Understanding Wage Garnishments

If you are already anxious about your personal financial situation because of incurred debt and the constant calls from debt collectors, your stress could be exacerbated by wage garnishment. This practice, which can (usually) only occur after a court has so ordered it, is a situation in which creditors have secured a judgment that legally mandates your employer to take money directly from your paycheck to satisfy debts. 

Child support and alimony payments, tax debts, and student loan debts are instances in which your wages may be garnished. The IRS, notably, does not need a court order to legally garnish your paychecks. Luckily, medical and credit card debts may not result in garnishments, nor can debts to utility companies. 

What if I deposit my paycheck?

After your paycheck is deposited into your bank account, then it is no longer considered wages or income. Certain creditors that cannot garnish your wages may have access to your checking or savings accounts or other material assets. Of some solace, though, is that your employer may not legally terminate you due to your first wage garnishment order. Subsequent orders in one year may put your job in jeopardy. 

Are there monetary limits to wage garnishments?

Yes. Fortunately for consumers, there are relatively strict laws governing the circumstances in which your wages may be garnished. State law requires employers to leave in place enough money to reasonably support the debtor and his or her family. After this, the amount each creditor may garnish depends on the nature of each debt. 

For example, student loan providers may legally take up to 15 percent of your paycheck to satisfy the terms of your agreement. If that sounds like a lot, be aware that up to 50 percent of your paycheck can be garnished to satisfy child support or alimony obligations. 

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If you have received orders from a court that inform you of an impending wage garnishment, there is a possibility you may have grounds to contest the order. The served documents will have instructions on how to proceed if you are interested in contesting. A common reason debtors contest garnishment orders is due to financial hardship. 

Depending on the circumstances, bankruptcy may be your best option to avoid wage garnishments, but you should arrive at this decision only after consulting with an experienced attorney. For that, we encourage you to get in touch with the Hedtke Law Group soon so we can begin with a free consultation regarding your situation.