Many people think that they can just leave a debt unpaid indefinitely. That the only thing that will happen is their credit score will take a hit. Not only is this short sighted, it’s also just plain incorrect. There are a number of ways a lender can make sure they get paid. One of the most effective is wage garnishment. This collection method does not give you a choice in paying, it happens automatically, which means that it can wreak havoc on your financial situation if it happens to you.
What Is Wage Garnishment?
First, let’s explain exactly what wage garnishment is. Wage garnishment is when an employer takes money directly from an employee’s paycheck to pay off an unpaid debt. The employer has no say in this process. They are legally ordered and required to withhold the funds from the paycheck. This ensures that the creditor gets paid. It also means that those whose wages are being garnished are suddenly receiving a paycheck that is much less than they are used to. This can make it extremely difficult to pay your other bills, which results in a vicious cycle where wage garnishment causes other debts to go unpaid.
Common Reasons Wages May Be Garnished
Wages can be garnished due to a number of reasons and to pay off all sorts of debt types. Common reasons why wages are garnished include:
- Credit card debt
- Medical bills
- Personal loans
- Student loans
- Child support and alimony
- Unpaid taxes
- Court judgments
As you can see, with so many reasons for wage garnishment, it can truly happen to anyone.
How Wages Are Garnished
The wage garnishment process starts with missed payments on a debt. The original lender will try to collect this debt through traditional methods, such as sending letters and making phone calls. When this fails, the creditor may choose to pursue wage garnishment. This is done by filing a lawsuit. You see, creditors must first obtain a court judgment before garnishing wages. You will receive a notice informing you of the lawsuit, giving you the chance to appear in court and plead your case. It is important that you respond to any legal notices so that you can be involved in the case. Otherwise, a judgement will be made in default against you. In court, the judge will decide whether or not to approve wage garnishment. If a garnishment order is issued, it usually takes effect immediately. Your employer will begin withholding the ordered amount from your paychecks and the withheld funds will be dispersed to your creditor.
Tips for Avoiding Wage Garnishment
There are certain things you can do to avoid wage garnishment. First, you should address missed payments early, as wage garnishment does not happen immediately after one missed payment, but after multiple. Second, you should communicate with creditors. Creditors are often a lot more flexible than people expect them to be. However, to see this in action, you must communicate with them. Let them know why your payments are late and that you want to work something out, and they are often willing to work with you. This often takes the form of payment plans or a settlement for less than you actually owe. Finally, pay attention to court notices and seek legal advice if a creditor does bring a lawsuit against you.
How to Stop Wage Garnishment
To stop wage garnishment, you must pay the debt or reach a settlement with the creditor. If these options are impossible, then declaring bankruptcy is always an option. Declaring bankruptcy will immediately put an automatic stay in place, which halts all wage garnishment. Should you declare bankruptcy, it is important to seek legal representation. Additionally, your legal help should be local to ensure they understand the unique laws of your state. For example, if you are in Pennsylvania, you should hire a Montgomery PA bankruptcy lawyer. They will understand all local laws and guide you through the entire process, giving you the chance to begin rebuilding your financial situation.
