If you have outstanding unpaid debt, creditors may seek to have your wages garnished. Wage garnishment is when part of your salary is sent directly to a creditor before you get paid. Even though wage garnishment is legal, there are ways you can stop the process.
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In Or Out Of Court?
As soon as you know you can’t pay your debt, call or write to your creditor and ask how you can settle your debts. A creditor may be willing to accept a lump sum payment rather than wait what could be years to get reimbursed from paycheck deductions.
In most cases though, wage garnishment occurs after a creditor sues you and receives a money judgement. After this occurs, the creditor contacts your employer to begin the garnishment process. However, as described below, in some cases, you can seek an exemption. By filing this form you may be able to reduce the amount that is garnished based on how much you earn, how you earn your money and if you support others. Before completing an application for wage garnishment exemption, it is advisable to consult with an experienced attorney.
If you feel a judgement is not correct, it may be possible to stop the wage garnishment. Reasons vary for an improper judgment. For example, if deductions are made by your employer without a court order or your permission, the deduction may not be legal. You will need to be prepared to explain and prove your claim in detail.
Some creditors may not need to go through the courts to obtain a wage garnishment. If you owe back taxes, student loans, alimony, or child support your wages may be garnished without a court judgement.
Wage Garnishment Exemptions
Certain kinds of income are protected from wage garnishment. For example, income from social security, disability, retirement, child support, and alimony typically cannot be garnished.
There are also limits to the amount that creditors can garnish. In the state of Maryland, the maximum amount of wage garnishment can vary from county to county and can be up to 25% of your earnings in some cases. Obtaining wage garnishment exemptions may require you to submit an application for exemption.
How Bankruptcy Helps
If a creditor has begun to garnish your wages, bankruptcy is another way to halt the process. Once you file for bankruptcy (either Chapter 7 or 13), a stop may be placed on garnishment (sometimes called an “automatic stay”). This means that during the bankruptcy process, creditors can no longer touch your wages. However, if you are paying child support or alimony, these payments may not be halted by the bankruptcy process.
To make sure that every creditor is informed of the bankruptcy process, you should inform your employer’s payroll department in writing.
Garnishments After Bankruptcy
If your debts have been legally settled (or “discharged”) through bankruptcy, then wage garnishment stops. Otherwise, creditors can resume garnishment after the bankruptcy proceedings end.
You may even be able to recover some past garnished wages within the 90 days prior to filing for bankruptcy. To recover lost wages, a complaint must be filed that presents evidence of exemptions.
Wage garnishment is a way for creditors to attempt to recover payment. There are various methods that stop wage garnishment. Experienced legal counsel can help make this process easier.
Facing a credit crisis? Bankruptcy might be your best choice. Contact Us today at (410) 415-0445.