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Can You Make Payment Arrangements On A Garnishment?

Can You Make Payment Arrangements On A Garnishment

In the case that a creditor files a judgment against you for a debt, an option to consider (if it is available in your state) is an installment payment plan. Setting up an installment payment plan through a court order will protect your wages from being garnished. Creditors can garnish up to 25% of your wages to collect repayment for debt. Wage garnishment can make it difficult or impossible to live comfortably, reducing the amount you are able to spend on essentials like food and toiletries, utilities and bills, or supporting your family. When requesting an installment payment plan, you must detail your income and expenses to the court. You will file a Motion for Installed Payments, and a copy will be sent to your creditor, who has 14 days to approve or deny your proposed plan. A creditor can object to the motion, so make sure your payment plan is reasonable pay the highest amount you can and no less. The creditor may object to the plan if the proposed repayment period is too long. If the court denies your Motion for Installed Payments, you have several options. One is to file a new plan with higher payments.

You’ll have to pay the filing fee again. However, if your plan is approved, the court will issue an Order Regarding Installment Payments. This means that, effective immediately, you will start making payments according to the Order. An Order Regarding Installment Payments should effectively stop or prevent a wage garnishment, as long as you make your payments on time. Your employer cannot legally garnish your paycheck once they’ve received this order if they continue to do so, you can file on objection with the court. You’ll need to include a copy of your Order Regarding Installment Payments with your objection. Don’t miss a payment. If you do, a creditor can file a Motion to Set Aside the Order for Installment Payments. You’ll receive a notice from the court that the motion has been filed, and have 14 days to request a hearing to object to the motion. At the hearing, you’ll explain why you missed your payment, and how the court can be assured that future payments will be made in full and on time. Installment payment plans are just one option you have to halt a wage garnishment. You also might consider filing for exemptions with the court to reduce the amount of your wage garnishment. An automatic stay, effective immediately upon filing for bankruptcy, will stop a wage garnishment in its tracks. Finding that your paycheck is less than usual due to wage garnishment is a stressful event. Although employees are protected from losing their wages completely, as well as their jobs, creditors with a court order or legal authority can require employers to withhold up to 25 percent of an employee’s disposable earnings. In some cases, such as unpaid child support or tax payments, an employer may have to withhold up to 60 percent of disposable income. Settling a debt becomes difficult once a creditor is granted a court order for wage garnishment, as there is little incentive for the creditor to agree to take less. There are warning signs before your wages are garnished. Deciphering the real threats can nonetheless be difficult since creditors often make threats long before they take any real action. Since most wage garnishments are court ordered, you can expect legal action to precede the garnishment. Generally, creditors must obtain a judgment to garnish your wages. By aggressively contesting the creditor before a judgment is entered, you may be able to avoid wage garnishment. But many debtors have judgments entered against them by default because they ignore the summons. Unpaid taxes or child support are likely to result in wage garnishment without legal proceedings.
Settling Debts
Settling a debt requires that you have some leverage. The creditor must believe that by settling the debt, you will pay them back money you otherwise might not. Once a judgment is issued and the creditor is able to receive payment through wage garnishment, you have little leverage for negotiating a settlement. At this point, the creditor has sufficiently proven the debt is valid and the court has ordered you to repay it. Of course, it doesn’t hurt to try especially if you are considering bankruptcy.

Contesting Wage Garnishment
Simply complaining to your employer about your wage garnishment is a waste of time. Once your employer is ordered to garnish your wages, he doesn’t have the option to stop. If you feel the wage garnishment is in violation of the law, you can file a complaint with the Wage and Hour Division. In cases where your state’s wage garnishment law differs from the federal law, the smaller garnishment is applied. If you feel there is an error in the court order mandating the wage garnishment, you can file a motion to vacate the judgment or consult an attorney for legal assistance.
Getting Out Of Debt
One wage garnishment is bad enough, so do what you can to take care of other debts before they make their way to your paycheck, too. If you have more than one outstanding debt with the same creditor or collector, they may pursue additional wage garnishment. If you cannot afford to pay your debt in full, or are unable to negotiate a settlement you can afford, willingly make payment arrangements with the creditor. For some individuals, bankruptcy may provide a fresh start.

