A writ of garnishment is an order requiring a third-party to withhold some type of property (usually money) of the defendant’s (also called the “garnishee” or “judgment debtor,”) for delivery to a creditor to whom they owe an overdue debt. Sometimes referred to as garnishment orders, writs of garnishment are often used by creditors to withhold a portion of a debtor’s wages to pay their delinquent debts. Most commonly, this tactic is employed by creditors such as banks and credit card companies, but it’s also frequently used by child support enforcement agencies to collect past-due child support payments. This process is referred to as wage garnishment. Wage garnishment laws concerning what type of debt can be garnished for, and garnishment limits, can vary by state. In most cases, a court order is required for a writ of garnishment to be issued. However, the federal government can employ an “administrative wage garnishment,” and is able to issue a wage garnishment order for past-due government debts (such as taxes or federally-backed student loans) without going through the court. The exact terms of a writ of garnishment will be specified in the order. Most garnishment orders are ongoing (until the debt is fully paid,) although some may be one-time only, or list an end date. Although in some states, garnishment is referred to as an “attachment,” a “Writ of Attachment” generally refers to the seizure of personal property (not money) to repay a debt. These are generally issued to law enforcement personnel, who will then recover the asset. If you’re an employer who’s received a writ of garnishment for an employee, you’re required by law to comply. The only exception would be if the garnishment order was sent to you in error, and the person named in the error is not a current employee (if this happens, you should contact the issuing agency as soon as possible to notify them of this.)
The writ of garnishment will include a response form as well as a garnishment calculation worksheet. It’s important that the garnishment is calculated and applied correctly. A copy of a writ of garnishment is required to be sent to the employee, but it shouldn’t be the first they’ve heard of the debt, as the creditor is required to attempt to collect the debt before seeing a wage garnishment. They have a set amount of time (which varies by state), to dispute the debt. If you’re an employee who’s received a copy of a writ of garnishment that was sent to your employer, keep in mind that your employer is legally not able to negotiate the terms of the wage garnishment. It may be possible to stop the garnishment by contacting the creditor directly to make payment arrangements, but ideally, this should be done before a judgment is issued. Any questions regarding your rights or the wage garnishment process should be referred to a qualified attorney, as they are the ones best suited to help in this situation. If you are faced with a wage garnishment, bankruptcy is not your only option to stop it. There are a number of things you can do that might prevent a creditor from garnishing your wages.
How to Respond to the Creditor’s Demand Letter
Once a creditor has obtained a judgment against you, many states require that it send you one last warning letter before the garnishment begins. This is usually called a “demand letter.” If you get a demand letter from your creditor, don’t ignore it. Many creditors prefer to get voluntary payments from debtors rather than deal with the cost and time-consuming paperwork involved with garnishments. Use this opportunity to negotiate a payment plan with the creditor before it begins the garnishment process.
Seek State-Specific Remedies
Some states offer their own additional protections against garnishment. For instance, in Utah, you can request that the court appoint a trustee. In a trusteeship, you make payments to the trustee, who will then distribute those payments to your other creditors. As long as you are in a trusteeship, a creditor cannot garnish your wages. You can make a claim of exemption. You can reduce or eliminate the garnishment if you can show economic hardship and that your income is needed to support your family. You should contact the clerk of your municipal or county court, or consult with a local attorney, to see what options are available in your state.
Get Debt Counseling
A consumer credit counseling service (CCS) may be able to help you stop a garnishment. Not to be confused with debt repair companies, a CCS is a non-profit agency that can help you negotiate and reach an agreement with your creditors to pay them over time. If your creditors agree to participate in this group payment plan, then they cannot garnish you as long as you make your payments.
Object to the Garnishment
If you do nothing after receiving the demand letter, you will then likely receive from your employer copies of the garnishment order and notice of the garnishment. You should file any objections you have to the garnishment, in writing, with the court and request a hearing. The garnishment papers might contain forms that you can fill in and request a hearing. If not, you’ll have to complete and file something separately.
Under federal law, your creditor can only garnish the lower of:
• 25% of your disposable earnings (gross pay less taxes and mandatory deductions), or
• your disposable earnings less 30 times the federal minimum wage
If you are being garnished for child support or alimony, then up to 50% or 60% of your disposable earnings are subject to garnishment. Garnishments for student loan debts and IRS taxes are also subject to a different computation. The laws of your state may set even tighter restrictions. If the amount of money proposed to be garnished from your wages exceed what federal and state law allow, you should object to the garnishment immediately.
The Creditor Did Not Follow Proper Procedures
If the creditor did not follow garnishment procedure, then the court may terminate the garnishment order. An example of improper garnishment would be for the creditor to fail to give you timely notice of the garnishment.
The Creditor Was Paid
If you already paid the judgment, or if the creditor received full or partial payment toward the judgment through other means (bank attachments, prior post-judgment voluntary payments, etc.) then you obviously need to object so that the creditor doesn’t receive more than what it is legally entitled. Once you have filed your objection, then you need to attend the hearing. If you file an objection, but do not go to the hearing, then the court may overrule your objection and the garnishment will begin. Even if you attend the hearing and the court denies your objection, you can still use this as an opportunity to meet with the creditor and negotiate a payment plan. It may not be too late to stop the garnishment if you can get the creditor to agree.
