Wage garnishment is a court or administrative order that requires an employer to withhold a percentage of your wages to repay an outstanding debt. State garnishment laws and Title III of the Consumer Protection Act not only limit how much of your disposable income is subject to withholding, but also protect you from losing your job for a single garnishment order. However, there are no rules that prevent you from leaving your job voluntarily, or legal consequences for doing so.
Voluntary Loss of Employment
A wage garnishment order is valid only as long you earn wages. Without a paycheck, a judgment creditor or federal agency has nothing to garnish. However, this is not a long-term solution, because a creditor can simply file a new garnishment request as soon as you find new employment.
A writ of garnishment order requires that you report not only a change of employment, but also any non-wage income. Income from Social Security, disability, retirement, child support and alimony payments are safe from regular judgment creditors. However, government agencies including the Internal Revenue Service, the Department of Education and the child support agency in your state have the option to seize these funds. In this case, your only option is to appeal the order by proving it will cause undue hardship to yourself and your family. However, a court may not look kindly on quitting your job voluntarily unless you can prove that you quit for a good reason.
Quitting to Become Self-employed
Quitting a job to start your own business can have unintended negative consequences. Although judgment creditors can’t use a wage garnishment in the same way if you’re self-employed, they may have the option to use non-earnings garnishments to seize income you receive from self-employment or as an independent contractor, as well as money in a bank account and income from rental property. While state laws vary on exactly how much a creditor can collect, many give creditors access to up to 100 percent of your expected compensation. This is because unlike with a wage garnishment, which only affects disposable income, a non-earnings garnishment affects your total compensation without any limits.
Pros And Cons Of Quitting Your Job Once Your Wages Get Garnished
Realizing that your wages are being garnished may come as a surprise to you, or you may have expected that it might happen soon. Whatever the case, few people are keen on wage garnishment, and this means that you may start to think about how you can avoid losing this money. One option that you’ll likely consider is to quit your job after all, there’s no garnishment if there’s no income. Before you make any decisions, it’s wise to speak to a garnishment attorney. Here are some pros and cons that you’d face upon quitting your job.
Pro: No More Garnishment
When your wages are garnished, your employer withholds a percentage of what it owes you and passes this money along to the creditor. Should you decide to quit your job, there are no more wages to divide and garnish in this manner. This can be an extremely satisfying situation for you, at least in the short term. For example, you’ll no longer feel the frustration that comes with working hard at your job only to be paid a percentage of what you’ve earned.
Pro: Ability To Find Something Else
Some people who face wage garnishment abruptly quit their jobs and then seek another job perhaps one that pays well because of tipping. For example, if you were to quit your job and then take a job as a valet, your creditors might eventually catch up to you and begin to garnish this income, too. But, you’d have your tips as a steady source of income, and that may make a difference in your financial health.
Con: No More Income
On the flip side of the decision to quit your job, of course, is the fact that you’ll no longer have a source of income. Wage garnishment usually only occurs when you’re in the difficult financial position of owing a lot of money and often, to a number of creditors. While quitting your job might stop the garnishment, it also stops your flow of income, which can be problematic for a number of reasons.
Con: It Seems Evasive
The creditors who are already trying to get money that you owe them are likely frustrated with your lack of paying what you owe, and they aren’t going to be happy when they learn that you’ve quit your job. To the creditors, this action can seem as though you’re deliberately trying to evade them which, technically, you are and this may compel them to take more drastic measures to get the money that you owe.
When You Change Jobs
There are options if you change jobs while a garnishment is in the works. State law will allow an appeal if the garnishment is causing undue hardship on your family or dependents. Such an appeal is more likely to succeed if you’ve going through a layoff, or have changed to a position that pays less. A bankruptcy filing, although a painful last resort, will result in an automatic stay of all collection actions, whether or not they process through the court system. Alternatively, you may persuade a creditor to accept payments on an installment plan. For the creditor, it’s more productive than waiting for a garnishment to take effect, or an appeal to be decided. For a debtor it’s less financially painful than losing a significant percentage of a regular paycheck. If you have a judgment against you, such as if you get behind on credit card payments and the credit card company sues you, that creditor can garnish your wages to enforce the judgment. Unfortunately, garnishment can create quite a hassle with your employer, and if you have more than one garnishment in a year you may lose your job. You can stop a wage garnishment by filing bankruptcy, but that’s a tremendously time-consuming and stressful process. However, there are several options available for you to change your wage garnishment without filing for bankruptcy.
Negotiating with the Creditor
• Review the garnishment notice: The notice you received about the garnishment should contain contact information for the creditor who took out the garnishment. Make a note as well of any deadlines included on the notice. You may have a limited time to contact the creditor before the garnishment begins. Typically you’ll have more ability to work out a deal with the creditor if you can get a hold of them before the garnishment begins. If you wait until the creditor has already garnished money from two or three paychecks, they probably will be less willing to talk to you.
