How Does Wage Garnishment Affect Your Credit?
If you’re behind on your bills and facing garnishment, you may be wondering, “Does wage garnishment hurt my credit?”
As a bankruptcy lawyer who’s helped thousands of people stop wage garnishment and improve their credit scores, I think a lot about the impact of garnishment on people already struggling enough as it is.
Here’s how wage garnishment affects credit scores and what you can do to recover your overall financial health.
Understanding Wage Garnishment
If you’re in a lot of debt, a creditor can petition the court to make you pay it back through your wages. Essentially, the court orders your employer to hold back a portion of your earnings until you’ve satisfied the debt. So if your wages are being garnished, you might lose up to 25% of your take-home pay.
That loss of income alone serves as enough pain for most people. But unfortunately, wage garnishment also brings another disadvantage: it can negatively impact your credit for a long time.
How Wage Garnishment Impacts Credit Scores
When creditors successfully get a judgment to garnish your wages, they typically report this information to credit bureaus. This results in a negative mark on your credit report.
Credit scores are very delicate. Even for people with high scores, it doesn’t take much to change the number from one month to the next. The negative entry from wage garnishment can lower your credit score suddenly and stay on your record for years.
Long-Term Consequences
Having a lower credit score comes with long-term consequences for your sense of financial freedom. It can limit access to credit and financing options, which makes it difficult to secure loans for essential purchases like cars or appliances. And it reflects on your overall creditworthiness to banks – which means it can hurt your chances for bigger goals like a mortgage, personal loan, or the funding to start a business.
Moreover, negative credit score entries from wage garnishment can remain on your credit report for up to seven years.
Mitigating the Impact
While wage garnishment can have serious consequences for credit, there are steps you can take to mitigate its impact and improve your credit standing, including:
- negotiating with your creditors to settle debts before they take it to the courts
- seeking professional assistance from credit counselors or debt relief agencies, and
- taking the steps to rebuild your credit.
However, these options don’t have the power of the courts behind them and aren’t enforceable by law. The creditors could always start garnishing your wages again. And while rebuilding your credit is wonderful, you won’t have much success long-term unless you can stop the garnishment.
How to Stop Wage Garnishment for Good
If you’re wondering, “Does wage garnishment hurt my credit?” you’re likely already facing significant debts that could impact your score.
In order to get back on track, you need someone who can help you get out of debt completely and start a new path toward a better financial future.
Our Memphis bankruptcy attorneys have helped thousands of people stop wage garnishment and get out of debt for good. We’ve helped folks save their homes and cars, get creditors to leave them alone, and improve their credit score to an A rating, even after a bankruptcy.
That’s because we approach every single case with your unique situation in mind. We’re committed to helping you get exactly where you want to go, and we never charge extra to help you get there. We’re with you every step of the way.
We offer a free consultation to help you get started, where we can answer any of your questions and help you figure out the best next step. To set up your free appointment, just contact us online today or give us a call at 901-327-2100.