Challenge the Underlying Judgment
If you have a legal basis to dispute the judgment (for instance, you were never properly served with the complaint and subsequent legal papers), it may not be too late to stop the garnishment. You will not be able to dispute the judgment at the garnishment hearing, so raising any of your defenses or objections will fall on deaf ears. However, you may be able to vacate the judgment by filing a separate motion, posting a bond (usually) and attending a different hearing. This can be a very difficult process, so you should speak to a local attorney to discuss this further. You must also do quickly, as you may have only a limited period of time to pursue this remedy.
Even after a garnishment has started, you can still try and negotiate a resolution with the creditor, especially if your circumstances change. For example, if you have an income tax refund that could pay off some of the judgment, then you may be able to get the creditor to agree to cancel the garnishment in exchange for a lump sum payment to settle the rest of the judgment. The laws governing garnishments are harsh. If you are being garnished, you don’t need to be told that. What you need to know is that there is a way to quickly stop a garnishment and get relief from the debt that caused it. While is it not your only option, once a garnishment becomes active bankruptcy is mostly likely your best option.
How to Stop a Garnishment
Once a garnishment has started, a person has very few options for stopping it. One option may be debt settlement; however, once a garnishment is in place there is very little incentive for a creditor to take less than what is owed and/or take payments at rate lower than what they will get from the garnishment. In my experience, debt settlement must be attempted prior to a writ of garnishment being entered to have any real chance of success. Unfortunately, most non-bankruptcy options are only truly effective prior to the garnishment taking effect. Upon filing a Chapter 7 or Chapter 13 bankruptcy, an automatic stay immediately goes into effect. The automatic stay is essentially a federal court order that tells creditors that they have to stop all collection efforts, which includes harassing phone calls and letters, lawsuits, garnishment, foreclosure, repossession, seizure of property, etc. The automatic stay does not cause a wage garnishment or a non-periodic garnishment to stop immediately. It typically takes about 1 to 15 days for it to stop. This is because there are series of steps that must be taken before your employer, your bank or the state can legally stop withholding funds pursuant to the garnishment order. Despite the delay in having the garnishment released, all funds taken after the date you file your bankruptcy must be returned to you in full. Bankruptcy may also allow you to recover funds that were garnished during the 90 days prior to the filing date of your case if the funds taken by the creditor exceed $600.00. The return of garnished funds may not be possible or may not make sense in certain situations, such as garnishment for child support arrears or garnishment for a non-dischargeable debt like student loans.
A wage garnishment requires little effort on your part. Procedures vary by state and locality, but usually you give the sheriff or other local official (called the “levying officer”) information about where the judgment debtor works. The levying officer serves the garnishment order on the employer and the employer is required to withhold the proper amount of money (which is limited, see below) which then goes to you.
Limits on Wage Garnishments
Under federal law, you cannot garnish more than:
• 25% of the debtor’s disposable earnings (what’s left after mandatory deductions),
• or the amount by which the debtor’s wages exceed 30 times the minimum wage, whichever is lower.
If your judgment is for child or spousal support, you can garnish up to 50% of the debtor’s take-home pay (55% if the debtor is 12 or more weeks in arrears). If the judgment debtor does not currently support a spouse or child, you can garnish up to 60% of the wages (65% if the debtor is 12 or more weeks in arrears). Some states have even lower wage garnishment limits. If a state wages garnishment law results in a smaller garnishment, the state law must be followed. Debtor is already subject to another garnishment. You cannot garnish wages if they are already being garnished by another creditor, unless the first garnishment takes less than 25% of the debtor’s disposable income (or whatever the state limit is), or you have a judgment for alimony or child support. The debtor’s wages are “exempt.” Each state has a set of exemptions that protect certain types of property. Most states offer a head of household or head of family exemption. You may claim this exemption if you provide more than 50% of the support for a child or other dependant. This exemption protects all of your wages unless you agree to a wage garnishment in writing. Debtor’s income is not wages. For the most part regular judgment creditors cannot get a debtor’s social security, disability, retirement, child support, and alimony. Consultation with an experienced bankruptcy attorney is always necessary to determine what relief is available for your situation. Taking action before a judgment is entered is the best way to avoid a garnishment. Prior to a judgment being entered and a garnishment taking effect, there are many more options for resolving the debt in a way that is affordable. Consulting with an attorney that practices bankruptcy and debt settlement during the beginning stages of a lawsuit will limit your losses and give you the most flexibility on how you can resolve your debts. Unfortunately, this is not always possible. Despite legal notice requirements, many people aren’t aware that they are being sued and a creditor is seeking garnishment until it is too late. However, even if the garnishment has started there is hope. Garnishment can be stopped quickly and the underlying debt can be eliminated by filing Chapter 7 or Chapter 13 bankruptcy. The faster you act, the faster you can get the relief you need.
When you need legal help to stop a garnishment, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506