Types of wage garnishment and how it happens
Wage garnishment is more common than you might think. A report by ADP Research Institute found that 7.2% of the 13 million employees it assessed had wages garnished in 2013. For workers ages 35 to 44, the number hit 10.5%. The top reasons were child support; consumer debts and student loans; and tax levies.

There are two types of garnishment:
• In wage garnishment, creditors can legally require your employer to hand over part of your earnings to pay off your debts.
• In nonwage garnishment, commonly referred to as a bank levy, creditors can tap into your bank account.
Garnishment often happens when a creditor sues you for nonpayment of a debt and wins in court. Sometimes, though, a creditor can force garnishment without a court order, for instance, if you owe child support, back taxes or a balance on federal student loans. The court will send notices to you and your bank or employer, and the garnishment will begin in five to 30 business days, depending on your creditor and state. The garnishment continues until the debt, potentially including court fees and interest, is paid. You have some rights in the wage garnishment process, but in most states, it’s your responsibility to be aware of and exercise these rights.
• You have to be legally notified of the garnishment.
• You can file a dispute if the notice has inaccurate information or you believe you don’t owe the debt.
• Some forms of income, such as Social Security and veterans benefits, are exempt from garnishment as income. However, they could be subject to seizure once in your bank account.
• You can’t be fired for having one wage garnishment, but you’ll lose this protection if you incur more than one garnishment.
If you believe the judgment was made in error or it’s causing undue harm to your finances, you can challenge the garnishment.

What To Do When You Get A Garnishment Judgment
First, carefully read the judgment to verify that all of the information is accurate. Make sure that it’s not something you already paid and that it’s in fact your debt. If it is, consider how much money will be taken and what it will mean for your financial situation. Then weigh what to do next. If you haven’t done so before, you may want to consult a consumer law attorney or local legal aid to determine what’s best for you. You have three main options:
Challenge the judgment
If you believe the garnishment was made in error, will cause undue harm or is being improperly executed, you can object in court. You’ll have to act quickly. You may have as few as five business days to contest the ruling.
Accept the garnishment
You can pay off the garnishment in installments as the judgment states or pay in a lump sum. Borrowing money from a family member or taking out a personal loan to pay off the judgment, which is possible even with the garnishment on your credit report, could give you quick relief from the stress of a prolonged series of payments. It can be embarrassing to have your employer know you’ve been sued for debt, but it’s best to be honest with your manager or human relations department. “Wage garnishment can cause stress in the work environment, so be proactive in talking with your employer.” You need to know how much you can pay toward the debt and how often. Base the installment payment plan on how much you can really pay. Consider all the money you have coming in and all your regular bills as well as irregular or unexpected ones. The more you pay, the sooner you’ll pay off the judgment. If you try to make the plan last too long, your creditor may object to it. You’ll also pay more in interest. You can contact your creditor and discuss your proposed plan before filing your motion with the court. This might help keep the creditor from objecting to your motion.

