What Is a Wage Garnishment and How Can You Stop It?
March 3, 2021
This blog is based on the laws in the State of New Jersey. A wage garnishment occurs when a creditor that you owe money to has obtained the right to get their debt paid by taking money out of your paycheck. Before this happens, the creditor has to have permission from the court to start the garnishment. Before a creditor can get a wage garnishment order from the court, they first have to sue you, and then they have to obtain a legal judgment against you. This means that they sued you and won the lawsuit.
So let's assume you owe $5000 to Discover, and you haven't been able to pay them for the last 8 months. They hired a lawyer a few months ago, and he sued you. You didn't respond to the lawsuit, you just ignored it. Then about two months later you got a notice that Discover was asking the court to permit them to take a wage garnishment against you. The notice told you that you had the right to object, but you didn't, and the next thing you know is that you received another notice from the lawyer for Discover. The notice has also been sent to your employer, and it says that the court has issued an order directing that your employer take 10% of your gross pay out of your paycheck, and forward that money to a court officer.
You are stunned, because you never realized that this could actually happen. At this point its probably too late to simply stop the garnishment, but you do have the right to ask for a hearing before the judge so you can ask the judge to reduce the garnishment to maybe as low as 5% of your gross pay. It's unusual that the judge would go any lower than that.
Wage garnishments can have a substantial impact on a person's take home pay, especially if they are raising a family. Every dollar counts.
So how can you stop the garnishment? Well, you could call the attorney and ask if you can possibly make some sort of settlement and just pay Discover a small amount every month. If you can demonstrate a real hardship that has been caused by the garnishment, maybe Discover will work out a deal with you. But what if they play hardball and they want as much as they can legally get?
I suspect that most people in this type of situation would owe money not just to Discover, but also to several other creditors. The debt to Discover is $5000, but maybe their total credit card debt is $20,000, and that is way too much. They simply can't afford to pay this.
Is bankruptcy a good answer to this dilemma? It might be. For one thing, bankruptcy would immediately stop the garnishment and any other attempts by Discover to get their money. It would also stop all of the other bill collectors and creditors from coming after you. That's called the "automatic stay". Those creditors are stopped dead in their tracks. You finally get some peace of mind, significant debt relief, and maybe even more importantly, significant stress relief. Hopefully, you'll be sleeping a lot better.
And here's another important benefit. Not only will the garnishment immediately stop, but you also have the right to look back and check to find out how much money they took out of your paycheck over the 90 day period before the bankruptcy was filed. If they took more than $600, there is a special law, and although it's not totally guaranteed, you just might be able to get all that money returned to you from Discover. We've had clients where we've been able to get $1000 or maybe even more returned to them from the creditor that had the wage garnishment. The creditor sure wasn't happy about it, but the law is the law, and it's the same for everybody.
Bankruptcy will not just wipe out credit card debts. There's a whole long list of the types of debts you can usually wipe out in a successful bankruptcy including:
Credit cards
Personal loans
Pay Day loans
Surcharges on your drivers license - this money is owed to the Motor Vehicle Commission
Medical bills, dental bills, hospital bills
Utility bills - gas, electric, cable, telephone, cell phone, TV bills,
Old insurance bills
Legal fees you owe to a lawyer
Old income taxes
Old homeowner association fees
Wage garnishments aren't exactly fun. They could take a big chunk out of your paycheck. Bankruptcy is one solution that will take care not just of garnishments but a whole lot more. Think about what might be the best decision for you and your family, and hopefully you can overcome your financial challenges and move forward to a brighter and better financial future for you and your family.
If you'd like to review Seymour's 2021 Bankruptcy Success Guide to get more information, please call us and we'll be happy to mail it or email it to you right away.