South Carolina or Texas (states B or C), but worked in still another state (state D), would a garnishment still be conducted?

                            I'm just a bit confused about all that. Thanks.


                            • #15
                              If my husband and I had a joint cc, could they garnish both of our wages for 25%? Is there any way of fighting a garnishment? What if it meant losing your home?


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