Wage Garnishment Overview
Wage garnishment is a way for creditors to collect any debt you’ve incurred. Whoever handles your paycheck has to withhold some amount from your income. Your employer will send this amount to your creditors. The process is repeated until you pay back the amount you owe.
Federal law places a limit on the garnishment amount to protect debtors. Some states have their limitations, but Louisiana follows the federal limit. The law states that the amount that can be garnished must be the lower of the following:
- The amount by which your net pay/take-home pay exceeds the minimum wage 30 times; or
- 25% of your net pay/take-home pay.
Wage garnishments require the creditor to sue the debtor for nonpayment of the debt he/she owes. If the creditor wins, they get a judgment against the customer, which lets them get a garnishment order. The customer’s employer receives the notice to begin wage garnishment.
Not all debt requires a judgment for a wage garnishment to take effect. Under federal law, your wages can be withheld for student loan debt and back taxes. IRS and the Department of Education don’t need a judgment from the court to garnish your wages for these.
Wage garnishment, creditor harassment, and non-stop calls from collection agencies can get overwhelming on top of all the debt you owe. If you wish to gain a reprieve from all these burdens, talk to a Monroe bankruptcy lawyer to help you out with your debt problems.
3 Ways to Stop Wage Garnishment
Challenge the Garnishment
Once a court orders garnishment, you’ll be notified at the same time as your employer. Challenging the garnishment may help you prevent any deductions from your wages. If you decide to do so, make sure to dispute ASAP. There’s a limit on the time when you can challenge the wage garnishment order. Talk to a lawyer immediately if you wish to challenge a garnishment.
Talk to Your Creditors about a Payment Plan
Likely, you can’t pay off the total amount owed with a lump sum payment. Try to negotiate a payment plan with your creditors. Get help from a Northeast Louisiana law firm when dealing with a debt collector or your creditor. Inform them how much you can afford to pay in debt settlement and how much you can afford monthly.
If you manage to come up with a payment plan with your creditors, you’d have stopped wage garnishment before it even began!
File for Bankruptcy to Stop Wage Garnishment
If your wages are already being garnished, it may be challenging to negotiate a payment plan. Another option is to file for bankruptcy. Bankruptcies place an automatic stay from the bankruptcy court, meaning creditors and collection agencies must cease any efforts to collect your debts. Once an automatic stay is in effect, the creditors will be notified to stop garnishing your wages.
If your debt is dischargeable, then any personal liability you may have is wiped out after bankruptcy. In other words, you won’t have to pay for them anymore. Take note that not all debt can be discharged. Dues like domestic support obligations, tax debt, and student loan debt are exempt from discharge.
Filing for bankruptcy is the best option for you if you have multiple debts and multiple creditors suing you. Bankruptcy can give you a fresh start at a secure financial future, whether it’s a Chapter 7 liquidation or a Chapter 13 reorganization. Consult with a bankruptcy attorney now on which bankruptcy chapter is best for you.
It can be challenging managing your finances when your debt collectors garnish your monthly income. To prevent your financial problems from piling up, talk to our Monroe bankruptcy lawyers.
At E. Orum Young, we understand that finances and navigating a path to a better financial future can be extremely sensitive situations. For that reason, we treat every client and every case with the utmost care, respect, and confidentiality. Contact our experienced Monroe bankruptcy attorneys now for a free case review and take the first step to a secure financial future!