How To Stop A Garnishment

If you are behind on your federal taxes, the government may impose a wage garnishment. This means they will take your money directly from your paycheck – before you even get it.

But if you act swiftly, you can avoid this situation – and possibly even get a claim of exemption. You want to avoid any type of legal action between you and the IRS, if you can help it.

What Is Wage Garnishment?

If your wage is partially withheld from you and sent to a creditor, that’s a garnishment. It’s legal to do so to pay off debt resulting from a number of sources, including unpaid taxes and child support payments. Common garnishments are withholding payment from your paycheck or seizing money from your bank account (a bank levy).

Though creditors are required to obtain a court order before they enact a garnishment, court orders are not required when the debt involves the Internal Revenue Service. In most cases, court order or no, your employer will take a portion of every paycheck until the debt is paid.

There are a few guidelines in place designed to protect you. For example, creditors are not allowed to deduct more than 25% of your weekly disposable income if that disposable income is greater than $290. Another example is that creditors are not allowed to take money out of a bank account with a garnishment order, instead needing an entirely separate court order.

While these rules are in place to make sure you’ll be able to continue affording your cost of living, there is still a chance that the very thing they’re trying to protect you from ends up happening. In such a case, you can object to the garnishment. You can also contest your garnishment if the judgement was unfair.

What Is A Garnishment Order?

Before any money is actually garnished, the creditor has to get a garnishment order via a judgment. The lawsuit giving them that judgment is not to be ignored, even if you don’t think a garnishment is fair.

If you don’t respond to the creditor, they’re within their right to ask the court to grant a default judgment against you. The exception is debt from student loans and tax debt. The Department of Education and the IRS are allowed to garnish your wages without a judgment.

Choosing A Tax Attorney For Wage Garnishment Issues

Choose an attorney who preferably has experience in debt collection and garnishment. Find more affordable legal service options at your local legal aid offices. They’ll guide you through the process.

By filing an answer document to the court in response to the lawsuit the creditor’s bringing against you, you can avoid a default judgment. While there is a fee, which varies depending on your state’s court system, it will at least buy you some time.

Your next step is to either object to the garnishment or negotiate with the creditor. The court will inform you when the garnishment is set to begin. That is your deadline for negotiating successfully.

Negotiating With A Creditor

Negotiating with your creditor means arriving upon an agreed payment plan. In the most likely case, you won’t be able to pay off the entire loan in a lump sum, but you can describe to them the amount you can realistically afford each month or for a debt settlement. If your creditor is using a law firm for negotiations, they may provide you with a questionnaire regarding your finances or ask to see certain documents.

Objecting to your garnishment is an option when you can’t afford your cost of living if your wages are garnished. You may also object if you believe that garnishment would be unfair in your situation.

Bankruptcy And Wage Garnishment

You can stop a garnishment from happening by declaring bankruptcy. If your situation prior to garnishment is one in which you already struggle with affording basic necessities, declaring bankruptcy can put the garnishment on hold.

In the case where you’re facing multiple creditors attempting to garnish your wages, bankruptcy court can protect you with an automatic stay. This means that a Chapter 7 bankruptcy will protect you from all creditors launching lawsuits against you and dischargeable debts (like credit card debt, for example) will be permanently erased.

Bankruptcy does not protect against all debt, though. Garnishment for child support and alimony are both allowed even in the face of a bankruptcy claim.

When judgment passes against the debtor, it’s time to quickly file a challenge. Your attorney will be able to walk you through the steps, but it’s important to understand them yourself.

After the garnishment is approved of by the court, a copy of the order will be sent to your employer. You’ll also receive a notice with instructions on challenging the garnishment. The deadline they give you varies by state, but they’re often somewhere between five days and a full month.

Consumer Debt And Wage Garnishment

Consumer debt is simply objected to by filling out paperwork at the courthouse where the judgment against you was made. If your state laws demand it or if the creditor contests, you will have to attend a hearing. In this situation, bringing along financial documents that support your objection will be enough for the judge in attendance to make a decision.

Student Loan Debt And Wage Garnishment

If your debt is that of a student loan, you have a window of time pre-determined by the judgment to object to the garnishment. When you do so, you’ll either receive a modified version of your student loan repayment plan or will have to fill out paperwork at the courthouse, a similar process to objecting to consumer debt.

Unpaid Taxes And Wage Garnishment

Unpaid taxes require faster action as the IRS doesn’t need a judgment to begin garnishing your wages. That being said, they’ll still give you notice and this will allow you time to claim exemptions that your household size and income might allow you.

Evidence For Protesting Wage Garnishment

If the judgment is an unfair one, you’ll need evidence. Mistaken identity, having already paid the debt, or debt erasure due to a bankruptcy claim are perfectly legitimate reasons to object on the grounds of incorrect judgment. However, you still should get the matter resolved quickly.

Bring all of your evidence together and send it along with a letter explaining the situation to your creditor. While this on its own may halt the garnishment, you may have to rely on your attorney for specific advice as to how to navigate the situation.

Always act quickly and with the guidance of an attorney. While garnishment can seem intimidating, there are ways to pause or stop it entirely.

Other Factors To Consider For Wage Garnishment

Due to COVID-19, there have been many more tax issues than usual. With disposable earnings becoming completely wiped out for many Americans, and living expenses still continuing to go up – many citizens are in dire financial straits, often not even making the federal minimum wage.

With other costs like child support and credit card debt, a wage garnishment becomes unbearable. And a bankruptcy case brings its own headaches – so you’ll want to work to resolve your financial issues before a wage garnishment occurs.

The Bottom Line On Wage Garnishment

Wage garnishment can be a scary and serious issue. Depending on the type of debt you owe, you can arrive a number of different solutions – as long as you act swiftly.

In some cases, by declaring chapter 7 bankruptcy, you may be able to immediate stop a wage garnishment. A bankruptcy case brings with it other problems though.

Regardless of your exact situation, we recommend working with a qualified tax professional. They will be familiar with a financial situation like yours, and will have experience in dealing with issues like foreclosure, chapter 13 bankruptcy, a fresh start for debt, and any income tax problems you can think of.

Many professionals will even provide a free consultation, as well as credit counseling. You could be sent to a collection agency if you do not properly pay your federal taxes – or even worse.

Sometimes the legal advice from a qualified tax professional will be to make an offer of compromise – which is really just one lump sum payment. As soon as you get your financials in order, you will end up getting a tax refund every year – rather than worrying about a garnishment amount.

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