Wage garnishment is a legal procedure whereby the court requires your employer to withhold your earnings to pay a debt. Creditors employ wage garnishment to collect bad debts. There are several reasons why the court can garnish your wages. Some of these reasons include the payment of a court-ordered debt, vehicle registration, spousal support, child support, and the payment of back taxes. Unfortunately, wage garnishment can cause you or your family a devastating financial burden. For example, a wage garnishment can be debilitating if you have a minimum wage of $14.00. Fortunately, you can explore several options to stop wage garnishment. One of the options is to reach out to an attorney to assist you in navigating the justice system.
Understanding Wage Garnishment
Under California law, wage garnishment is a lawful procedure that involves seizing a portion of your earnings to offset a debt. The judge can order a wage garnishment for credit card debts, medical bills, student loans, taxes, spousal support, child support, and other outstanding debts.
Under the law, it is an offense for a creditor to seize a portion of your earnings without a court order. However, your employer is lawfully required to withhold a portion of your wages to offset your debt once the creditor acquires a garnishment order.
The Process of Wage Garnishment
The wage garnishment process usually depends on the kind of debt under collection. For example, there are specific processes for withholding spousal and child support from your earnings. In addition, without a court order, the federal government can withhold up to 15% of your earnings for unpaid student loans. Similarly, the Internal Revenue Service can garnish your earnings for back taxes without a court order. However, general creditors have a different procedure for wage garnishment, including:
Securing a Wage Garnishment Order
The creditor will ask the court for a writ of execution. The court will attach the writ to the earnings withholding order, permitting your employer to withhold money from your earnings according to the judgment. Your employer will be served with the garnishment packet to start garnishing your earnings with the initial salary you earn after ten days from the service date.
Generally, your employer submits the money to the levying officer, also known as a marshal or sheriff, who then sends it to the creditor. The earnings withholding order, or wage garnishment order, provides your employer with all the necessary information to execute the wage garnishment.
The law places wage garnishment according to priority as follows:
- Priority 1 — Wage and Earnings Assignment Order for Support.
- Priority 2— Earnings Withholding for Support.
- Priority 3 — Earnings Withholding for Taxes.
- Priority 4 — Earnings Withholding for Elder Dependent Adult Financial Abuse.
- Priority 5 — Earnings Withholding Order.
Personal judgments for personal loans, credit card debts, medical bills, and other unsecured debts are categorized under priority five. The highest priority order receives payment first. However, an employer could sometimes receive two orders with similar priorities. In this case, the employer will prioritize the order received first.
Before your employer begins garnishing your wages, the employer must first serve you with a copy of the garnishment order. However, the law allows you to contest the garnishment order in court, but the statute of limitations is short. Therefore, you will have only ten days to request exemptions after receiving the wage garnishment notice. After that, your employer will start deducting money from your paycheck if you fail to take any action and will continue to deduct the money until your debt is cleared.
Securing a Personal Judgment Against You
Typically, it is illegal for the creditor to automatically garnish your wages for an unpaid debt. Instead, the creditor must first secure a personal judgment against you for the debt by filing a debt collection case. Common debt collection cases involve personal loans, foreclosure deficiencies or repossessions, medical bills, credit card debts, and other unsecured debts.
The creditor is also required to file a complaint with the court and send you a copy of the complaint. The complaint includes the debt details, the amount you owe, the facts of the case, and the summary of the law. The summons outlines the period to respond to the charges, usually 30 days. If you file a response or an answer to your charges, the court will schedule a trial date. If you fail to answer or respond to your charges, the court can issue a default judgment in favor of the creditor, meaning you lose the case before it goes any further.
The court will enter a default judgment if the creditor’s documents substantially prove that you owe the debt. A default judgment is an order outlining the specific amount of money you owe the creditor. The court’s final judgment or order is filed with the clerk. The creditor can then execute the legal action and recover the debt by seeking an order to garnish your wages.
Stopping a Wage Garnishment
The first defense against wage garnishment is to contest the debt collection charges. Filing an answer or a response allows you to challenge your charges before the court. You should seek the services of an attorney when you receive debt collection charges. An attorney will help you understand your rights and the alternatives to contesting your charges. Several options are available if you want to stop wage garnishment. They include:
Paying Your Entire Debt
Paying your entire debt enables you to stop wage garnishment. Usually, you can negotiate with the creditor for a settlement if you cannot pay the whole debt. For example, if you promise to clear the amount in one payment within 30 to 60 days, the creditor could agree to a lower amount to pay off the outstanding debt and avoid wage garnishment.
You should secure a written agreement outlining the settlement conditions if you negotiate a garnishment plan with the creditor. You need to obtain the agreement before submitting the payment to the creditor. You should hire an attorney to review the agreement before you sign it or start making the payments.
