When you owe creditors money and you fail to make those payments, they can request a wage garnishment, if they have already successfully sued you and obtained a judgment. This means a payment to the creditor is deducted from your paycheck by court order. Those already struggling with finances might find this to be the final straw. Bringing home less in your paycheck than what you have earned can drive your financial situation over the edge. Luckily, there is a way to stop wage garnishment.
Wage garnishments are often a result of unsecured credit card debt. When you fall behind on a mortgage payment or car loan, the creditor can foreclose on or repossess your property. When you are behind on credit card payments or medical bills there is nothing available to recover. The creditor requests a wage garnishment to ensure they receive their money. Laws regulating wage garnishment vary from state to state, but in New York, the amount for an unsecured creditor, will be 25% of your gross (before tax) income. If your debt involves back tax payments the amount might be higher.
What are some of the most common questions about wage garnishment?
Does my employer know if my wages are garnished?
Yes. The court order must be given to you payroll department and they must comply with the order. Your job is protected by law, so your employer can not fire you for your poor financial decisions. Your main concern regarding your employer when your wages are garnished is embarrassment.
Can my wages be garnished if my spouse owes a creditor?
In New York, if the judgment was only against you, the creditor cannot receive a wage garnishment against your spouse.
Will my wages be garnished if I switch jobs?
Possibly not. Each garnishment requires a separate court order. The creditor will need to seek a new order if you switch jobs. They will not know where you went to work unless you or someone else tells the creditor. In most circumstances, they will find out through sending you an information subpoena. If the subpoena is signed by a Judge, then you have to respond of risk contempt of court.
In short, eventually, they will find you, but a change in jobs may create a temporary reprieve. This should NOT be a strategy to deal with the debt. Switching jobs is stressful and you risk not finding a new job in this economy. There are better ways to handle addressing the debt.
What should I do to stop garnishment?
There are only two things you can do to stop wage garnishment. The first is often not a viable option and that is simply paying what you owe or convincing the creditor to take a lesser amount as full settlement. In most cases, the creditor is less likely to settle for a lesser amount once they have a judgment and an ongoing wage garnishment.
Another option is that you can file for bankruptcy. Bankruptcy creates an automatic stay, which stops wage garnishment and all other debt collection efforts. This includes foreclosure and repossession efforts, as well as ongoing phone calls and letters from creditors.
Though it might seem counterintuitive to stop payments when you have a debt to pay off, wage garnishment can stretch your income too thin. It can also put you at risk for more serious debt collection efforts. For instance, if you are forced to pay 10% of your income toward a credit card debt and this leaves you too little to pay your mortgage, you could be at risk for foreclosure. You might be better off filing for bankruptcy and creating a repayment plan that makes it possible to repay all of your debt.
Are you facing wage garnishment? Are you concerned your current wage garnishment arrangement is putting you at risk for defaulting on other debts? Contact the law office of Frank J. LaPerch, PC. We can help you sort through your options and determine which arrangement is best for your financial future