Wage Garnishment (What You Should Know)

When a court orders an employer to hold back a percentage of an employee’s paycheck and pay that portion to one of the employee’s creditors, it’s called a wage garnishment. Can you fight a wage garnishment? Yes, with the help of a good wage garnishment attorney.

How does a wage garnishment work in Massachusetts? If you default on a debt, the creditor may bring a lawsuit against you. If you fail to respond to the lawsuit or if you fail to appear in court, a default judgment that allows the creditor to garnish your wages may be entered against you.

Wages may be garnished for back taxes, back child support, student loan debts, or for any payments ordered by a court. Bonuses and overtime wages may also be garnished, and employers may charge “service fees” for each paycheck that is subject to wage garnishment.

WHAT STEPS DO CREDITORS TAKE TO GARNISH WAGES?

To begin garnishing your wages, a creditor who has obtained a judgment against you must submit legal paperwork in the county where you are employed and then notify your employer. After they’ve been formally notified, employers are required by law to begin garnishing wages.

Wage garnishments inconvenience employers, but the federal Consumer Credit Protection Act offers some limited protection to employees. An employee cannot be retaliated against, disciplined, or terminated because his or her wages are being garnished – if it’s just for one debt.

However, if two or more creditors are simultaneously garnishing an employee’s wages, federal law does not prevent the employer from terminating that employee.

CAN A CREDITOR GARNISH YOUR WAGES WITHOUT A JUDGMENT?

Most creditors can’t garnish wages unless they first sue for the debt and then win a judgment from the court. However, the Internal Revenue Service, local and state tax and child support collectors, and the U.S. Department of Education may garnish wages without a judgment.

There are legal limits on how much of someone’s wages a creditor may garnish. The maximum amount that may be garnished is limited to twenty-five percent by the federal Consumer Credit Protection Act.

WHAT PART OF YOUR WAGES MAY BE GARNISHED IN MASSACHUSETTS?

But Massachusetts law gives wage earners even more protection. In this state, creditors in most cases can take no more than fifteen percent of someone’s wages. However, these limits may not apply to wages that are garnished by state agencies for alimony arrears or child support arrears.

Court orders for child support usually include an automatic wage garnishment order. Up to sixty percent of your disposable income may be garnished for child support payments.

The U.S. Department of Education – or an agency working on the Department’s behalf – can impose an “administrative” garnishment without a court judgment in order to collect student loan debt. The IRS can also garnish your wages for back income taxes without a court judgment.

WHAT’S THE MOST EFFECTIVE WAY TO STOP A WAGE GARNISHMENT?

Bankruptcy is a common and effective response to a wage garnishment. When you file for bankruptcy, an order for relief – an “automatic stay” – takes effect. The stay will prevent most creditors from continuing to garnish your wages and from taking any other action against you.

Bankruptcy has the additional benefit of removing creditors from your relationship with your employer, and it lets you make the decisions about how your debts are paid. However, a wage garnishment for child support or alimony will not be stopped by an automatic stay.

If you receive a debt discharge in a bankruptcy proceeding, and if the debt owed to the creditor who is garnishing your wages is included in that discharge, that creditor cannot continue to garnish your wages or harass you about payments.

However, if your bankruptcy petition is dismissed by the court without a discharge of your debts, the creditor may continue to garnish your wages after the petition’s dismissal.

IS BANKRUPTCY THE ONLY WAY TO STOP A WAGE GARNISHMENT?

Bankruptcy is one response to a wage garnishment, but bankruptcy is not for everyone. If your wages are being garnished, discuss your circumstances with a Massachusetts bankruptcy attorney to determine if bankruptcy is your best option.

It is also actually possible that your wages are being garnished mistakenly or even illegally. That happens quite frequently. For example, if the party that is garnishing your wages is a debt purchasing company, you may not owe that company anything.

HOW DO DEBT PURCHASING COMPANIES OPERATE?

Debt buying companies buy defaulted debts from banks. A debt buying company may claim that it legally purchased and owns a debt, but these companies are often unable to support their claims in court with the proper legal documentation.

Even if a debt buyer has the original documents, a court may not find the documents adequate or acceptable. There are several ways to dispute a debt buying company’s claim on a debt. A good Plymouth wage garnishment attorney will know what approach is most effective and appropriate.

If a creditor doesn’t take the right legal steps to have your wages garnished, the court may revoke its garnishment order. Creditors must file and notify you of a lawsuit, win a judgment against you, and notify you of the impending garnishment before any of your wages may be taken.

Missing any of these steps gives the court a sufficient reason to revoke its garnishment order. Of course, if you have already paid the debt, you will need to prove that you’ve paid it and – with your attorney’s help – request a hearing with the court that issued the garnishment order.

WHAT WILL A GOOD ATTORNEY DO ON YOUR BEHALF?

If you take legal action, you must follow through with it. If you request a hearing to challenge a wage garnishment, but you subsequently fail to appear at that hearing, the court will reject your challenge, and your wages will be garnished.

Finally, you can always offer to negotiate with a creditor, or more specifically, have your lawyer negotiate on your behalf. In many cases, the right lawyer can negotiate a payment plan – something you can afford – that ends the garnishment or reduces the amount being garnished.

The most important point to remember is that if your wages are garnished – or about to be garnished – you have legal recourse. There are several ways to respond. The right attorney will negotiate with the creditor to end or reduce the garnishment or take legal action to end it.