• Contact the creditor: Use the information from the garnishment notice to call or write to the creditor and begin negotiations to remove the garnishment. Keep in mind that many creditors prefer to receive voluntary payments than to go through the hassle of garnishment, which typically is viewed as a last resort. You may be able to negotiate a payment plan that impacts your finances less and doesn’t carry the stigma the garnishment would. Find out if the company is willing to accept automatic debit of the payments from your bank account, which provides a little more assurance that the payments will be made on time. Keep in mind that the garnishment, which the creditor has already gone through the trouble to get, is already providing the creditor with a monthly payment. Typically you’ll have difficulty getting a creditor to agree to lower monthly payments to pay off the debt, unless you’re willing to offer a decent lump-sum payment up front.
• Get any agreement in writing: If you reach a deal with the creditor, make sure you have written confirmation in the event the garnishment continues. Written acknowledgement of your agreement from the creditor also can protect you if the creditor later claims you agreed to larger payments than you did, or settle the debt for a lesser amount and then claims you owe more. Once the agreement is finalized and you have written proof, you may want to follow up to make sure the creditor actually has stopped the garnishment.
Claiming an Exemption
• Check your state’s law: Each state provides certain exemptions for some wage earners to prevent too much of your income from being garnished. Additionally, all states limit the percentage of your wages that can be garnished, provided that you make below a certain amount. The maximum percentage of your wages that can be garnished typically will be between 15 and 25 percent. Some states allow exemptions for financial hardship generally, without requiring you to prove that you provide over half of a dependent’s support. However, you must provide proof of your expenses and your inability to pay your necessary bills without the money the creditor wants to garnish. You can contact the clerk of the court that issued the garnishment order to find out what options are available in your state.
• Gather information: If you believe you fit into one of your state’s exemptions, you typically must provide documentation that supports your claim. The exemption law you reviewed typically will include a list of what expenses can be included. Keep in mind that expenses such as cable or internet may not be considered basic living expenses under the law, even if they are things you feel you cannot live without.
• Fill out a claim of exemption form: You can find a form by visiting the clerk’s office of the court where the judgment was entered. Some courts may have the form available online just search for the name of the court that issued the garnishment order. The form requires you to enter information about yourself and the garnishment. Typically you must then select the exemption that applies to you from a list. You may be required to include additional documentation to support your claim. You also may need the name of the creditor and the case or file number of the underlying judgment that gave rise to the garnishment. This information should be located on your garnishment notice.
• File your claim of exemption form: When you’ve completed your form, you must take it to the clerk’s office of the court where the judgment was entered. When you file your form, the clerk will set a date and time for your hearing. If you don’t attend your hearing, your claim will be dismissed. Make copies of your form after you sign it but before you file it. The clerk will keep the original, but you’ll need at least one copy for your records. In many cases you won’t have to pay a filing fee to file a claim of exemption. If a fee is required, you might want to ask the clerk if you can fill out an application for a fee waiver. If you meet certain income requirements, the court will waive any required fees.
• Attend your hearing: Typically the court will hold a hearing so a judge can listen to both sides and determine whether to grant you an exemption from wage garnishment. Bring your documents with you to court that prove your income and expenses so you can show them to the judge. To change your wage garnishment, you must prove to the judge that the exemption applies to you. If he or she agrees, your garnishment will cease. Keep in mind, however, that this doesn’t mean you no longer owe money to the creditor it just means that the creditor cannot get that money by garnishing your wages.
Filing an Objection
• Review the original garnishment order: Unlike exemptions, objections typically are based on the failure of the creditor to follow the correct legal process to have your wages garnished. Your garnishment order may include instructions on how you can object to the garnishment and the time frame you have to do so. Objections typically must be filed before the garnishment begins. If the creditor has already started garnishing your wages, you may have to look at other options to change the wage garnishment.
• Search for forms: Most courts have a form you can fill out to object to wage garnishment, available from the clerk’s office that issued the garnishment order. In some jurisdictions you’ll receive a form to fill out for an objection along with the garnishment order.
• Gather information: If you have an objection to the wage garnishment, typically you must present documentation that supports your argument that the creditor did not garnish your wages properly. Keep in mind that certain types of garnishments, such as for child support, alimony, or unpaid IRS taxes, can exceed those limits under some circumstances.
• File your objection: Once you’ve completed your forms, take them to the clerk’s office that issued the garnishment order. There typically won’t be any fee required to file your objection. If your court charges a fee, you may be eligible for a fee waiver if you meet certain income requirements. You may want to contact the clerk’s office before you file your form to see how many copies you need to make. You’ll need at least one copy for your records, plus copies to have served on the creditor who filed the garnishment. Depending on the jurisdiction, you also may be required to have the creditor served with your objection. The clerk will tell you if you need to take care of this or if it will be done for you. If you have to do it yourself, the easiest thing to do is mail it using certified mail with returned receipt requested.
• Attend your hearing: The court may have a hearing so a judge can hear both sides and decide whether to sustain your objection. Keep in mind that if you don’t attend the hearing, the judge will overrule your objection and the garnishment will begin under the terms outlined in the order. Even if the judge does not sustain your objection, you still have the opportunity to meet with the creditor (or a representative of the creditor) and negotiate payment arrangements to potentially stop the wage garnishment.
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