A wage garnishment instructs your employer to take money out of your paycheck to pay an outstanding bill. All garnishments, however, aren’t the same. Not only do different rules apply to each type, but some are easier to stop than others. In this article, you’ll learn ways to handle frequently encountered garnishments.
When Your Creditor Must Go to Court
Most creditors must first file a lawsuit, win, and get a money judgment against you for the amount you owe before it can garnish your wages (but not always—more below). Understanding this concept will help you overcome the worry that you might experience when missing a payment. (For an overview of the process, start by reading When Can a Creditor Garnish Your Wages?)
Even so, not all creditors will bother with the expense and hassle. At the end of the day, the creditor will only sue you if it will realize a profit.
For instance, most credit card companies (or the collector that buys the debt) will file a collection action against someone with a large, unpaid credit card balance. Likewise, an auto lender might go to court seeking reimbursement for the balance remaining after auctioning off a repossessed car. Other sizeable unsecured debts, such as a medical bill, personal loan, utility bill, or unpaid rent, are also ripe for litigation.
(Learn more about the process in Delinquent Debt Lawsuit: What to Expect When a Creditor Sues You.)
Stopping a Court Judgment Garnishment
If a creditor with a money judgment proceeds to garnish your wages, you have options. For instance, you can:
- pay the debt in full
- negotiate for a lower amount or a payment plan
- if it isn't your debt, or you weren't served with a lawsuit, ask the court to set the judgment aside
- if it will cause you undue hardship, ask the court to set it aside at a hearing, or
- file for bankruptcy.
Ultimately, what you decide to do will likely depend on your financial situation.
When You Can Find the Cash
The easiest way to stop the garnishment is to pay the judgment amount to the creditor. A fully satisfied creditor must let the court know that you paid the judgment and withdraw the garnishment. If you don’t have the money, you might want to consider borrowing it from a friend or family member.
Keep in mind that you might be able to persuade the creditor to settle for a lesser amount. A lump sum paid immediately is often more enticing than multiple payments over many months. The creditor will be even more motivated if there’s a concern that you might leave your employment or file for bankruptcy.
(Learn how to settle a debt before a lawsuit in How to Negotiate a Credit Card Debt Settlement: The Process.)
When Your Pockets Are Empty
Many people who live paycheck to paycheck don’t have enough money to pay for necessary expenses like food and housing after accounting for the garnishment. If you’re in this situation, you can ask the court to set it aside.
Be aware that it’s important to act quickly. You won’t have much time to fill out and file the required paperwork with the court. (The forms will ask for detailed information about your financial situation.) Instructions will likely be on the garnishment notice given to you by your employer. If not, look for the information on the website of the sheriff’s department or your local courthouse. If you’re still at a loss, contact an attorney.
Also, keep in mind that filing for bankruptcy will stop this type of garnishment. In most cases, the garnished debt will get wiped out, along with many of your other bills. (Find out more in Can I Eliminate All of My Debts by Discharging Them in Bankruptcy?)
When You Object for Other Reasons
If this isn't your debt, or you weren't served with the lawsuit, you can petition (ask) the court to vacate—or set aside—the judgment. If the court grants your request, you'll have an opportunity to dispute the debt by responding to the lawsuit. Because this can be tricky, you'll likely want to consult with an attorney.
Other Garnishment Types
The garnishment rules differ depending on the type of creditor. Not only can some creditors garnish your wages without suing you, but you might not have as many options, either.
(If you’d like to know the amount a particular creditor can take, read How Much Can a Creditor Garnish From My Paycheck?)
IRS Tax Debt
The IRS is powerful. Not only can it garnish your wages without a court judgment, but it can take more from your paycheck than any other creditor. Fortunately, you might be able to avoid a garnishment by agreeing to a payment plan. If you can’t afford to do so, you can ask the IRS to delay collection to another time.
(To learn about additional options, read How to Stop an IRS Wage Garnishment.)
Government-Backed Student Loan Debt
If you default on your government student loan, the U.S. Department of Education (DOE), or its representative, can garnish 15% of your disposable wages (the amount remaining after mandatory deductions) without a court judgment.
If you don’t agree with the validity of the garnishment, you can ask for a hearing. The procedure will be outlined in the letter sent to you notifying you of the future garnishment (otherwise, go to the DOE’s webpage). Additionally, programs are available to help you get out of a default status. For instance, you can rehabilitate your loan by demonstrating that you can make timely payments for nine months.
(Find out more by reading How to Stop a Government Student Loan Wage Garnishment.) LINK
Domestic Support Obligations
This type of garnishment arises in family law court. To make an adjustment, you’ll need to file a motion in your family law matter.
Questions for Your Attorney
- Do I have grounds to object to challenge the wage garnishment?
- Can you help me stop the garnishment?
- Does filing for bankruptcy make sense in my case?