The Utah Court system allows for creditors to collect on unpaid debts through what is known as wage garnishment or a writ of garnishment. The amount of money that’s withdrawn from your check can be up to 25% of your wages and even up to 50% in some instances.
How Wage Garnishment Works
Creditors file a writ of garnishment with the Utah Courts, which allows them to have an employer hold a portion of wages to satisfy a debt. Once the creditor has obtained a court judgment, they can start the process of collecting on a debt. The employer is forced to hold a portion of earnings, then forward those earning on to the creditor. Some organizations don’t need to go through the courts system. Debts that involve student loans, taxes, and child support payments don’t need a court judgment to collect on a debt. With guaranteed federal student loans, the creditor will need to send a written 30 day notice to the defaulted borrower’s last known address. They can then start garnishing up to 15% of the borrower’s wages. The IRS can levy bank accounts, garnish wages and seize property and the Utah Office of Recovery Services (“ORS”) can force your employer to “withhold Income’ of up to 50% of your disposable income and under certain circumstances can seek a larger percentage as provided by Section 303(b) of the Consumer Credit Protection Act as cited in 15 U.S.C. Section 1673(b). These actions are known as administrative garnishments. The power that Congress has granted these entities can be damaging and you can suffer significant loss. Creditors must provide the Utah courts with specific information in order to receive a court judgment. Following is the information that they will need to provide:
• They must prove that you are legally indebted to their company.
• They must provide a contract showing your agreement to pay.
• The payment of the claim cannot be secured by a lien upon a property in Utah.
• They must show that you have the creditor’s property.
Employer Garnishment Requirements – Writ of Garnishment
An Employer is not required by law to notify an employee that they have been served a Writ of Garnishment. However, most employers have policies and procedures in place that are followed when a notice of wage garnishment is received. Most of the time, the employer will notify the employee in writing that it has received a wage garnishment notice and provide the employee with a copy of the paperwork. The paperwork will give the employee all of the information needed to get more details directly from the creditor or the collection agency. Your employer is obligated by law to follow the Writ of Garnishment and faces significant legal consequences if they do not proceed with the garnishment. To avoid liability, the employer is unlikely to give you advice on how to deal with the garnishment. Before your wages can be garnished most creditors must obtain a court order that states that you owe them money. You must be sued by the creditor and the creditor must obtain a final judgment from a court of competent jurisdiction. With the final judgment, that creditor is referred to as a “judgment creditor” and has the legal right to take action to collect the amount you owe the creditor set out in the court ordered judgment. In Utah, the creditor has the right to collect on its judgment by garnishing wages, levying a bank account, seizing personal property and/or placing a lien on real property.
Most judgment creditors will attempt to garnish your wages by delivering a writ of garnishment to your employer via certified mail or personal delivery. Because employers face significant penalties for delaying on processing the writ of garnishment, they will act quickly to begin the garnishment of your wages. Be aware that there are certain types of debts that do not require a court ordered judgment for collection, including: unpaid income taxes, court ordered child support or child support arrearages and unpaid federal student loan debt. Start Fresh Utah can help if you are struggling with garnishment or other debt problems. Pursuant to Title III of the federal Consumer Credit Protection Act (“CCPA”) an employer in Utah is prohibited from terminating or taking disciplinary action against an employee if the employee has a single wage garnishment. However, these protections do not apply to an employee with multiple wage garnishments. A creditor in Utah can obtain a Writ of Execution from the court as a means of seizing personal property from a debtor that can be liquidated at auction and the proceeds of the sale applied against the debt due the creditor. This is not technically a garnishment, but is a legitimate collection method. The creditor must apply to the court for a Writ of Execution in order to seize your personal or real property. The Writ of Execution is a legal document that will be served on you by a Sheriff or Constable. If you believe that a Sheriff or Constable is attempting to serve you with legal documents, get help from Start Fresh Utah now. Many have asked if they avoid the service (or delivery) of the Writ of Execution paperwork by the Sheriff or Constable, will they be able to dodge having their personal property seized. Generally, avoiding service of process is a nuisance and ineffective. Eventually, the Sheriff or Constable will make service and, if you have made it difficult for them, they will be less likely to work with you. Most often the Sheriff or Constable will be easy to work with and can set up a payment plan. More important, however, is that debtors are not aware that there is a long list of property that is deemed exempt from seizure so it is in your best interest to get the Writ of Execution and work with the Sheriff or Constable. Also, if you file a petition in bankruptcy the Writ of Execution will be avoided.
