Whether in finance or life in general, we all make mistakes. We’re human. But when we’re staring at court judgment that says a portion of our income will be taken to pay back a debt, we can understandably feel pretty demoralized.
Avoid the brutal and frustrating experience of having a percentage of your paycheck taken from you because of debt. Here’s what you can do to make sure wage garnishment doesn’t happen to you.
Types, Causes and Frequency of Wage Garnishment
There are two types of garnishment: wage, which allows creditors to mandate your employer give them some of your earnings — and nonwage, which provides creditors with access to your bank account. Of the two, wage garnishment is far more common, affecting one in 14 U.S. workers. Wage garnishment occurs from child support, student loans, consumer debt and taxes.
Know Your State Laws
Each state has varying laws around garnishment, giving your income or bank account additional or fewer protections. Take the time to read and understand your state’s laws about garnishments. Here’s a list of garnishment laws in all 50 states.
Your Options After Being Served a Garnishment Judgment
If you’ve been legally notified of a garnishment judgment, it’s important to address the matter quickly, regardless of how valid you deem it to be.
The judgment will contain specific information on next steps, but essentially your main three options are to file a dispute it, negotiate with the creditor that took legal action or accept the judgment.
Disputing the Garnishment Judgment
If you see inaccurate information or a debt listed that you’ve already resolved, challenge the judgment. You can seek legal counsel to do this, or save the lawyer fees and challenge it yourself. The main thing that matters is challenging the judgment quickly to prevent the garnishment from continuing. You may also dispute the judgment on the grounds of financial hardship, which will require you to submit some forms and appear in court. The court will then make a decision based on your income and expenses, and either uphold their ruling or
Negotiating a Garnishment Judgment
If the judgment is valid, reach out to the creditor to see if another deal can be made. It’s often assumed that being served a judgment is the last strike, but it’s really a creditor’s last-ditch attempt to recoup their money. If you’re transparent about your situation and present a realistic payment plan you can stick to, they might work with you.
Accepting a Garnishment Judgment
Then of course you can bite the bullet and accept the judgment, either by paying per installments or lump sum. Some debtors take out a personal loan to pay back the judgment. Additionally, there’s always the possibility of getting help from family members.
Need-to-Knows and Exemptions
Another thing to keep in mind is that you can’t be fired because of one garnishment, but you can be for multiple judgments. Even if you have one though, it might be prudent to notify your employer before they hear about it from someone else.
If you’re older and facing a judgment, know that social security and veterans payments are exempt from wage garnishments. However, that money could be taken if in a non-wage garnishment if it reached a bank account.
Should You Get a Lawyer?
Even with your options outlined above, you may still want to consult with an attorney on the best course of action for your situation and applicable state laws. But once a strategy or conclusion has been reached, don’t feel the need to pay unnecessary costs having the lawyer represent you.
Being Proactive to Avoid a Potential Garnishment Scenario
Many debtors facing garnishment ignored all the warning signs until it was too late. If you know you’re falling behind, it’s in your best interest to do something sooner rather than later.
Debt relief options like debt settlement or bankruptcy, while certainly carrying their downsides, can stop garnishment from happening. The process may take anywhere from two to four years, but might save you substantial money off your debt, giving you the fresh start you need. Be cautious when exploring providers, however, as the debt relief ecosystem carries a lot of scammers. Even large debt relief providers like Freedom Debt Relief review the common warning signs scammers display. Know them, and then find a company that can actually help resolve some of your debt.
If you’re already facing a judgment, you no longer have leverage with debt settlement. You could still file for bankruptcy, but the garnishment will stay remain on your report for seven years, and you’ll have to pay court costs, attorney fees and take financial management courses.
It’s expensive enough to live without wage garnishment adding to the mess. If you think you might be served a judgment in the future, do everything you can now to avoid that possibility. Try to make more money, reduce unneeded expenses, track your spending with a budget and commit to a get-out-of-debt plan. You’ll save yourself time, money, stress and so much more by acting now.
