Wage garnishment happens when court orders that your employer withhold a specific portion of your paycheck and send it directly to the creditor or person to whom you owe money, until your debt is resolved. Child support, consumer debts and student loans are common sources of wage garnishment. Your earnings will be garnished until the debt is paid off or otherwise resolved.
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. Federal law and in some cases state law limits the amount your employer can withhold from your wages for a wage garnishment. State law determines the process creditors must follow to garnish wages, including the length of time it takes to initiate the garnishment. Because a hearing must be scheduled, in most cases it takes at least several weeks.
Creditors must obtain a court judgment to garnish wages. State law varies so the process for obtaining a judgment depends on the state. The creditor files the lawsuit in your county, or district, court. The court then gives the creditor a case number and a trial date, by which time the plaintiff must notify you of the lawsuit via a court approved method. For example, the creditor might be required to notify you at least 10 days before the trial date, which may be three to four weeks after the creditor filed the lawsuit. If the creditor wins the case, it receives a judgment against you.
The court might mandate that the creditor send you a notice of court proceedings to collect the debt. The creditor must then wait for a specific period, such as 15 days after the mailing, before filing the wage garnishment. Depending on your state, the court may allow the creditor to file the garnishment after it obtains the judgment, without notifying you first. When filing the garnishment, the creditor includes on the form the awarded amount including interest and your employer’s name and address. The sheriff or other local official serves your employer with the garnishment.
Once your employer receives the garnishment order, it begins the withholding according to the order’s instruction, such as on the next regularly scheduled payroll. The court may require that your employer submit an “answer” to the garnishment. For example, the answer might be due within 30 days of receipt of the garnishment. In the answer, your employer says whether you are employed with the company, and if so, your rate of pay, the amount that will be submitted each payday, and any previous garnishments against you.
Statute of Limitations
Each state has its own statute of limitations that governs the length of the judgment. For example, the creditor may have 20 years to act on the judgment, so it must garnish within that period. Keeping that in mind, the garnishment may last until the debt is paid in full; or it may expire after a specific period, such as 60 or 90 days later, at which time it might be renewed if the debit is not paid off. In the latter case, court costs are added to the debt each time it is renewed. The length of the garnishment depends on the amount of your debt and the amount your employer is required to withhold each pay period.
Government agencies, such as the Internal Revenue Service and the U.S. Department of Education, do not need a court order to garnish wages. However, they must take certain steps to implement the garnishment. For example, before levying your wages for delinquent taxes, the IRS sends you a levy notice at least 30 days prior to the levy. You may request a hearing to plea your case within 30 days of the levy notice. If a creditor is garnishing your wages to pay off a money judgment, tax debt, or student loan obligation, you probably want to know when the wage garnishment will end. The wage garnishment will end when you:
• pay off the debt
• settle the debt
• discharge the debt in Chapter 7 bankruptcy
• pay some or all of the debt through a Chapter 13 repayment plan, or
• successfully ask the state court to stop the garnishment.
How to Stop the Wage Garnishment When You Can’t Pay
Federal law and each state’s law afford you several options to stop a creditor from garnishing your wages.
File a Claim of Exemption
In certain circumstances, states allow you to protect some of your wages with laws called exemptions. By filing a claim of exemption with the state court, you’re asking the court to totally or partially stop the creditor’s garnishment of your wages.
File for Bankruptcy
Filing for bankruptcy immediately stops most types of wage garnishments, at least temporarily, because of the automatic stay order that’s put in place when you file. Chapter 7 and 13 each offer different ways to take care of the debt.
• Chapter 7 bankruptcy. Many debts can be wiped out in three to four months, such as credit card balances, medical bills, and personal loans. You’ll need to qualify by passing the bankruptcy means test.
• Chapter 13 bankruptcy. Not all debts can be discharged in bankruptcy. For instance, many tax debts and all support arrearages will remain your responsibility. If you don’t want the garnishment to go through your employer, you can repay non-dischargeable debts by setting up a payment plan through Chapter 13 bankruptcy.
Other Options for Tax and Student Loan Debt
One of the difficult things about owing taxes and student loan debt is that the creditor doesn’t need to get a judgment before garnishing your wages, and it’s difficult to get rid of these debts in bankruptcy. Fortunately, procedures exist for negotiating tax debt with the IRS, and there are ways to challenge a student loan wage garnishment.
Pay the Debt and Stop the Garnishment
Sometimes it makes sense to pay off what you owe. Here are two options.
• Settling the Debt: Many creditors would prefer to receive a smaller amount in a one-time lump sum payment as opposed to the full amount paid in smaller, periodic payments over time. For that reason, the creditor might agree to settle the debt for less than the amount you owe. If you can get some cash to settle the debt, the garnishment will end.
• Paying the Garnishment: If the creditor proceeds with the garnishment (that is, you don’t settle the debt or stop it some other way), the creditor will reduce your total balance by the amount of money taken from each paycheck.
Also, for many types of debts, you’ll have to pay interest. For example, if the garnishment is due to a money judgment, often you must pay 2% to 18% interest on top of the principal balance, depending on your state’s laws. A significant interest rate will make the underlying debt that much more difficult to pay off. Ideally, you’ll be able to pay off the total balance in a relatively short amount of time without too much financial hardship on your part. Unfortunately, this is rarely the case. A sizeable principal balance combined with a substantial interest rate means that you might find it hard to pay off the balance without significant financial difficulty.