Applying for Your Installment Payment
To apply for a court ordered installment payment plan, file a Motion for Installment Payments. Use the Do-It-Yourself Motion for Installment Payment Plan tool to create your motion. You will have to pay a fee to the court when you file the motion. After you file your Motion send a copy to your creditor. It then has 14 days to object to your plan. If your creditor does not object, the court will grant your motion and issue an Order Regarding Installment Payments. When that happens, start making the payments.
If your creditor objects to your Motion, the judge will decide if the plan is acceptable. The judge might have a hearing to decide this, or the judge might decide to approve or deny your motion without a hearing. At the hearing, the judge or hearing officer might change the payment plan. Be prepared to show the court why your suggested payments are reasonable, and why you can’t afford to pay more. If the court denies your Motion, you still have some options to avoid garnishment. You can file another Motion for Installment Payments with higher payments. To do that, you will have to pay a new filing fee. You can also try working directly with the creditor to set up a payment plan. If you talk to your creditor to establish a payment plan, it will not be through a court order. It may not stop your creditor from garnishing your wages. As part of the agreement, ask your creditor not to garnish you unless you miss a payment. Make sure the payment plan you set up with your creditor is in writing. If the court approves your plan, it will issue an Order Regarding Installment Payments. When that happens, start making payments according to the Order. If you get a court-ordered plan and you are paying as ordered, your paycheck should not be garnished. If your paycheck is garnished, show your employer the court order for the payment plan. Your employer can’t stop garnishing you unless it has an order from the court telling it to stop. This should stop the garnishment. If you’re still being garnished after that, you can file an objection to the garnishment with the court. You will need to include a copy of your Order Regarding Installment Payments with your objection. If you miss payments, your creditor can file a Motion to Set Aside the Order for Installment Payments. If that motion is granted, your creditor can garnish your wages. If this happens, you will get notice that the Motion to Set Aside Order for Installment Payments was filed. After you get a copy of the motion, you have 14 days to request a hearing to object to it. At the hearing, you will need to explain why you missed any payments. You will also need to explain why you are sure you can pay the rest of the payments in your plan. If your installment payment plan is set aside, you can file a new Motion for Installment Payments. If you file the motion within 91 days of when your old plan was set aside, you will probably have to pay all the court costs.
How to Handle a Post-Judgment Debt
If a creditor has taken you to court for an unsecured debt and won the case, you now have a judgment filed against you and an important obligation you need to deal with. While you can’t change the past, you can improve the future. There are steps you can take to reduce the burden of a judgment and improve your credit standing. A judge may grant the creditor that sued you (called the judgment creditor) the ability to collect in a number of ways. Collection action depends on state law, but may include a:
• Wage garnishment: This is when a portion of your paycheck is automatically deducted and sent to the judgment creditor until the debt is satisfied. Federal law allows for a maximum garnishment of 25 percent of an employee’s net wages, though some states allow less and others prohibit this method altogether.
• Lien: If you own real property, such as a home or a car, the judgment creditor may record a lien against it, which will have to be paid when you sell or refinance your property. Sometimes a judge allows a judgment creditor to force the lien, meaning you would have to sell the property and pay the creditor from the proceeds of the sale.
• Levy: In some cases, a judgment creditor may be allowed to take cash from checking, savings, or other deposit accounts to satisfy the judgment. This is called a levy. Or they may levy your personal property and sell it at auction, with the proceeds going toward the outstanding debt. Depending on the state you live in, the judgment creditor many have many years to take collection action, and can usually renew the order for another span of time without having to sue you again.
Options for handling a post-judgment debt
After the lawsuit you may be surprised to find that the amount of the judgment is far higher than the original debt. This is because court and attorneys fees were added to the balance. Many states also allow the creditor to charge post-judgment interest as well. Because the debt can be large and the collection action severe, know the various methods for handling a judgment and choose the option that makes the most sense for you.
• Pay in full: You can, of course, pay the debt off at any time. To pay, use a personal check, money order, or cashier’s check. If you must pay with cash, be sure to get a receipt. Once you have paid the total balance, obtain a Satisfaction and Release of Judgment form from the court or the court’s website. Have the judgment creditor sign it, make and keep a copy of the completed form for your records and file the form with the court. If the creditor has placed a lien on your property, they will lift it when you satisfy the judgment. You can also save your property from a levy if you are able to come up with the money before your assets are seized.
• Offer an installment plan: For judgments too large for you to pay in full, you may be able to pay in regular installment payments. Determine the amount you have to pay the judgment on a monthly basis. Be conservative never offer more than you can really afford. Put your payment plan in writing and ask the judgment creditor to agree to it. If you can persuade them to take your offer, you may be able to avoid a garnishment or other collection methods.
• Pay via the garnishments: If your wages are being garnished, you can leave the situation as it is and have the debt run its course. Eventually, you will repay the balance this way. However, if the payment is causing a tremendous strain on your finances, you may be able to modify the garnishment by filing a claim of exemption. You would usually do this when your employer first presents you with the earnings withholding order, though you can file the paperwork at any time. The information and instructions for filing a claim of exemption are on the earnings withholding order. If your claim of exemption is accepted, you will receive a modified order.

Payment Arrangement Lawyer

If you have a wage garnishment and need relief, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506
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About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.