File for Bankruptcy Relief
It is hard for most people to afford a wage garnishment when living paycheck to paycheck. The standard strategy to stop wage garnishment is to file for bankruptcy. When you file a bankruptcy petition, the creditor will stop all debt collection efforts against you, including seeking a wage garnishment order.
The most affordable option is filing for Chapter 7 bankruptcy. However, you must be eligible for bankruptcy based on your income limits and the bankruptcy means test. When you file for Chapter 7 bankruptcy, your creditors will not pursue a wage garnishment. This is particularly true if the underlying debt is dischargeable in bankruptcy. For example, bankruptcy will clear out the debt and the wage garnishment if the judgment is associated with a credit card account loan, personal loan, or medical bill.
Chapter 13 could also assist you in stopping wage garnishment. However, it is more costly and could last three to five years. You can consult your attorney and file a Chapter 13 bankruptcy if your wage garnishment is for a debt that is not dischargeable in bankruptcy or if your income/assets do not allow you to file for Chapter 7. Chapter 13 bankruptcy allows you to repay certain debts over three to five years.
How much does it cost to file for bankruptcy?
This will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy. You need around $338 to pay for the court filing fee for Chapter 7 bankruptcy. On the other hand, you need around $313 to pay for the filing fee for Chapter 13 bankruptcy. The above charges will only cover the filing fees.
Additionally, you could pay between $1,500 and $3,000 as attorney fees for Chapter 7 bankruptcy. You could also pay a higher attorney fee for Chapter 13 bankruptcy. However, the attorney fee varies from one law firm to the next.
File for an Exemption
You can request an exemption if you need money to support yourself and your family. You could request this relief by filling out a wage garnishment exemption form. You can file an exemption to stop wage garnishment if you have income protected from wage garnishment, like social security income. However, you can only apply for an exemption depending on your residence. Some courts permit the application of an exemption, while others do not.
The court could exempt you from wage garnishment if you live in an area where rental prices have increased, making it hard for you to meet your family's basic needs. However, the court could deny you an exemption if:
- The debt you owe is the salary owed to your former employee.
- You owe money from your previous marriage due to spousal or child support.
- You owe money to an attorney due to a court order in a family lawsuit.
- You use some of your salaries to pay for luxury services or buy luxury items.
You are required to file a claim to be exempted from wages with the levying officer to request an exemption. You will also be required to complete and file a Financial Statement with the Claim of Exemption form. The levying officer has the power to issue the Earnings Withholding Order. You are expected to explain why the creditor's desire to garnish your salary should be stopped.
You need to give details regarding your needs and your family's needs. For example, your medical bills could be recurring because of a medical condition or illness. In this case, you need to give the details of your situation and include evidence of the recurring medical expenses. If you provide more information, you will improve your chances of receiving an exemption.
The Claim of Exemption form allows you to request a total exemption, and no money will be deducted from your wages. The form also lets you decide on the amount to be withheld monthly to offset your debt. For example, you could decide on the amount you can afford to offset your debt, which is less than the amount of the wage withholding order.
Wage Garnishment Rules
Wage garnishment rules vary at the state and federal levels. The law limits the earnings your employer can withhold from each paycheck. Usually, the amount is based on the applicable minimum wage and your disposable earnings.
The maximum amount your employer should withhold is the lesser of these two amounts:
- 25 percent of your disposable earnings for the week, or
- 50 percent of the difference between the applicable minimum wage for that week and your disposable earnings for that week.
If you were paid the California minimum wage, your employer must calculate the amount you would make in a week and your disposable income. The minimum wage is often $14.00. However, a higher minimum wage has been established in some cities. Generally, your employer is expected to use the minimum wage he/she will pay you based on the company's size and location.
Your earnings constitute all the money your employer pays you for services. Your earnings subject to wage garnishment include sick pay, vacation pay, commissions, bonuses, overtime pay, salaries, and hourly wages.
Once your employer deducts the specific withholding amount, your disposable earnings for the pay period remain. The following are the withholding requirements:
- Mandatory retirement plans.
- Social security.
- Medicare.
- Local income tax.
- State income tax.
- Federal income tax.
Find a Bankruptcy Attorney Near Me
It can be overwhelming to deal with debt issues. However, you need an attorney to help you, particularly if you face wage garnishment. At the Sacramento Bankruptcy Lawyer, we offer reliable services to people who require help to defend a wage garnishment case or other debt relief services. We will help you analyze your financial situation, review all debt relief options, and choose the best option. We will also help navigate Chapter 13 if that is the best option and craft a good repayment plan. Contact us at 916-800-7690 and talk to one of our attorneys.