The duration for garnishment to last solely depends on the laws of your state, and the method that the creditor uses to try and collect on that judgment. Usually, judgments are valid for several years before they expire or “lapse.” In some states, a judgment is effective between five to seven years. In other states, it can be twenty years or longer. The time period is usually starts running from:
• the date of entry of the judgment
• the date that a creditor last tried to execute (collect) on the judgment, or
• the later date of either event.
Renewing a Judgment Restarts the Cycle
Potentially, a judgment can effectively become permanent. That is because many states allow creditors to renew their judgments. That means that if a creditor gets a court order or files an affidavit or other document, it can renew the judgment for another cycle. In some states, creditors are allowed to renew a judgment once or twice. In others, there’s no limit.
When a Judgment Lapses
If a judgment creditor does not renew a judgment on time, then that judgment lapses. A judgment may also lapse if the creditor doesn’t do anything to execute on that judgment for a certain period of time. When a judgment lapses (or becomes “dormant”), the creditor can no longer legally enforce it. That means a creditor cannot:
• garnish your wages
• attach your bank account
• seize your property, or
• make you appear for a debtor’s examination.
Reviving Dormant or Lapsed Judgments
If a judgment against you has lapsed, that doesn’t mean it has gone away forever. That’s because many states allow creditors to revive dormant judgments. There might be a time limit for a creditor to revive a dormant judgment. State laws vary on how the time period is calculated. The clock may begin to run from the time the creditor last tried to collect on the judgment, or it might run from the time the judgment later went dormant. Under the Fair Debt Collection Practices Act (FDCPA), a bill collector may still contact you on a lapsed judgment and ask you to pay. However, a debt collector cannot threaten to garnish your wages or take other legal action to pressure you into settling that old judgment. If a debt collector lies to you about the age of the judgment and whether it lapsed under your state’s laws, then that also might be a violation of the FDCPA. Under the Fair Credit Reporting Act (FCRA), a judgment can show up on your credit report for at least seven years. It can show up even longer, depending on how much time your state’s laws give effect to that judgment. For example, if a judgment was entered against you in Utah, it can show up on your credit report for ten years, or even 20 years if the creditor renewed it on time.
Wage Garnishment Exemptions
Wage garnishment exemptions are a form of wage protection that prevents the garnishing creditor from taking certain kinds of income or more than a certain amount of your wages. The idea is that citizens should be able to protect some wages from creditors to pay for living expenses. Each state has a set of exemption laws you can use to protect your wages. Depending on your situation, you might be able to partially or fully protect your income. Some types of wages are fully exempt (although exceptions exist). Generally speaking, ordinary creditors cannot garnish the following types of income:
• social security
• child support, and
Wages, however, are almost always subject to garnishment unless you can claim an exemption of some sort. Lower income debtors might be able to keep all of their wages. Higher earners will likely lose a portion of their income.
How to File a Claim of Exemption
Before you can protect income, you must file a claim of exemption by filing a document with the court that issued the underlying garnishment order. Most courts will have a form for you to fill out. You’ll include:
• your name
• the name of the creditor suing you, and
• the case number.
You’ll also describe the exemption that will allow you to keep the greatest amount of your wages and provide any other required information, such as proof of your dependents. You’ll file the completed document with the clerk of court office in the county where the garnishment originated. Depending on your state’s laws, a hearing will probably be scheduled. You should plan on attending this hearing. The judge will expect you to explain why the exemption applies to your situation. If the judge agrees, the creditor will be ordered to reduce or stop garnishing your wages. If the judge disagrees, your wages will continue to be garnished. Bankruptcy works well to stop most wage garnishments and you don’t need to worry about losing everything you own. Property exemptions apply to more than just wages. Each state has a list of exemptions that a filer can use to protect property needed to maintain a home and employment, such as furniture, clothing, and a modest car. You’ll find the assets listed in each state’s exemption statutes. If you own an asset that appears on the list, you can exempt it. Property not covered is nonexempt. Here’s what happens to nonexempt property in the two primary chapter types:
• Chapter 7 bankruptcy: The bankruptcy trustee an official selected by the court to oversee your matter will sell any nonexempt property and distribute the proceeds to your creditors.
• Chapter 13 bankruptcy: You can keep your nonexempt property, but you’ll have to pay the creditors its value (and possibly additional amounts) through a three- to five-year repayment plan. The rule is that you must pay either your disposable income or the value of your nonexempt property in your plan, whichever is greater.
After a court decides you owe the money, it will enter a judgment against you. The creditor must wait 21 days after the judgment is entered. Then it can get a Writ of Garnishment. This is a court order that tells the garnishee to give your money to the creditor. Paying the judgment within 21 days of the judgment will prevent garnishment. Once the court issues a Writ, the creditor must serve it on the garnishee before it expires. The garnishee has seven days to serve the Writ on you by mailing or giving you a copy. The garnishee also has 14 days to send a Garnishee Disclosure to the court, the creditor, and you. The disclosure states what money the garnishee controls. For example:
• Your employer controls your paycheck
• Your bank controls your accounts
• Your tenant has control of any rent money owed to you
The garnishee must withhold the funds from you right after sending the disclosure. This means you might not be able to get money that was garnished from your bank. So, you may not get all the money you earned in your paycheck because part of it will go to your creditor. The garnishee holds the money for 28 days. This is so you have time to object to the garnishment. If you do not file an objection with the court, the garnishee will give the money to your creditor. When you get a writ of garnishment, you have 14 days to file an Objection to Garnishment. After a writ of garnishment expires, a creditor can go to court for a new writ to collect all the money you owe.
Writ Of Garnishment Lawyer
When You Need Legal Help with a Writ of Garnishment 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