What You Can Do to Stop Wage Garnishment
We all make financial mistakes, so once you’ve accepted that, you should put aside any feelings of guilt or remorse and fight these companies with tactics from their own game plan. Most creditors are willing to work with debtors to find a solution to help them get back on track and repay their debts. If you are falling behind on payments to a creditor it is generally in your best interest to communicate with the creditor and attempt to restructure the debt or negotiate a payment arrangement. Do not ignore notices from a creditor. It is in the best interest for both parties to find a reasonable repayment plan before your account becomes seriously delinquent. Most creditors will make several attempts to contact you to establish a repayment arrangement prior to charging off the account and sending it to collections. Even if your debt is charged off by the creditor and it is sent to collections, you can still negotiate a payment arrangement. In fact, many collection agencies will establish a payment plan so they do not have to escalate the collection process. You may want to consider Consumer Credit Counseling services or retaining a debt settlement company if you have several delinquent debts. However, it is important that you do research prior to using these options. One of the best ways to stop wage garnishment is to file for bankruptcy. Bankruptcy not only stops wage garnishment, it can also eliminate certain debts. Additionally, filing for bankruptcy stops creditors from harassing you or your employer. For individuals, there are two different options to file for bankruptcy, either a Chapter 7 Bankruptcy or a Chapter 13 bankruptcy. With a Chapter 7 bankruptcy the debtor, the person filing for bankruptcy, can completely eliminate certain types of debts like credit card debts and hospital debts. Not everyone can qualify for a Chapter 7 bankruptcy and must use the Chapter 13 bankruptcy where the courts can reduce overall monthly payments into one low manageable payment, while eliminating some unsecured debts. A Chapter 13 bankruptcy applies to people who have more income and assets than someone filing for Chapter 7. They are still eligible to have their debt payments reduced and consolidated into one low manageable payment, but they are not necessarily eligible for debt elimination. Secured debts are debts with some type of asset pledged as a security for the debt like cars and homes. The Chapter 13 helps debtors retain their assets and establish a payment plan under the protection of the bankruptcy laws. A Chapter 13 payment plan can be the most effective and economical way to repay your debts.
More Options To Stop A Garnishment
If you’re facing garnishment and you’re looking for student loan wage garnishment help, there are, fortunately, a number of steps you can take to stop student loan garnishment of your wages.
Request a Hearing
The garnishment process begins with a Notice of Intent to Garnish. If you request a hearing to challenge the garnishment within 30 days of receiving the Notice of Intent to Garnish, the garnishment process will be put on hold until your hearing. If 30 days have passed, you’ll still be able to make a request for a hearing, but a garnishment order will still be issued and the garnishment of your wages will proceed. If you win your hearing, the garnishment will end. The most common reason is that the garnishment will impose undue financial hardship on you and your family. The other reasons to request a hearing are usually related to objections to the validity of the claim stated in the notice, which may include the following:
• The loan has already been repaid.
• You are currently participating in a repayment plan for the loan.
• You have filed for bankruptcy.
• Your loan qualifies for student loan forgiveness, cancellation or discharge. There are a number of circumstances in which you may be able to obtain forgiveness, cancellation or discharge, such as the closed school discharge, public service loan forgiveness and the Perkins loan cancellation and discharge, among others.
Making A Settlement Offer Through A Consumer Proposal
Trying to negotiate directly with the creditor is worth a try, but if it doesn’t work your next option would be to consider a consumer proposal. A consumer proposal is a formal debt settlement process under the Bankruptcy and Insolvency Act which means it provides you with the benefit of a stay of proceedings that stops most garnishments.
There are several benefits of dealing with a garnishment through a consumer proposal including:
• The wage garnishment can be stopped immediately. Once you file your employer will be notified right away to stop taking money from your pay.
• You can make a settlement to deal with the debts subject to the garnishment.
• You will also deal with other outstanding debts you may have, giving you a fresh financial start.
• A consumer proposal allows you to keep any assets you own including a home.
Limitations On garnishment
Although a creditor with a judgment can take a portion of your wages, he or she cannot take all of them. Both federal and Utah law sets limit on the amount that may be garnished, to ensure that you have enough left over to live on. Under Utah law, the maximum amount that a creditor may garnish is:
• 25 percent of your weekly disposable earnings, what is left over after taxes and other deductions have been taken out; or
• The amount that your weekly disposable earnings exceed the federal minimum wage by 30 times
The law also limits the amount of wages that may be garnished, if more than one creditor is garnishing you at a time. Under the law, only 25 percent of your wages may be garnished, regardless of the number of creditors. Depending on the type of debt that you owe, there are exceptions to these limitations. For example, up to 60 percent of your wages can be taken if you owe back child support.
Dealing with Garnishment
If you are faced with garnishment, you may be able to avoid the process by working out a repayment plan with your creditor. However, this is not a viable solution if you cannot afford the debt or if the creditor refuses to work with you. In such cases, bankruptcy may be the best way of stopping garnishment. Once you file bankruptcy, your creditors must cease all collection activities, including garnishment. Depending on the type of bankruptcy that you file, your debt is either wiped out or repaid over a period of three to five years. Once you have completed bankruptcy in either case, you are free of most debt subject to garnishment and can start over again financially. If you are struggling with your finances and face the threat of a lawsuit or garnishment, an experienced bankruptcy attorney can explain your options and help you get the relief from your burdensome debt that you are entitled to by law.
When you need a garnishment attorney in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506