When you’re behind on bill payments, the law allows certain creditors to garnish your wages (meaning take money from your paycheck automatically). Usually this process starts with a creditor suing you for the debt in court and then getting a court order. In some specific cases, the creditor doesn’t need a court order at all. But in all instances, the law determines who can garnish your wages, and how.
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Here’s a quick rundown:
Who Can Garnish Your Wages (and How It Works)
- The IRS & State Tax Agencies
State and federal government offices can garnish your wages for back taxes and usually don’t need a court order. The IRS has to take into consideration your deductions and dependents. State agencies follow laws specific to each state, but they usually take dependents into consideration as well.
- Child Support Orders
Court orders for child support come with a provision allowing the court to withhold wages. This means collectors don’t need to file for a new court order to take the wages from you directly. With this specific kind of debt, federal law allows the courts to take a much higher rate of your income than normal: 50-60% of your disposable income, depending on whether or not you have other dependents.
- Federal Student Loan Collectors
As one of the leading causes of debt in general, student loan debt often leads to wage garnishment, and the Department of Education doesn’t need a court order to do it. That said, they can only take 15%, or however much your weekly disposable wages exceed 30x the federal minimum wage (whichever number is less).(The above rules apply to federal loans. Private loans fall under the next section.)
- Other Creditors
Medical debt, credit card debt, private loans, and more all require a court order to garnish your wages. They have to sue you, win a judgement against you in court, and then get an order from the court granting permission to take from your paycheck. From there, they can garnish up to 25% of your wages until the debt is paid or you declare bankruptcy.
Stop Wage Garnishment
For many Americans facing wage garnishment, bankruptcy is the only way out. When you’re already struggling to pay your bills, losing another 25% can be devastating.
Our Memphis bankruptcy attorneys help people stop wage garnishment all the time, and we can help you. Bankruptcy automatically stops garnishment for most debts and ends any lawsuits against you. It’s a powerful tool available to help people who need a fresh start and can’t keep going under the oppression of lost wages.
If you need to stop wage garnishment, don’t wait. You will only lose more money for no reason. Contact us today to get started getting your paycheck back. The conversation is free.